‘Digital Transformation’ – The trend that moved from being a buzzword to be an industry imperative because of the immense value it delivers faster than any other trend.
Once a nebulous concept, today, organizations have realized that digital transformation is not something that comes in a box. Neither is it all about the cloud, or AI or Machine Learning, or any of these high-profile, new-age technologies.
Digital transformation is about rethinking how organizations can use technology, people, and processes and transform business performance.
This is important because the world has become more customer-centric. The pace of technological evolution has accelerated phenomenally. And owing to these trends, today’s modern has higher expectations and more choices.
Thus, organizations, especially small businesses, have to identify new ways to create value, identify new revenue streams and business models, drive customer experience, and increase profitability.
Studies show that global spending on technologies that enable digital transformation is expected to reach $2.3 trillion (£1.8 trillion) in 2023.
Now, these were studies conducted in the pre-COVID world. The push towards digital transformation has only increased since the pandemic. Organizations have realized how digital technologies and systems have helped them maintain stable operations even under such adverse situations.
The Need for Digital Transformation for Small Businesses
Successful implementation of digital transformation does include the use of new technologies to improve productivity and processes to improve business outcomes. It also demands vendor and cultural support across the organization. While large enterprises have access to technology vendors and large budgets, prioritizing digital transformation is essential for small businesses as well.
Digital transformation involves taking a close look at your business to change business models to remain relevant. When technology is changing the rules of business, it is important to evolve simultaneously. Those who don’t, become redundant. Kodak, for example, did not let digital innovation transform its business model. While they had invented the digital camera way back in 1975, they never introduced it to the market. It seemed easier to follow the business model that they already had. But this eventually ran them out of business.
You cannot be a livery cab driver in the age of Uber. Or a Borders bookselling chain in the age when Amazon has redefined how we buy books. New technologies are changing the rules in the market. To stay relevant, it is important to grow along with these changes. And this might mean making some not-so-comfortable changes or even reconsidering something that might have worked for you in the past.
Reactive IT is redundant
In the world of instant gratification, traditional IT models that small businesses employ do not work. IT is no longer just about ‘keeping the trains running on time’. IT is no longer about putting out fires that crop up in the day to day operations and troubleshooting.
Since technology has moved into the center of what every business does, IT has to be more proactive. It has to be the enabler of change and help identify opportunities rather than simple troubleshooting.
Netflix, for example, started as a DVD mailing service that customers could use online. But Netflix transformed its IT ecosystems, leveraged the right technologies, and experimented smartly to capably think outside the box. Since Netflix did not depend on a reactive IT model (just troubleshooting focused), it was able to find new paths to reach the customer and discover new ways to make profits.
When it comes to increasing brand loyalty, small businesses have a lot of work to do. With customers being far less loyal than they were a couple of decades ago, organizations have to work harder to understand their customers.
For this, organizations need deep insights into customer behavior and buyer journeys. They need a 360-degree view of the customer to understand consumer habits and sentiments and deliver personalized customer experiences.
Since context and personalization rank highly amongst customers today, organizations have to leverage data to drive unique experiences. Digital transformation helps small organizations leverage the data generated by the customer and gives a 360-degree view of the customer using the right set of technologies.
With these insights, small businesses can curate marketing strategies, improve product development, introduce the right updates and upgrades, cross-sell and upsell proactively, improve customer engagement, and pivot to meet customer demands with assurance.
Digital transformation is a trend that is focused on increasing efficiency and accuracy – it is programmed to eliminate waste and errors.
Digital transformation tools and technologies can help small businesses significantly improve efficiency and accuracy by automating time-consuming, repetitive, and tedious tasks and reduce the chances of errors. Using these tools and technologies, organizations can eliminate errors, improve or eliminate slow process, remove the guesswork, and eliminate friction.
By automating and improving processes, providing platforms, tools, and systems to help employees work more efficiently, small businesses reduce wastage and consequently improve their bottom line. It also improves the business outcomes as the business decisions are all taken using accurate data-backed insights.
Increase innovation capacity and agility
Given the complex business environment and increasing competitiveness, small businesses have to heavily focus on increasing their capacity to innovate. This automatically means they need to become more agile to respond to market changes and customer demands.
But how can they do so in the absence of an ecosystem that enables this? Modern-day technologies such as mobility, cloud, AI, Machine Learning, advanced data analytics, etc. play an important role in driving innovation and agility as they provide the capacity to quickly respond to customer and market changes. These technologies also make it easier for the business to reduce compliance efforts and streamline operations, which gives them more time to focus on driving innovation.
However, many organizations shy away from digital transformation as they view it as an ‘all-or-nothing’ exercise. But digital transformation can be implemented in a modular manner as well. Taking a carefully calibrated, piece by piece deployment approach makes sure that existing systems work unhindered, communication remains seamless, and business continuity does not get impacted.
We need to internalize that digital transformation is not about technology alone. It is about the purpose of that technology and how it will improve business outcomes, increase business opportunities, and help people do their jobs better.
All transformation initiates have to be aligned with what business goals and objectives you want to achieve. Small businesses need to realize that digital transformation is not the end in itself. It is the means to an end…and end that is defined by better outcomes, better business results, and a higher profit margin.