SME Digitization: A Competitive Advantage

November 18, 2021

Every organization must undergo digital transformation to enhance internal procedures and market competitiveness.

The epidemic has underlined the necessity of increasing digitalization of businesses globally, especially SMEs, which account for 99.83 percent of overall employment and almost 65 percent in Europe. So, according to Social Security statistics, 99.7% of the over 45,000 enterprises that went out of business in 2020 had less than 50 employees.

Before the health issue, digitalization was a strategic advantage to ensure competitiveness, but today it is a need that no firm can ignore. The digital economy's impact to growth is undeniable. Between 2013 and 2018, DigitalES believes that the progress of digitalization in Spain might have contributed up to 7.5 billion euros to real GDP.

Using technology in SMEs' operations and procedures may help them overcome the constraints of their size, better their business strategy, and adapt to an unpredictable and changing environment. Digitization helps companies save money by streamlining operations and allowing them to be monitored and managed precisely.

E-commerce and the ability of selling via platforms and marketplaces also enable new ways to better understand the markets in which the firm operates. Big data and analytics have become essential decision-support tools, since they give real-time information on both internal and external variables of an organization.

It is crucial to be aware of changes in customer demand, tastes, and requirements, and to respond appropriately with the needed flexibility.

What is it?

Before analyzing a company's level of digitization, it's essential considering what digitization is. It is related with introducing technology into businesses and doing things differently using digital tools. However, digitalization affects the company's culture and operations, as well as the ability to enter new markets and establish new business lines.

The digital culture helps the business to make choices based on data management skills, while also establishing a foundation for cross-functional cooperation and encouraging a spirit of perpetual innovation. All of this must result in value creation for all parties involved.

Its four pillars are: cooperation inside the organization's ecosystem to jointly build creative solutions; data as a rudder that leads actions; customer experience as the focus of activities; and innovation as continual improvement of goods and processes, trying new things and taking risks.

Digital culture requires adaptability and a workforce capable of taking on new challenges. Today's technology allows teams to operate remotely, creating offshore collaborative networks. However, it permits the establishment of new business models and distribution channels, as well as creative goods and services that suit client wants.

Digital transformation levers and brakes

The digital transformation process changes the way businesses operate, and SMEs may need to work harder than big corporations to adapt their culture. AUTELSI conducted a study of Spanish businesses to identify digitalization levers and obstacles.

One of the primary outcomes is that most people associate technology with boosting corporate competitiveness. Resistance to change is the largest impediment to transformation, especially when it comes to aligning technology and business, collaborating with open ecosystems, and developing new digital skills.

The organizations examined agree that they are adopting digital skills, despite the continual need for training in areas such as strategy, analytics, and social connections. More over half of organizations say their digital strategy is aligned with their company goals, while just 4% say it isn't.

Four out of five respondents claim they have made digital advancements through fashion or appearance.

Three-quarters of firms believe that not all parts of organizational culture are ready for digital revolution. However, organizational “silos”, or a lack of communication across various business divisions, hinder the change.

Another impediment is legislation, notably the General Data Protection Regulation, they say. This impacts banking and insurance industries, as well as industrial firms.

Only a third of the firms surveyed include cybersecurity in their digital initiatives, and most see it as a hindrance. In this instance, it is critical to transform corporate perceptions of security as an advantage rather than a hindrance to digital implementation.

Digital solutions for change

DigitalES has identified a set of technologies that are critical to promoting SMEs' digital transformation. It specifically mentions:

  • Broadband connection, both fixed and mobile, is the foundation of digitalization.
  • Digital workplace and teleworking as a guarantee of organization flexibility and resilience.
  • ERP software and office automation.
  • Multi-channel customer management (CRM) tool helps manage client contacts, predict demands, enhance revenue, and create campaigns to attract new consumers.
  • Cloud-based cybersecurity tools and corporate data copies.
  • Solutions for online stores.
  • Platforms for the Internet of Things (IoT) that connect the digital and physical worlds to enable data collection, device management, fleet management, and video surveillance, among other functions.
  • Digital marketing solutions that analyze enormous amounts of data quickly and effectively. On-line monitoring of the company's web presence is one of the many methods available. brand, or a company's social media influence.
  • Services ranging from clever analysis to vast data storage (big data).
  • Artificial intelligence decision support systems.

Thanks to Peter Navarro at Business 2 Community whose reporting provided the original basis for this story.

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