Peter Navarro November 17, 2021 Digital transformation is a process that every company must undertake in order to improve its internal processes and its competitiveness in the markets.
The pandemic has highlighted the urgency of promoting the digitization of companies worldwide, and specifically of small and medium-sized companies, which constitute 99.83% of the total and account for almost 65% of employment in Europe. The crisis unleashed by COVID-19 has devastated the productive fabric of our country, especially affecting the smallest ones, so that, according to Social Security data, at the end of 2020, 99.7% of the almost 45,000 companies that disappeared during that year had a workforce of less than 50 workers.
Before the health emergency, undertaking a digitization process was already a strategic asset to guarantee competitiveness, but now it has become essential, which no company can ignore. The contribution of the digital economy to growth is more than evident. DigitalES estimates that the evolution of digitization in Spain could have contributed an annual average of up to 7.5 billion euros to real GDP between 2013 and 2018.
The introduction of technology in the operations and processes of SMEs can help them face the challenges imposed by their small size, and improve their business strategy and their resilience in the face of an uncertain and changing environment. Digitization contributes to reducing company costs by optimizing existing processes, since it allows them to be measured and controlled with precision. In addition, it provides new channels to better understand the markets in which the company operates –CRM, social networks-, and to reach new potential customers, through electronic commerce and the possibility of selling through platforms and marketplaces. The big data and analytics have become fundamental tools to support decision-making, as they provide relevant information to know in real time both internal factors of the company, as well as the environment in which it operates. This is especially important to be able to know the changes in demand, the appearance of new preferences and consumer needs, and to be able to act accordingly with the required flexibility.
What is digitization?
Before judging whether companies have reached an optimal degree of digitization, it may be worth reflecting on what a digitization process is. Generally, it is associated with the introduction of technology in organizations, and doing what has been done, but with digital tools. However, digitization is something much more transcendental, affecting the culture and processes of the company, the possibility of accessing new markets, and even developing new lines of business.
The digital culture allows the organization to use the knowledge derived from data management to make decisions, and to operate with a customer-centric approach, and, at the same time, establishes a framework for collaboration between all areas, and encourages the spirit of permanent innovation. All this must result in the creation of value for all the actors involved and interest groups.
In this sense, the World Economic Forum rests digital culture on these four pillars: collaboration within the organization’s ecosystem for the joint development of innovative solutions; the data as a rudder that guides the actions; the focus on customer experience; and, finally, innovation, conceived as the continuous improvement of products and processes, trying new things and taking risks.
Digital culture implies flexibility and having a staff capable of taking on new challenges, so that the organization is not left behind. Technology helps to adapt to rapidly changing environments such as todays, providing the possibility for teams to work remotely, so that offshoring collaborative networks are generated. On the other hand, it enables the development of innovative products and services that meet customer needs, and the creation of business models and new distribution channels.
Levers and inhibitors of digital transformation
The digital transformation process involves a great change in the operation of the company, and probably the cultural change of SMEs requires greater efforts than in the case of large ones. AUTELSI has carried out a survey among Spanish companies to determine the levers and inhibitors of digitization. One of the main conclusions is that there is a majority that identifies the application of technology with improving business competitiveness. On the other hand, the greatest inhibitor of transformation is resistance to change, mainly related to the alignment between technology and business, collaboration with open ecosystems, and the development of new digital skills.
The companies consulted acknowledge that they are incorporating digital talent, although the training needs are constant, not only in technical disciplines, but also in topics such as strategy, analytics and social relations. More than half of the companies affirm that their digital strategy is properly aligned with their business objectives, and only 4% of them admit a total misalignment. It also highlights the fact that four out of five respondents say they have made digital developments by fashion or image.
Within the aspects related to the culture of the organization, three-quarters of companies consider that not all areas are prepared to face digital change. On the other hand, the existence of organizational “silos”, that is, lack of communication between the different areas of the business, stand out as an inhibiting factor in the transformation. Another obstacle in this regard is regulation, specifically, they highlight that the General Data Protection Regulation is negatively impacting the implementation of digital transformation projects. This particularly affects companies in the financial and insurance sector, as well as industrial companies.
Only a third of the organizations consulted incorporate cybersecurity in their digital developments, and the majority consider it an obstacle for technological transformation projects. In this case, it is a priority to change the perception of companies so that they see protection as an asset and not as a burden for digital deployment.
Digital solutions for transformation
DigitalES has identified a series of technologies whose adoption is considered key in order to promote the digital transformation of SMEs. Specifically, it talks about:
- Fixed and mobile broadband connectivity, as the backbone of any digitization action.
- Digital workplace and teleworking, as a guarantee for the flexibility and resilience of the organization.
- Digital management applications (ERP) and office automation.
- Multi-channel customer management (CRM) platform, as a solution to manage and analyze interactions with customers, anticipate needs and desires, optimize profitability, increase sales and customize campaigns to attract new customers.
- Cybersecurity tools and copies of corporate business information in the cloud.
- Online store solutions and web pages.
- Internet of Things (IoT) platforms that allow connecting the digital world and the physical world, with the aim of enabling the collection of information, the care of geographically distributed devices, fleet management or video supervision and video surveillance, among many other functions, so that all this information can be processed and analyzed in order to reduce operating costs, improve services or provide new ones.
- Digital marketing tools, whose purpose is to process a large volume of information, speeding up processes and improving results. Among the multiple existing options there are email marketing tools, marketing automation, content marketing, content creation and editing, SEO and SEM, benchmarking, online presentation sharing, management and prospecting in social networks, online presence monitoring of the company. brand, or measurement of the influence of the company in social networks.
- Business intelligence services, ranging from intelligent analysis technologies to massive data storage platforms (big data).
- Artificial intelligence systems for scenario prediction and decision support.
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