Lena Gaede

Status Quo and major challenges of digitalization for SMEs – and the solutions!

Digital transformation is only for the big players? What a persistent myth. In fact, digitalization holds great opportunities for SMEs and can even level out inequalities between small and big companies. Yet, not all small- and medium-sized enterprises embrace digitalization: A study by IDC from 2016 revealed that only 42% of small businesses worldwide are actively engaged with digital transformation to automate functions, derive real-time insights, and optimize processes for performance gains.

But there is so much to gain! The mentioned study also showed that there is a connection between the state of digital transformation and revenue growth: Whereas 52% of the most fast-growing SMEs stated a rather high progress in digital transformation, only 28% of companies with flat or declining growth declared the same. Still, it is understandable that smaller firms dread bigger investments and the risks that come with it. But standing still is also not an option. Instead, let us look at the major challenges of digitalization for small and medium-sized companies and how they can tackle it!

Prospect #1: embracing new technologies

According to the IDC study, SMEs are still hesitating to implement the real game changers of new technologies. While about every second company uses collaborative software or customer relationship management software, leading-edge technologies are less common: A smaller percentage adopted planning and coordination solutions (33.3%), advanced business networks (25.9%), or the Internet of Things (23.0%).

Luckily, the IT-world blessed us with cloud technology. It is easier to afford and can mean a valuable next step towards digitalized processes. Willing to invest more? Even better. If that’s the case, connecting with corporations and startups to exchange experiences, ideas and thoughts can be more than beneficial. For further support, you might as well want to check out some of our CODE_n Services.

Prospect #2: changing business models

Changes in customer behavior due to digitalization can make existing business models irrelevant. Depending on the industry you’re operating in, this development might hit a firm sooner or later – but it will come. But how do you know which old processes and business models need to be changed? And more important, what is relevant instead?

The answer is: Listen to the customer, because in the era of digitalization, the core of successful business models is clearly the customer, his needs and wishes. Making the customer a priority and adapting the strategy accordingly – that is what makes a business future-ready. Read more about customer development strategy and customer understanding on our blog.

Prospect #3: recruiting the right people

With so many changes, SMEs will find themselves facing another challenge: the demand for new competences and skills. Of course, the whole work force of a company should be involved in the transformation and this requires training. But especially for newly developed task areas and responsibilities there is a need for experts.

For the goal of leading a business through the challenge of digitalization, it is suggested to look for digital talents to drive this progress. However, those specialists are naturally in great demand and rare to find. But with the tips in our article about attracting digital talents, it’s easier to catch them in your net.

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