There’s a lot of buzz around the term digital transformation (DX). As a small business, you may wonder if it’s something you need to pay attention to.
It sounds like a fancy gimmick for large corporations with big IT budgets.
However, no small business can afford to ignore digital transformation. Don’t sweep it under the rug. You’ll likely miss out on opportunities that will set your business up for success for years to come.
Research conducted by Bain & Company revealed that digital leaders more than double the performance of digital laggards in their industries. Profitability follows the same pattern – 83% of the leaders increased their margins over the same period while less than half of the laggards did so.
Many small businesses are now taking note: 42% of SMBs believe that DX impacts every aspect of their business. They think that it should be a core component of their organizational strategy.
The good news is that you don’t need to spend a large budget on complex technologies. In fact, some of the most effective DX strategies focus on maximizing values within existing infrastructure. The goal is to make the most cost-effective improvements.
What exactly is Digital Transformation (DX)?
DX is much more than signing up for some cloud products or building an eCommerce website and then hoping for the best.
It starts with a holistic view of how an organization incorporates technologies into every aspect of its operation and delivers value to its customers. It requires a change in the company’s culture, structure, and workflow to get the most value out of its investment.
Effective DX happens at a fundamental level rather than on a tactical level. There’s no one-size-fits-all approach and different organizations will need to execute different strategies to meet their unique objectives.
As such, digital transformation may often sound like a vague catchall term that includes many seemingly unrelated tactics. For some companies, it could mean adding cloud capabilities and for others, it could be leveraging AI-powered technologies.
A DX strategy is determined by a company’s goals and challenges. It could focus on improving the customer experience both online and offline or increasing efficiency in backend operations.
The objectives of your particular strategy should be about deploying the most appropriate technology to:
- Simplify business processes
- Improve operational efficiency
- Augment the customer experience, and
- Increase profitability.
Key Focus Areas For a Digital Transformation Strategy
Your DX strategy should focus on areas that’d move the needle the most – the initiatives that generate the highest ROI for your business.
Here are some key areas where small businesses can use technology to achieve results that were only feasible for larger organizations in the past:
Customer experience is surpassing pricing and product selections as the major brand differentiator and 86% of customers are willing to pay more for a better experience.
You can use a variety of technologies to understand customer preferences and improve the customer experience, for example:
- Use personalization technology to deliver highly targeted content, offers, and product recommendations. Customize these to each individual shopper’s preferences, behaviors, and customer lifecycle stages. 75% of consumers are more likely to buy from a company that provides a relevant and personalized shopping experience.
- Leverage a CRM system to manage pipeline, foster customer relationships, automate follow-ups, analyze customer behavior, and optimize your sales team’s productivity. In fact, growing SMBs are twice as likely to utilize a CRM tool than their struggling counterparts.
- Deliver a seamless omnichannel experience with a centralized customer data management platform. Your users can interact with your brand across multiple touch points. The 360-degree profile is updated in real-time to facilitate customer communications and effectively progress them down the sales funnel.
- Deliver “instant gratification” with AI-powered chatbots to streamline customer care and reduce response time. More than 50% of consumers expect a customer service response within one hour. On-demand support allows you to provide the pre- and post-sale support that increases customer acquisition and retention.
Irrespective of size, hiring the right talent is essential to staying competitive. A great employee experience can improve retention and lower costs associated with employee turnover.
Here is how you can use technology to improve candidate and employee experience:
- New Hire Onboarding Software: Streamline and automate the hiring process to deliver a great candidate experience to attract top talent. Empower employees during the onboarding process, keep them engaged, and set them up for success in your organization. These tools also help you improve time-to-productivity and increase employee satisfaction.
- Collaborative software: Facilitate seamless communication and close collaboration among employees no matter where they are. These cloud-based tools enable the use of a remote workforce. They help you attract the right talent without being constrained by location.
- Gamification learning platform: Motivate employees to invest the time and effort in ongoing training. Help them improve performance and job satisfaction with a gamified learning portal. Such portals can increase employee usage by as much as 417%.
- BYOD (Bring Your Own Device) policy: Increase engagement by giving employees the autonomy to use the devices of their choice. To enhance the effectiveness of BYOD, implement the proper policies. They should provide the appropriate IT support and ensure that employees are adhering to your company’s cybersecurity protocol.
According to Gartner, 90% of corporate strategies explicitly mention information as a critical enterprise asset. They also consider analytics as an essential competency by 2022.
Data is the key to business success in the future. The best machine learning is useless without clean, digital data. Small businesses can leverage numerous technologies to enhance how they utilize data:
- Data preparation tools: Extract data from structured and unstructured sources. Ensure that it’s “clean” (e.g., by removing duplicates) so you can extract accurate insights from analytics.
- Data analysis and visualization: Turn big data into actionable insights. Use analysis, modeling, and visualization to discover hidden opportunities, uncover new insights, or predict future trends.
- Predictive analytics software: Use data mining, predictive modeling, and machine learning technologies to analyze current and historical data and predict outcomes. For example, it’s used in many online advertising platforms to help businesses get the highest ROI from their ad budgets.
- Continuous intelligence: Integrate real-time analytics from various sources within a business operation. It allows you to process current and historical data. You can prescribe actions in response to specific events and optimize real-time decision-making.
Business Process Improvement
Improving everyday processes will help you increase operational efficiency, reduce process cycle times, minimize errors, and eliminate bottlenecks. In fact, 83% of IT decision makers consider workflow automation “essential” to digital transformation.
Here are some technologies you can use to improve your operations:
- Workflow management software: Design, execute, automate, and monitor processes based on workflow rules. Human tasks, data, or files are routed based on predefined rules to increase efficiency and lower operating costs.
- Mobility: Modern platforms offer built-in mobility. Mobility ensures that employees have access to the information and apps they need from anywhere.
- Document management system: Eliminate errors and inefficiencies associated with version control issues. Enable employees to quickly find and collaborate on documents even if they’re in different locations.
Cloud computing has been a godsend for many small businesses. It provides many essential features needed for success in today’s digital environment without a hefty upfront IT investment.
Different cloud platforms offer different functions. However, they all have some key functions that businesses of any size or nature will need:
- Cybersecurity: Adhere to industry regulations and protect your sensitive information with frequent security updates and security features. Cloud providers have the resources to employ cybersecurity specialists and ensure that their platforms are secure at all times.
- Uptime: Minimize downtime, which can cost organizations as much as $1.55 million per year. Cloud vendors typically have built-in redundancy and a comprehensive backup and recovery plan.
- Anytime, Anywhere Access: Increase productivity by allowing employees to access the most up-to-date information stored in a centralized location from anywhere with an Internet connection. They can stay responsive and productive even when out of the office.
- Data storage: Reduce the cost of data storage and improve real-time accessibility. Your team can leverage a large amount of data for better analytics and data-driven decision-making.
- Software integration: Streamline workflow, improve efficiency, and minimize errors by enabling integration with other cloud-based platforms. Data can be synced in real-time and errors can be minimized by reducing manual data-entry.
There are many technologies you can use to improve efficiency, lower cost, and increase profits. Understandably, choosing the right software and tools can be quite intimidating at times, especially for a small business.
However, don’t let it hold you back from starting your digital transformation initiative. Keep in mind that DX isn’t an all-or-nothing undertaking. Even for large organizations, it’s often a multi-year effort that requires careful planning and prioritization.
To reap the benefits of DX, first create a written roadmap. Prioritize initiatives that are most critical for your current business objectives and can generate the highest ROI.
Last but not least, remember to set KPIs that tie back to your business goals. They help you track results, measure ROI, and fine-tune your subsequent efforts.
In the next installment of this series, we’ll look at how you can simplify the implementation of digital transformation for your small business.