The digital transformation of small and medium-sized enterprises (SMEs) is gaining momentum. According to a KfW study, 30 percent of the 3.76 million SMEs invested in the implementation of new or improved digital technologies between 2015 and 2017. And just under 66 percent of companies have firmly planned to implement digitalization projects over the next two years.
Another encouraging sign: The trend toward digitalization is evident among both large and small companies, though large companies with revenue exceeding 50 million euros are leading the way.
But where there is light, there is also shadow. According to the study’s authors, one-third of small and medium-sized firms are “clear laggards.” Even basic digital applications are used at a below-average rate among them.
Examples cited include a lack of IT skills, poor-quality internet connections, data security concerns, and organizational issues within the company.
Digitalization in Small and Medium-Sized Enterprises: One-Third Are “Laggards”
Anyone looking to take over such a business would be wise to be aware of the pitfalls. The first pitfall in business succession is that the company to be taken over has not even recognized the need for change or formulated a strategy for digitalization. The most important prerequisite for turning the tide is that the issue is embedded at the executive level and that a cultural shift is initiated and shaped.
Building Digital Ecosystems
Inseparably linked to this is the need to consistently train employees in digital transformation. It takes “lighthouse-like” digital experts to drive the transformation forward. However, there is a shortage of digital experts. According to the consulting firm Accenture, many companies have only a low single-digit number of people capable of thinking in terms of digital business models.
Small and medium-sized businesses are struggling even more than large corporations in this regard. There is a lack of qualifications and the will to build functioning digital ecosystems. “The workforce isn’t holding back digitalization. It needs leadership,” concludes Accenture.
It is also important that the change and digital transformation encompass all areas of the company. It does not help if individual IT silos emerge, similar to traditional silo thinking. This makes it impossible to design and manage processes across IT systems. The same applies to internal and external communication: digital transformation takes place in every department and every area.
Significantly Increase Revenue Through Far-Reaching Digitalization
Even if a small or medium-sized business has embarked on digital transformation, minefields remain on the path to becoming an exemplary digitized company. Experts note that many small and medium-sized firms have somehow tackled the topic of “digitization in the SME sector” but end up getting bogged down or falling into blind, reactive action.
Experts report that in some companies, hundreds of pilot projects are launched in isolation from one another—with devastating results. As the aforementioned Accenture study found, four out of five of these projects are either abandoned or prove unsuccessful.
Yet the opportunities and benefits of far-reaching digital transformation are truly overwhelming. Digital technologies enable, for example, the development of entirely new products and data-driven services. Furthermore, engaging customers digitally—such as through social media—opens up new avenues for marketing.
Last but not least, sales also benefit from mobile-friendly online order forms, optimized demand tracking, and simplified payment processes.
