Why Digital Transformation Is Not Out Of Reach For Small Businesses

Dinesh Sharma

Part 1 of the “Thriving in the Digital Economy” series 

Digital transformation has impacted nearly every person and business on Earth in some way. For small and midsize companies, digital transformation has brought unimaginable opportunity to become more nimble, expand, and turn the tables on much larger competitors. When everything is digitized and tracked, businesses can work directly with suppliers and customers while gaining more control over their business.

How small and midsize companies are adapting to a digital marketplace

To understand how the digital economy is impacting companies with fewer than 1,000 employees, SAP commissioned IDC to conduct a study, “Thriving in the Digital Economy: How small and midsize enterprises are adapting to digital transformation,” covering 11 different countries with more than 3,200 decision makers. The research takes a rare, thorough look at how small and midsize businesses are participating in digital transformation.

In developing the study, we were particularly interested in whether these businesses are using technology as a competitive advantage over larger companies. Here’s what we learned:

  • 49.3% of decision makers believe that technology levels the playing field for small businesses versus larger corporations
  • 40.8% cite their size as an advantage over larger companies that are less able take advantage of digital innovation in a timely way

Does digital transformation make a difference for small and midsize businesses?

According to the IDC study, there is a clear connection between digital transformation and revenue growth. Fast-growing small and midsize firms with 10%+ annual revenue growth were significantly more likely to indicate major progress towards transformation than slower growing firms.

Take the company Living Proof, for example. This rising star in the hair-care market went from managing its business with individual spreadsheets to digitizing everything including finance, human resources, supply chain, and production. Not only did this move make it easier to run the business, but it also maximized the level of growth the company achieved. Living Proof has increased its product portfolio by 230% and increased revenue by 330%. With that kind of growth, you would think the company would have to augment its workforce significantly. However, because its processes are so simple and insightful, Living Proof only needed to hire 30 additional people.

Is your business thriving in the digital economy? 

It’s hard to ignore the potential of digital transformation. Every day, we hear stories of how a small or midsize business achieves “overnight success” by disrupting an entire industry. Uber, Skype, Spotify, WhatsApp, Netflix, and Airbnb – how did they do it? It’s all starts with the digital transformation of the entire business model.

During the next seven weeks, we will share additional insights from this study. Be sure to check each Tuesday for new installments to our blog series “Thriving in the Digital Economy.”


About Dinesh Sharma

Dinesh Sharma is the Vice President of Digital Economy at SAP. He is a GM-level technology executive with leadership, technical innovation, effective strategic planning, customer and partner engagement, turnaround management and focused operational execution experience at both large enterprise and startup companies. Share your thoughts with Dinesh on Twitter @sharmad