Why Digitalisation Is Now on the Agenda for Small and Midsize Businesses

Image: KUKA Aktiengesellschaft
Image: KUKA Aktiengesellschaft

“Now or never” is the best way of describing many companies’ state of mind regarding digital transformation. However, the issue of digitalisation not only affects the mind, but also requires entrepreneurs to use their know-how, resources, tools and wallets. In a recent survey conducted by the magazine Harvard Business Review and Microsoft, the makers of the study speak of a “digital inflection point”. This is about the time when digital trends turn an industry completely upside down and set the tone.

Digitalisation Affects Entire Industries and Therefore All Companies

Of all the business decision-makers questioned, 56 percent believe this point will be reached between today and 2020. Only 16 percent believe that the digital inflection point will come after 2020, with the rest believing that we’ve already crossed it. Digital transformation is happening in the here and now. Business leaders do not refer so much to their own organisation, but rather to the entire industry in which their company is active. The supposed assumption that digitalisation is primarily an issue for large companies is thus invalid. When an industry has reached its digital inflection point, it means that digital transformation affects all companies involved, including small and medium-sized enterprises (SMEs).

Nevertheless, many medium-sized enterprises are hesitant. According to a study by the KfW Banking Group, 80 percent of SMEs have initiated projects for digital transformation. However, the scope is often limited to basics, such as communication via digital channels or a presentable online presence. On the other hand, the company-wide and cross-company network with the help of new technologies is the exception. The KfW Förderbank sees the risk SMEs take of losing connection with the major transformation processes within entire sectors. Renowned tech suppliers, including GoogleMicrosoft and SAP, have identified this vulnerability and are offering digital solutions targeting SMEs. They promise lower investment, fast project duration and measurable results earlier on.

 

Benefits of Adopting Digital Trends More Quickly

SMEs have many advantages over large corporations which they can use to speed up the implementation of digital trends. Organisations are smaller and less complex, and the interests of all parties involved are more transparent than in corporations with many branches. Conflicts can be solved more directly and decisions can be made quicker. Due to low complexity, it is easier to focus on the activities that are critical for the success of the project, rather than getting bogged down with political sideshows. The project balance can actually be seen: While every second transformation project fails across the board, 87 percent of SMEs are satisfied with the results of their investments, according to a study carried out by IDC and SAP.

 The study also showed that 48 percent of SMEs are concentrating on the most pressing problems. 35 percent are more opportunistic and invest in technology simply because it is available, as well as because it is fast and easy to implement. 28 percent “have to” invest because their customers and business partners demand it. But what about such investments that support strategic objectives and create sustainable competitive advantage? Unfortunately so far it has looked rather negative!

 

Digital Transformation With a Long-Term Perspective Provides Lasting Advantages

As we know, the exceptions prove the rule. In one of our most recent blog posts, we reported about Otto Wulff. The construction company based in Hamburg is active in an industry in which the digital inflection point has not yet been reached. But instead of simply waiting, the family-run company wants to play a role in the digitalisation of the construction industry. “With our strategy, we are actively shaping our future and are convinced that it will generate sustainable long-term benefits” says Hendrik Schumacher, coordinator of the digital agenda at Otto Wulff. This is digital transformation with a long-term perspective, which should pay off in the end.

 

Summary: The majority of business decision-makers assume that digitalisation will set things on a completely new course in their sector. This makes digital transformation necessary for SMEs. To be successful, SMEs should focus on the long-term impact and opportunities of digital trends, instead of just responding to short-term needs. Surwayne helps you to keep your transformation projects on track. Write to us or call us on +49 40 69919 899. We look forward to hearing from you!

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Jasmin Daneschumand

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Jasmin Daneschumandjasmin@surwayne.com

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