How to prioritize digital transformation for SMEs

[fa icon="calendar"] Aug 1, 2017 9:37:14 AM / by Lotte Marschall

 

 

Translated from Danish - Original Article @ Business.dk

90% of small to medium sized companies (SMEs) are falling behind in digitalization in Denmark - the most digital savvy country in the EU. We’re not talking advanced robotics here, first these companies need to be inspired to digitize and automate manual processes that are harming their competitiveness.


 

This year Denmark was ranked number 1 in the EU Commission’s annual Digital Economy and Society Index.

In May, the Danish “Digital Growth Panel” delivered their report with recommendations for the Danish Government that identified initiatives that can help unleash Denmark’s digital potential further - with a special focus on SMEs.


The level of digitalization is low

The focus on the SME segment is with good reason. The debate around digitalization is usually centered on large companies and their disruption of markets.

But the fact is, more than 90% of companies have less than 10 employees. These are the ones who are falling behind. According to the report only 30% of SMEs are considered highly digital whereas 75% of large companies are already highly digital.

One of the main barriers for digitalization is the limited focus on the value of digital solutions from SMEs top management and owners. Other barriers, certainly affecting the lack of focus by owners, are cost of implementation and limited time.

It can seem easier to continue with manual business processes and just increase efficiency rather than adopting new technology.  It is time consuming to understand new technology, choose between suppliers and implement new business processes. So it gets postponed – there is never a right time.

But what they don’t seem to realize is that this creates a vicious cycle where not allocating the time and money in the short term to digitalization means they are slowly but surely harming their ability to grow in the long-term. Simply put, SME’s are too busy to ensure their own competitiveness. 

I believe many people all over the world can say the same is true about the SME segment in their own country.


New affordable self-service solutions

I have the pleasure to be Chairman of the Board for Plytix.com - a company delivering digital tools and knowhow for companies engaged in ecommerce.

One would think companies selling their products online would have mainly digital processes. Paradoxically, very often we see that their business processes are primarily manual.

These companies are, in fact, digital. They have product data stored in Excel, images in Dropbox, they use InDesign to create ad artwork….but they are missing the key to successful digital transformation - efficiency and automation. This data is usually stored locally on the individual computers of the employees and loads of time is spent sending data to retailer’s web-shops or marketplaces. While digital, they are still in the stone-age, not believing there is a better alternative in their price bracket.

But the introduction of Software as a Service (SaaS) has opened the doors to specialized, cost-effective cloud platforms that will centralize and automate these processes. For example, companies can use a PIM system (Product Information Management) for centralized maintenance of the product data and for automatic distribution to all sales channels. Using a PIM system will not only improve quality of the product data and ensure version control ect. it will also save valuable time. 

For many years, this type of system has been wishful thinking for SMEs....and a luxury for large companies due to the price of the license and extra costs for consultants for implementation of the system.

But the good news is the technology has become cheaper and the focus on usability has increased – enabling these self-service platforms. Now, SMEs can afford the digitalization of their processes. Not to mention they don’t have to spend millions on consultants in order to adopt new systems.

So my example from the world of Plytix shows new and better ways to bring digitalization to companies selling through ecommerce. Many other examples can be seen with new solutions, like Slack and Telzio, which can improve the central business processes from communication to HR and all are value for money for SMEs.


Share the good stories

Nurturing the will to change is essential for this transformation. So, the good stories must be put to work for the next digitalization wave in SME. Stories about SMEs who optimize their business processes based on new self-service technology with positive effects like time and cost savings plus improved quality.

The Industry Associations must participate in sharing the good stories of SME digitalization in their industries. The Confederations of Danish Enterprises and of Danish Industry have many members in the SME segment so they must also participate. The same goes for the accountants, lawyers and consultants serving SMEs.

Finally, the press can put more effort into sharing the SME stories along with the sensational stories about large corporations and digital disruption etc.


More self-service, please!

The path to digital transformation is worth every cent and second. My recommendations for anyone looking to unleash digital growth potential in SMEs is:

  1. Present relevant, cost-effective solutions for the SMEs. This way they can learn about affordable self-service solutions which can impact the competitiveness from day one – that is what they need.
  2. Steer clear of trying to hook them with advanced technologies. This will only appeal to a very limited number. Robotics and AI are simply too far away from the SME world, which is struggling with manual business processes and lack of time.
  3. Nurture the will to change through sharing positive business cases and stories by and for SMEs

Yes we can!

Through the good, relevant stories about digitalization, we create inspiration and will to change in the SME segment – and maybe even a “Yes we can” wave of effective digital transformation in Denmark and many other countries.

 

 

Topics: Dansk Erhverv, PIM, Digital Transformation

Lotte Marschall

Written by Lotte Marschall

Chairman of Board in Plytix.com, former advisor and consultant at Accenture etc. and former CEO of SME company.