Small and medium-sized businesses don’t have the power of a big firm or the agility of a digital start-up but they can’t afford to miss the revolution. Baker Tilly’s experts explore data-driven solutions for this critical sector of the economy in our digital transformation series.
As the theatre of battle evolves in the digital revolution, many proven small and medium-sized businesses have found themselves caught in uncomfortable territory.
Pressure is being applied from the flanks – big business has the firepower to drive large data-driven transformations, while new start-ups have the digital agility to inflict damage on competitors.
It’s a dangerous place for established SMBs because the path to digital transformation is not as well defined – yet disaster looms if they choose to do nothing.
SMBs make up over 90 per cent of businesses in most countries, they are responsible for as much as two-thirds of employment, and contribute more than 50 per cent of GDP, with some estimates placing it as high as 70 per cent.
In short, SMBs don’t just contribute to the economy – they are the economy.
For these organisations, says Adam Grainger, Chief Information Officer at Baker Tilly International, the digital transformation should be about becoming adaptable and flexible in the face of ever-changing external factors.
“There’s little doubt that small and medium-sized businesses play a critical role in driving innovation and competition in their markets,” Mr Grainger says.
“But they don’t have the investment power or the productivity of a big organisation, or the agility of a digitally-focused start-up.
“The issue then is that established small and medium-sized businesses can look complacent and less innovative than the competition.
“Companies that display these traits are actually more likely to be locked-in, under-funded and ultimately extremely vulnerable to a pressured market.”
Mr Grainger cited some of common scenarios that business leaders hide behind are masking well-known deficiencies.
“Many times, we’ve heard companies say they have no need for a new website or CRM, for example, because that’s not how they win new clients or retain clients,” he says.
“Another is that they already have a good local market share and don’t feel the need to alter a winning formula, or they have retained the services of key employees for years.
“But companies that run with these excuses are often denying the reality of their vulnerabilities.
“It is likely the company that claims they don’t need to invest in technology has no idea about potential clients and employees being turned off by a poor experience.
“Firms referring to good local market share often know they are at risk from competitors outside that local market.
“The experience from long-serving employees can be a key strength for a company but it’s also a direct threat to renewal, to see the future possibilities.
“Personal integrity gets mixed up with company strategy in organisations with long-serving personnel and the influx of new ideas is halted, and suddenly there is no awareness about better ways of doing work or winning work.”
Digital transformation is not as simple as replacing a replaceable part on the assembly line of the business of the future.
But it also doesn’t have to be complex or require expensive digital solutions.
Identifying potential vulnerabilities is the first step for small and medium-sized businesses, because that understanding is the key to empowering change.
Baker Tilly’s Amanda Klein says when considering a digital transformation, organisations should analyse five key categories that are critical to success:
- Vision and strategy: What is the vision of the company and its desired future state?
- Data: How will I manage the collection, use, storage, transformation, processing and availability of data?
- Technology: What technology should I use to drive insights?
- People: What are the people needs of the organisation to support digital transformation?
- Process automation and governance: What are the rules that govern the use and distribution of data and processes?
Digital transformation can help businesses to improve their product or service offering, while also building a more meaningful relationship with a new generation of customers.
Tools are constantly being developed to aid SMBs with fast and flexible solutions. Mr Grainger nominated business intelligence, robotic process automation and low code application platforms as among those that should be considered in a digital rethink.
Business intelligence (BI)
The power of data is at the heart of the digital revolution and it’s the rise of the data-driven organisation that is dominating boardroom discussions.
Business intelligence solutions cover everything from descriptive and predictive analytics to data mining and data visualisation.