4th July 2019

Digitalization is Not an Option for SMEs, It’s a Prerequisite

Remember when a Masters degree used to be the unique selling point of someone’s education? Applicants with Master’s degrees stood out from the competition and had a head start in the application process for jobs.

Not to dismiss the value or importance of post-graduate education but this dynamic has changed in recent years. More and more people are getting Master’s degrees which means that getting one will only keep you afloat with what everyone else is doing. 

This same paradigm applies to digitalization. Going digital used to be a way of differentiating your business from the flock but the development and mighty rise of tech in recent years is making it a necessity, not a choice. SMEs are caught in a tight spot with this new reality as it is costly to turn their business into fully-functional digital entities. The market though is leaving them with no choice.

That all Sounds Good, but why Should SMEs go Digital? 

SMEs operate in tight budgets and staying in business is a challenge in itself. To convince an SME that they need to spend money from the limited money they have on a process such as digitalization, they need proof they’ll see a return. 

Luckily for SMEs, digitalization is not a bet, it’s a guarantee. Let’s see some of the reasons why.   

Your Customers are Going Digital

Customer behavior is dictating this newfound necessity. People are now spending most of their time online. The way they consume information, buy, sell and interact with products and services is purely digital. 

Apps, social media streams, messaging platforms, browsing the web. So many different streams but a common denominator: digital. This extract from the Ernst & Young report “The digitalization of everything: How organisations must adapt to changing consumer behavior”, encapsulates the impact of this young, tech-savvy generation on business strategy.

“Generation Y are best thought of not as a uniform group but as an evolving mindset, and the demands and expectations of this group are trending upwards to older generations, which makes them all the more important to take note of. They are today the catalysts and the incubators of change, but each day their influence is growing in consumer and corporate environments, meaning that organisations must learn to engage effectively now, or risk being shut out of the game.”

SMEs going digital

The Company Gets Healthier

More often than not, every decision taken by an SME is related to the turnover, sales and money. Whilst digitalization directly affects those areas of business, what most people fail to see is all the intangible and indirect gains the company will be able to absorb from this process.

Building a sound digital infrastructure will add value to all business functions and departments. Think of internal processes and the performance of your staff. Remote working will be a possibility allowing them to be productive and contactable even outside the office. 

The digital element allows people within the company to have real-time access to information. That makes their life easier, but most importantly, it frees up their time from administrative tasks and allows them to focus on high-value tasks. 

Communication within the business becomes easier and hierarchy lines are blurred. People can now interact with managers and people from other departments, increasing transparency and creating stronger bonds between teams. 

Reach a Bigger Audience

Digitalisation essentially makes your business accessible to anyone with an internet connection. Your business goes global without moving offices. Your products and services become exposed to a larger audience and that expands your potential turnover and sales. 

This is where digital payments come to the forefront of the discussion. An Economist Intelligence Unit and Mastercard study The Digitalisation of SME Finance in Asia, points out the following:

“The digitalization of payments also gives SMEs access to valuable information to improve their businesses. This data can allow sellers to offer innovative loyalty programmes or customer rewards to incentivise prompt payment, provide a foundation for process automation, improve payment reconciliations, and create better business analytics for buyers and sellers alike.”

The Challenges 

Most SMEs don’t prioritize digitalisation because of the challenges associated with it. Apart from the obvious financial strain, most companies are mostly concerned with the day-to-day running of the business.

The common sentiment amongst these businesses is that there is a certain level of technical knowledge and expertise associated with digitalizing your company. Whilst that’s true, what’s also true is that it’s not rocket science.

This process can happen in simple steps in a more “plug and play” environment. Online tools, plugins and software come as standalone finished products that hit the ground running without much assistance or oversight. Lead generation, marketing, accounting and invoicing, project management and internal communication can all be addressed in quick and easy ways. What most SMEs view as a challenge is essentially an opportunity to train and up-skill your workforce whilst increasing efficiency and productivity.

The mentality that keeps them stuck in their old ways follows the principle of “if it isn’t broken, why fix it?” What that shows is a lack of awareness of the importance of digital transformation. Mentality and perception is what needs to change first before actually implementing tech. Business owners need to digest the long term benefits this transformation will have on their business. Adapting to the market and to consumer needs is the key to profitability for companies of any size, country and sector. 

SMEs going digital

Last but not least is the question of cyber-security. Most SMEs use the threat of cyber-attacks as one of the main reasons for not going digital. That’s like not driving a car because there’s the chance of crushing. Is a cyber-attack a possibility? Of course. But that should not stop you from deriving the unbelievable benefits of digitalization . Cyber security is a challenge but there’s a lot you can do to ensure your company is as safe as possible. 

  • Get an original software and don’t try to cut corners and save money by installing a pirated version. Not original versions are prone to attacks that can have serious repercussions on your business
  • Install an anti-virus protection on all business devices
  • Build a firewall on the business network and website 
  • Own an encryption software to secure any online transactions
  • Back up data both externally to hard disks or to the cloud
  • Create secure business wi-fi networks 
  • Avoid emails that have weird names or ask for passwords, personal or financial information
  • Educate employees about the dangers of online attacks