As technology innovation accelerates, it can be difficult to keep up with new jargon—let alone figure out whether the latest bright and shiny buzzwords are relevant for your business.
A quick Google search will identify “digital transformation” as one top buzzword out there today. The good news is that the percentage of SMBs say they’ve heard of digital transformation and understand what it means has grown from 33% in 2017 to 57% in 2019. But the bad news is that it’s still a fuzzy term for many—and most SMBs are uncertain as to how to tackle it.
What is Digital Transformation?
SMB Group defines “digital transformation” as: how businesses use digital technologies to create new or modify existing business processes, practices, models, culture, and customer experiences to meet changing business and market dynamics. Simply stated, it’s about identifying how you must adapt your business to drive customer loyalty and maintain a competitive edge in the digital age.
Customer expectations are being reshaped by digital innovation. When they get new capabilities elsewhere—from round the clock support to fast returns—they want them from your business too. Employees increasingly expect to use more powerful, easy, consumer-like tools, and always on information access to get their jobs done more efficiently as well. Machines are getting also smarter. Artificial intelligence (AI), machine learning (ML), Internet of Things (IoT), sensors, analytics and other technologies are teaming up to create sweeping changes across a wide swath of industries and functions.
Digital transformation goes beyond individual application areas like marketing, financials, HR or services. A solid digital transformation strategy can help you prepare your business and for the digital era. It provides businesses with the opportunity to rethink how to use technology better engage customers and employees, and to meet changing business and market conditions.
Digital transformation also means more than simply asking “How can we do the things we do today, only faster?” Instead, it means questioning “How do we need to adapt our business processes to keep pace with new market realities, and how does our technology strategy need to change to support this?”
Digital Transformation in the Real World
Most of us are familiar with large enterprise digital transformation stories, such as Best Buy. Several years ago, many people thought that Best Buy could not survive against Amazon. But Best Buy took a fresh approach to transform its business and differentiate based on providing a better customer experience.
Best Buy now focuses on advising customers, not just selling to them. It offers in-home consultations and installation services, and Total Tech Support contracts provide customers with unlimited support for their devices and appliances, no matter where they purchased them. The company improved delivery times, introduced a price matching program and transitioned to a data-driven marketing strategy to offer customers customized recommendations and assistance. Today, Best Buy is reaping the benefits, with adjusted earnings per share surging to a record $5.32B in fiscal 2019.
Digital transformation is just as relevant for SMBs. For instance, Goodway Group, a third-generation family-owned business, has evolved over the past ninety years from a printing press, to a direct-mail marketer, and now, into a digital marketing organization.
To support its transformation from print to digital, Goodway Group needed more efficient and flexible solutions for key processes, such as employee expense management, commission tracking, invoicing, and financial consolidation. The company was also spending so much time preparing financials to show historical, descriptive data that it never had the time to focus on how to do things differently and improve processes.
Goodway Group switched from entry-level accounting and spreadsheet solutions to Sage Intacct to automate these workflows, streamline project billing, and improve gross profit visibility across campaigns. Now, the finance team has automated the drudgery, and can spend more time analyzing data and helping Goodway to make better-informed decisions to meet its goals.
The move paid for itself in less than 3 months—and since deploying Sage Intacct, the company has grown twice as fast as its finance headcount.
The Need is Real, But Getting Started Can Be Hard
SMBs know how important it is to start planning for digital transformation: More than 80% agree that technology is reshaping their industries, businesses and workplaces.
However, the execution is challenging. Only 24% have started executing on a digital transformation strategy, and just 19% say they have well-defined plans in this area.
Integration tops the list of complications, followed by difficulty in figuring out which solutions will work best. These are followed by age-old problems including a lack of IT skills, time and money to get things off the ground.
The High Cost of Procrastination
Change is hard, but thinking and planning for digital transformation is critical to ensure viability and growth. SMBs currently investing in digital transformation are 1.9 times more likely to forecast revenue increases than their counterparts with no plans for digital transformation and 1.3 times more likely to forecast increases than those planning for digital transformation.
Summary and Perspective
Business success increasingly depends on putting technology to work to better support your business goals. The time is now to think, plan, and build a strategy to transform workflows and processes with modern technology solutions that will empower your business with the capacities and agility necessary for success in the digital age.
As they embark on digital transformation, many companies are taking a step back to ask whether they are really doing the right things. Read on for answers.
SMBs’ recognition of and desire to transform their businesses for a digital future is real, but the vast majority are still unprepared or underprepared to act on it. Vendors must create more accessible on-ramps to help more SMBs move from aspiration to execution.
This is the first post in a two-part blog series sponsored by Sage Intacct that examines digital transformation for SMBs. It was originally published here. In the next post, I’ll discuss how to start planning for and executing on a digital transformation strategy.
© SMB Group
Source: Laurie McCabe’s Blog