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What Is Digital Transformation and Why Should SMEs Care?

Digital transformation, or DX, is one of the most persistent buzzwords in IT and business technology circles. Digital transformation projects gained even more prominence amidst the pandemic, as lockdowns and social distancing mandates led to a shift in customer habits to digital channels. For example, in Europe, organisations saw the share of their digital customer interactions grow by 23% from December 2019 to July 2020 — a growth rate that would have taken at least three years before the pandemic.

Image Source: McKinsey & Company

For small and medium-sized enterprises (SMEs), the challenge is understanding how digitising your processes, and even your products and services, can help you achieve your business goals. 

Digital Transformation Explained

Digital transformation is a catch-all term that describes the use of digital technology to fundamentally change business processes and service delivery models. In today’s world, digital transformation typically involves the application of Industry 4.0 technologies to reinvent the business’s ability to provide value to customers.

These technologies can include:

For many SMEs, cloud services are the low-hanging fruit of digital transformation projects. By moving your data and workloads to a public, private or hybrid cloud environment, you can reduce spending on expensive hardware and software licences and support more agile working methods (e.g., remote or hybrid work). 

To understand why digital transformation is such a game-changer for SMEs, it helps to list its benefits. 

3 Benefits of Digital Transformation

For many small businesses, cost savings are the biggest driver of digital transformation. But the use of digital technologies also enables businesses to unlock other benefits, including:

1. Improved Data Collection

Data is the lifeblood of modern enterprises, and it reveals insights about customers and their behaviours, enabling businesses to make data-driven decisions that support growth. 

Digital transformation creates a system for collecting data and plugging it into a pipeline of actionable business intelligence. Take project management software, for example. These platforms offer a way to integrate disparate data sources within an organisation, giving business leaders a full overview of a project, its stakeholders, key players, tasks and their individual status. 

2. More Effective Resource Management

A digital transformation project can seek to consolidate your workloads and data into an integrated tech stack that’s accessible through the cloud. By doing so, businesses can lower vendor overlap, correct over or under-licensing of software and limit the selection of applications they use to only what is necessary. 

With the average enterprise having 900 applications — of which only 29% are connected — an integrated tech stack can create an optimised and more cost-efficient experience. 

3. Enhanced Customer Service Capabilities

The application of automation and AI can unlock opportunities to engage your customers in a wider range of digital channels — all without having to grow your customer service team. 

For example, automated chatbots with AI and natural language processing (NLP) features can interact with customers on your website, social media channels and messaging apps like WhatsApp and Facebook Messenger. This creates a more natural and accessible experience with 24/7 availability that’s faster than email and calling a contact centre. 

Does Your SME Need Digital Transformation?

At the fundamental level, digital transformation represents survival. The disruption caused by COVID-19 was a wake-up call for many small businesses, leaving them little time and room to adapt to supply chain disruptions and rising customer expectations. 

For many, technology holds the solution for staying resilient and maintaining business continuity. IDC predicts that global spending on digital transformation will reach $2.8 trillion in 2025 — more than double the amount spent in 2020. 

Author: Todd Gifford

Todd’s world can be a detailed and complex one. As a Certified Information Systems Security Professional (or CISSP for short), with over 20 years of experience in IT and Information Security, Todd helps customers understand the risks with their information, where it is stored and processed and how best to manage those risks in our ever-evolving digital world. He writes a mean blog and prides himself in turning technical language into simple sentences we can all understand.

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