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A Digital Transformation Strategy for SMEs

By now, you’ve heard a lot about digital transformation. Businesses of all sizes are embracing new technologies. You may have thought, ‘How do I know if it’s right for our company?’ and ‘What kind of ROI will digital transformation provide?’

So What is Digital Transformation Exactly?

Digital transformation is using digital technology to improve business operations. It helps companies better compete through increased efficiency and functionality. Some standard digital technologies are cloud computing, the Internet of Things (IoT), machine learning, Artificial Intelligence (AI), mobile, and Big Data.

How Does Digital Transformation Help SMEs?

Digital transformation helps businesses improve costs, efficiencies, customer satisfaction, and profitability. Companies that use digitalization have double the performance over those that don’t. And as stated earlier, it isn’t only large companies transforming. Forty-two percent of SMBs consider digital transformation a central part of their organizational strategy. And 83% have incorporated some level of digitalization.

Key issues SMEs face today are supply chain management, worker shortages, lack of insight, mobility, and quality control. These situations get addressed with digital transformation. It helps your company through greater connectivity, intelligence, and productivity.

As more companies embrace digitalization, those that don’t are finding it difficult to compete. But where do you start? And how do you ensure the most significant impact for your organization?

Developing an Effective Digital Transformation Strategy

A digital transformation strategy is a detailed plan to improve business operations. It lays the groundwork for a company to establish the why and how of digital technology.

1. Determine What You Want to Achieve

The first thing to look at is your organization’s strategic goals in the next 5 to 10 years. You need to know what you want to achieve before figuring out how to achieve it. You’ll want to start with a bigger picture and then break it down for the short and long term. Everything you’ve defined is then put in order of priority to make it easier to execute.

The goal of digital transformation should be, not just to implement new technologies, but to transform the business as a whole. Digitalization can help you make better decisions with the help of business intelligence, find new revenue sources, gain a competitive advantage, and be more agile as an organization. To achieve such goals, you need to define them well, as they will drive your strategy.

2. Transform Your Processes and Culture

As you prepare for digital transformation, you should also take the opportunity to improve your operational processes. You’ll want to review workflows in all departments to find problem areas. Determine how processes can be adjusted to achieve greater efficiency. Map them out to uncover blind spots to correct. Look for gaps in your data. Examining your processes is essential to help you get the most out of your transformation.

As digital transformation modernizes your business processes, it will also impact your company culture. According to a McKinsey survey, companies that don’t shift their culture impede their digital transformation. Management must inspire the entire company to become a more structured and predictable organization. One that is more mature in the way it operates. Make the shift from a smaller, entrepreneurial enterprise to one that is data-driven and smart in its decision-making process.

Digital transformation will provide significant changes. Changing the culture of a company isn’t an overnight scenario. It’s something you need to plan for as part of your transformation. It will take time, and management must empower their staff to work in new ways. More skill sets may also need to be acquired to align with the transformation’s goals.

3. Focus On the Customer Experience

As you work on your strategy, think of how you can improve the customer experience. According to McKinsey, company revenue can increase by 20 to 50% by revamping the customer experience. When you focus on satisfying customers, you grow repeat business through word of mouth.

Consider options that can improve their satisfaction. Mobile apps, chatbots, a customer portal, etc., are items that can help enhance the customer experience. Examine the entire customer journey to understand their needs. Look at what other companies are doing successfully and listen to customer feedback and other sources to determine how to best implement positive change.

4. Establish Buy-in Company-Wide

Your employees need to feel optimistic about the digital transformation. If they don’t, it will be difficult for them to adapt to the changes and support the company’s goals. Buy-in should start with management. They should stand behind the transformation, show enthusiasm, and get staff excited about the change. Employees must feel optimistic about the transformation and understand how it can help them in their roles and benefit the organization.

5. Define Metrics to Measure Success

With any company initiative, you should be able to evaluate its success. When you invest your time and money, you want to measure your return on that investment. Define productivity, processes, costs, new revenue, and customer satisfaction metrics. See if they improve in a positive direction and by how much.

Once your technologies are implemented, observe to what degree they are being used by your staff. You will not see the desired results if the adoption rate is low. If the adoption rate is low, find out why. Determine if employees are having difficulty understanding how to use the system, or are simply unwilling to adapt. Either way, it’s something you’ll want to address proactively.

Keep Your Focus on Your Goals

Remember to refer back to what you want to achieve as you work through your strategy. There are many options – which can be overwhelming – but you want to focus on what will best achieve your goals. Keep your customers in mind and strive to meet their needs today and beyond. Think of how you foresee your business evolving in the next decade.

Biggest Benefits of Digital Transformation for SMEs

For SMEs, digital transformation brings its greatest advantages through process automation, improved accuracy, increased insight, and greater collaboration. Cloud ERP provides all these benefits and can integrate with other technology innovations. For instance, it connects to production machinery and mobile devices to scan inventory barcodes in the manufacturing space.

Let’s look at how these benefits are achieved.

1. Streamlined Workflow

Digital transformation with cloud ERP removes repetitive tasks through automation. It makes things such as generating and sending invoices faster. With a couple of clicks, the work is completed. Automation frees employees from tedious processes, and productivity is improved.

2. Improved Accuracy

When tasks are automated, mistakes from human error are reduced. By integrating every department in your organization, redundancy and the resulting bad data that can creep in are eliminated. Automatic quality checks are implemented to keep production errors from occurring. Better decisions are made with current, accurate data. Connectivity across processes keeps inventory totals up-to-date.

3. Better Insight

Digital transformation with cloud ERP provides more information to view in real-time. Big Data is used to provide deeper analytics. Fast access to the information you need lets you make informed decisions. You have insight into demand trends and forecasts. With its business intelligence, you can identify opportunities for business growth.

4. Lower Costs

With digitalization, your organization becomes more efficient. Greater efficiency lets you run leaner. Inventory optimization reduces the cost of stored stock and waste. Purchasing receives information to get better deals. Customers get invoiced faster so you can get paid quicker. And better insight into operations lets you identify ways to reduce expenses.

5. Increased Collaboration

Digital transformation with cloud ERP connects processes for greater employee collaboration. Improved connectivity lets your staff work better together to improve the customer experience. For manufacturers, the shop floor is linked to other departments giving the team real-time status of production and resources.


Digital transformation, when implemented strategically, provides significant improvements for SMEs. Keep the focus on the goals you want to achieve. Get management behind the change and then other company employees. Consult with companies you may know that have already transformed. Bring in an industry expert in digitalization if needed. Keep customer experience in the forefront as you build out your strategy.

Take your time and do it right. Remember to identify metrics that will show the ROI after your transformation. And keep in mind that this is an ongoing process. You will need to make sure that the new technology is used to its full capability. Due diligence helps to ensure digital transformation success.

The post A Digital Transformation Strategy for SMEs appeared first on ERP for Manufacturers | Manufacturing Software | OptiProERP.

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