The Three Types Of SMBs That Talk About Digital Transformation

Su Soe

What comes to your mind when you hear “digital transformation”?

Do you think it is about going paperless? Do you think it is about using digital technology to solve traditional problems? Is it about leveraging new types of innovation and creativity to enhance our existing ways of doing things? Or, do you just brush it off and say “Ugh, not that again!”?

It’s all of the above, in my opinion, and more.

When someone says “transformation,” it means change is coming. When someone says “digital transformation,” it means there will be a major change coming along with challenges and opportunities. This is because digital transformation is not just a change of technology, it’s a cultural change for the organization.

In the past three years of working with small and midsize business (SMB) customers, I have seen three types of organizations that talk about digital transformation.

  1. Forced digital transformation – The support for their current system is ending. Plus, many customizations have been done to the current system that they are afraid of breaking if they touch it.
  1. Growth digital transformation – They have grown by acquisitions. As a result, there are multiple systems being used within the organization. Their growth is being limited by the technology – such as the 150 million organizations running purely on formula spreadsheets.
  1. Mandatory digital transformation – A subsidiary or an organization bought by a private equity firm that has been asked or tasked to do digital transformation.

No matter which industry you are in, no matter which type you fall into, no matter the size of your organization, we all have one thing in common: Anxiety to change. As I mentioned earlier, digital transformation is not just a change in a system, it is a shift in the organization’s culture.

Three P’s of digital transformation

The following three P’s are important for anyone going through digital transformation:

  • People: They are the valuable members of any organization. They have to believe that this change is necessary. For a transformation project to be successful, you have to get their buy-in. How many failed projects have we seen due to resistance?
  • Process: In a forced transformation (Type 1 above), the organization often wants to maintain the status quo. It knows it needs to change. It knows it needs a new system. However, it wants the same way of doing things with the new system. It is like buying a first-class ticket and asking if you can fly in economy.
  • Product: My favorite subject! (I do work for an enterprise software company!) When it is time to choose the product, the process often goes, “So, which one?”

Let’s think about an example of buying a smartwatch. We all have done online shopping; even for the smallest item, we search for reviews and recommendations, determine our budget, decide which supplier we want to buy from, then pause and think about the delivery options we need to choose from:

  • Standard delivery: takes longer than we expected
  • Express delivery: arrives earlier but there’s an extra cost
  • In-store: we get it immediately

And, after all of that, we have to consider the service and warranty options.

The product part of digital transformation mirrors the way we do our online shopping.

Questions to ask to select a digital transformation product

How much do I want to spend in terms of resources, time, and budget? 
This is where we need to prepare our people and process owners and plan for the future together.

Does it cater to my needs today and in the future? (i.e., Will it scale as I grow?)
This is where the functions, features, and roadmaps come in.

How many of my peers are already using this?
That’s where the reviews come in.

How much effort do I want to put into taking care of this?
This is where we decide we want an on-premises or cloud solution.

How much support will I get?
This is what the service agreement is for.

How will you tailor the solution to my needs?
This is where we decide on the partners. A few weeks ago, a CFO of the company told me that 60% of his project success relies on choosing the right partner.

How am I going to get all the new innovations and technology upgrades? More importantly, will I need to pay for them?
This is also another checkpoint where we decide if we want to on-premises or cloud.

Is this product able to handle both my domestic and international growth?
This is where the product roadmaps and references from other parts of the world come in.

After all, the sole reason of digital transformation is to gain competitive advantage in the market.

Satisfaction comes when you unbox your new watch, strap it on your wrist, and start using all those cool stuff the product maker advertised. You have a smile on your face and hope that your due diligence will pay off.

Learn more about why small and midsize business run better with SAP solutions.

Su Soe

About Su Soe

Prior to joining SAP, Su completed the Master of Business in ERP from Victoria University in Melbourne. She has been with SAP for 3 years supporting S/4HANA and Business ByDesign in SMB. She is a part of SAP Digital Supply Chain Solution Hub.