How digital is driving SME growth
Learning to love digital transformation
Nov 13th 2017
How SMEs can grow, reduce costs and gain customers, with the power of digital transformation.
There was a time when only the largest organisations with the deepest pockets could invest in the IT necessary to drive efficiency and innovation.
Thankfully those days are gone; cloud technology has made the same IT firepower that was once the preserve of only the wealthiest and biggest corporations available to SMEs.
So, it’s no wonder so many SMEs are embracing the digital future and the amazing opportunities it brings.
Realise your digital potential
A recent white paper by research firm IDC, The Road to the Digital Future of SMEs, involved a survey of 300 businesses and casts new light on the circumstances of British SMEs. But while there is much cause for celebration, there is still work to be done before all firms realise their digital potential.
Perhaps most concerning was that 45% of SMEs view IT as a necessary cost rather than a driver of competitive advantage. The truth of the matter is very different, so let’s take a look at what digital transformation can achieve.
Firstly, it’s a way to improve business efficiency. The IDC survey found only 35% of respondents agreed, but with the cloud, SMEs have a compelling opportunity to update systems, promote colleague collaboration, facilitate home working, capitalise on the capabilities of VoIP – and still keep costs down. It’s hardly surprising that the 48% of larger SMEs which viewed IT as an enabler of business efficiency also reported the highest growth numbers, with 41% reporting revenue increase of over 10%.
Standing up to the competition
Secondly, digital transformation is a way to achieve increased competitive advantage. The IDC white paper concludes: “…smaller businesses share the same strategic imperatives and digital future mindset as larger enterprises: they understand that investing in the most up-to-date ICT gives a competitive advantage and that first-rate connectivity is key in a world shaped by cloud and wireless/mobile technologies. Paradoxically, at the same time, a lot of SMEs are held back by a lack of willingness and knowledge to invest in ICT to drive their digital transformation.”
Clearly, leveraging digital technology provides a distinct competitive advantage to the SMEs willing to make the investment that will ultimately drive future growth.
The customer is king
Thirdly, digital transformation can improve customer experience. This could make a crucial difference to the 51% of SMEs that reported finding new customers was their biggest challenge. In fact, many SMEs feel their ability to provide excellent customer relations is a crucial advantage over larger organisations.
So how can digital transformation help? In short, by giving customers what they want from a business’s online portal. That means a regularly updated website, customer support and social interaction. IDC concludes: “All SMEs (and small SMEs specifically) should focus on improving their customers’ digital experience. For example, if small businesses are difficult to find online they are limiting their audience and thus growth.” That sounds like sound advice.
Fourthly, having a fast, reliable internet connection means you can be more open to new ideas and technology – it’s about being ready for the future. The IDC white paper says, “UK SMEs run the risk of not having the right ICT infrastructure or internet connectivity and therefore cannot take advantage of the opportunities in a data-driven digital world.
“From Voice-over-IP (VoIP) to accessing the cloud, the benefits of flexible working, improving digital marketing and enhancing customer experience mean that reliable, high internet connection speed is a necessity for the future. IDC believes that it is important for SMEs to embrace an investment strategy to drive growth.”
A growth sector
In other words, investment is necessary in order to win market share against larger organisations. However, what IDC calls ‘democratising innovation’ means that to take advantage of transformative technology costs far less, thanks to the cloud and digitisation of telephony estates.
Word has clearly got out, for IDC found UK SMEs starting or planning to invest in digital technologies. Some 98% are investing in security, 73% in cloud and 63% in social technologies.
As more and more SMEs discover the importance of embarking on a journey to digital transformation, these figures, and the respective businesses, will only grow.