Small And Midsize Businesses: Overcoming The Challenges Of Digital Transformation

Rodolpho Cardenuto

Part 4 of the “Thriving in the Digital Economy” series

Almost every small and midsize business has adopted some form of digital technology. Social collaboration, mobile apps, communication resources, and the cloud – these are just a few of the many options available. But when considering investing in such innovations, small and midsize businesses have specific criteria: The technology must transform market risk into opportunity and cost into revenue immediately, without disruption, and with little to no impact on cash flow.

According to the recently released IDC global study, “Thriving in the Digital Economy: How small and midsize enterprises are adapting to digital transformation,” sponsored by SAP, small and midsize businesses worldwide see some challenges in digital transformation:

  • 49.2% feel that the always-on nature of the digital economy is forcing them to be “always available” to deal with work-related issues
  • 45.0% think social media poses challenges since mistakes are quickly visible on the Internet, making it impossible to hide anything from customers and prospects
  • 41.3% are concerned that they will become too reliant on data to make effective decisions and will draw inappropriate conclusions

The concerns raised by the respondents in this study are valid. Transitions can be challenging. And digital transformation calls for a new way of working – more always on, more transparent, and a switch to taking advantage of a new wealth of data rather than relying on your “gut” instinct.

But, small and midsize businesses shouldn’t take an “if it’s not broke, don’t fix it” mentality. Otherwise, they may miss out on significant opportunities to expand operations, gain new customers, and strengthen brand loyalty.

Three reasons why your digital transformation can be more successful than the big guys’

Most people view digital transformation as a commitment of resources for an indefinite amount of time before any real gains are made. While this may be true, it’s also possible that your small or midsize business may have some advantages over much larger competitors when undergoing such a change:

1. Being small is your advantage

Size. Flexibility. Management adaptability. These are key competitive differentiators when exploiting gaps and seizing opportunities in the marketplace with technology. As a beneficiary of those attributes, your company is better equipped to readjust operations and meet ever-evolving needs quickly. 

Although large enterprises have more resources such as marketing, IT, digital, and strategy organizations, small and midsize businesses are, by nature, simpler and more focused due to their relatively smaller size. And this characteristic allows digital transformation to impact the entire company faster.

2. Smaller footprint accelerates impact

In relation to size and available resources, most small and midsize businesses do not have the manpower to tackle every trend. Your company must be very, very specific and focused, especially when selecting technology.

Because of its smaller footprint, your organization does not need to purchase thousands of cloud subscriptions or on-premises licenses – just a handful will do. Plus, it can take as little as one work week to implement the capabilities needed now and scale up later as the company grows, without disrupting operations and sales.

3. Less diversification brings greater focus

It’s no secret that large enterprises typically manage office locations scattered around the world, various currencies, a wide mix of product and service portfolios, and a series of other variables. Because your small or midsize business is less diversified, you can implement focused solutions that can help the entire company use a multi-channel approach to entering new markets, targeting new customers, or expanding the portfolio to respond to customer demand.

For example, embedded predictive analytics can help everyone in the business monitor and anticipate customer purchasing behaviors, connect market demand to production activity and inventory, and engage in social chatter. With this insight, your company stands a better chance of competing against large brand names and protecting yourself from being surpassed by disruptive startups.

Digital transformation is impacting businesses of all sizes, industries, and regions – but size may be an indicator of how successful they will be. The essence of being a small or midsize business can lead to a digital transformation that can help you out-compete larger, more established rivals. You just have to be willing to reevaluate what your business’ size offers, recognizing the potential value ahead and getting the right solutions and support to fully realize that value. 

Get ready to embrace everything the digital economy has to offer. Check out our blog series “Thriving in the Digital Economy” and the IDC study, co-sponsored by SAP, “Thriving in the Digital Economy: How small and midsize enterprises are adapting to digital transformation.”

Rodolpho Cardenuto

About Rodolpho Cardenuto

Rodolpho Cardenuto is the President of Global Channel and General Business at SAP, responsible for driving SAP Board-sponsored initiatives through strategic SAP partners and accelerating the company’s growth through new and existing sales channels worldwide.