Planning for digital enterprise transformation with SMEs
The digital transformation, which had already gained in importance before the outbreak of the pandemic, has become even more important for companies of all sizes since the outbreak of Covid-19. Since companies want to adapt to the rapidly changing environment, the experts at the management consulting marketplace Consulthon also offer small and medium-sized companies opportunities to do business – if they find the right strategy for it.
According to the European Commission’s definitions, a small company has fewer than 50 employees and an annual turnover of up to 10 million euros. The medium-sized company has fewer than 250 employees and a turnover of up to 50 million euros.
However, these are just numbers. The term SME reflects much more than just a company of a certain size. On closer inspection, an SME is made up of unique people, the materials, the mining chains, the manufacturing, the supplies and the services to be rendered. These are as important as the numbers – even more so today.
SMEs are the most common type of business and form the backbone of any economy. One of the biggest challenges they face today is that of digital transformation. When an SME decides to go digital, many questions arise. One of the first should be, “What is the best approach for this company?”
Take the right approach
Before choosing the right approach, SMBs need to understand where they want their business to be after a transformation is complete. What do you want to achieve? To make this a reality, they need to define the problems they are facing and then start the approach.
The first approach many organizations take when tackling a transformation is top-down implementation. In other words, they focus on the skills that will enable their company to lead the transformation. For example, using certain tools to change the way the company works. This is a useful approach for companies in the service sector or for financial firms.
However, it is important to note that this is not possible for every business. Many more SMBs will find that they are better suited to a bottom-up approach, where they transform their business from the lower levels, from the operational levels. Starting here where things are actually “done” can be particularly effective in production-based work. For example, if an SME is active in manufacturing, this is where the company’s core profits come and this is where it has to start. It is not only important that an SME invest in tools and machines, but also in people and their training.
At the same time, this doesn’t have to be a binary choice. Midsize companies with diverse business models can consider a blended approach to transform both their service and manufacturing operations. In addition to this hybridized method, there are even more options available, depending on the company structure and requirements.
For example, a data-driven approach can be used in a small insurance company that combines data collection and choosing the right AI tool to improve services. In this case, companies can opt for an approach that increases customer satisfaction if that is the primary goal. This is especially important these days when trying to differentiate a business or service for the attention of online customers.
Once the goals and the procedure have been defined, SMEs can move on to developing a concrete strategy. One of the first questions to ask is, “Do I really need a strategy?” The short answer is, yes, you always need a strategy, no matter what the transformation is. There are a few steps you can take to flesh out an initial plan.
SMEs should first analyze the industry in which they operate, the region and the environment at all levels. This gives them a clear idea of where they are and shows them the path to take. Companies should then conduct an in-depth analysis of the customers. This will reveal the existing growth opportunities and a different perspective on the transformation goals to be pursued. Companies should then define their needs and goals and compare them with the existing environment and customer needs.
After that, companies should set up a working group; Get executives to participate in a brainstorming session. This may or may not help in deciding on the exact steps and, if necessary, hiring an external consultant. External expertise can be particularly useful for larger companies or with regard to more serious and far-reaching digital transformation processes.