A Two-Pronged Approach To Digital Transformation for Small Businesses
What Is Digital Transformation (DX)?
The common definition of digital transformation states that it “is not necessarily about digital technology, but about the fact that technology, which is digital, allows people to solve their traditional problems and they prefer this digital solution to the old solution.”
A preference for a digital solution over an old solution could have occurred in 1990 as much as it could occur today. What has made digital transformation the global phenomenon that it is today is the acceleration of preferred digital solutions in all facets of life.
The acceleration has occurred on the foundation of cloud computing, big data and analytics, mobile, and social technologies, and further by technologies higher up in the digital strata, such as AI, 3-D printing, robotics, and IoT. And what all technology shares today that was absent in the 1990s is connectedness (i.e. the Internet) and, in recent years, readily-available interoperation (APIs).
Why Do Small Businesses Need To Become More Digital?
One of the biggest reasons a small business needs to become more digital is that billions of people are connected online via millions of applications. Where people gather, value exchange follows. The connected world is a 24/7 global marketplace that, in terms of access to customers and suppliers, levels the playing field for small businesses.
It also levels the playing field in that information – the hottest commodity in a connected world – can be leveraged by anyone. The connected world has grown to become a marketplace of marketplaces.
For example, the Alibaba marketplace brings millions of B2B buyers and suppliers together from around the world. LinkedIn brings millions of job seekers and hiring companies together. Facebook completely leverages information by virtually turning its members into unpaid employees who provide billions of pieces of free content, and then monetizes their presence and the content on the platform.
Small and mid-size businesses, particularly ones that have been around for decades, may think digital forces have less impact on them. They might believe they’re running fine with tried and true trading partners and processes. Or, to them, the intersection between what they do and the digital world isn’t intuitive and becomes a lower priority.
But a connected marketplace of billions of users that never sleeps cannot be ignored and will eventually significantly influence, if not completely disrupt, all traditional business models.
The Two Prongs of Digital Transformation
There are two primary ways a business can approach digital transformation:
Prong 1.) As something to help run the current business better.
Prong 2.) As something that could highly influence or augment the business model, the value the business provides, and its revenue streams.
While this first approach to digital transformation is more focused on the current business, it has the potential to seed real new value and impactful change. In this effort, a business should involve the people who understand current processes and the opportunity for improvement. Digital transformation benefits are often more attainable near-term in this approach than in the “change the business” approach described below.
In this “run the business” approach, digital transformation opportunities may simply come from asking a series of questions centered around a primary question: “How might we become a more connected business?” To find the possibilities, a business should look across its operations, its trading ecosystem, and its business model to identify where people and systems could have a more direct connection to each other with more timely and accurate information. For example:
- When a salesperson needs an updated view of orders or inventory, how do they get it? Does someone extract it from a database and email it to them? What would be a better connection to inventory for the salesperson?
- How do salespeople provide their forecasts on a regular basis?
- How do suppliers receive and keep track of purchase orders?
- How do suppliers provide status updates on orders? What would be a better connection for the supplier?
- How do customers connect with the business to review and pay invoices?
- How do people on the production floor capture data?
- How fast and accurately does data get to approvers in any process and then synchronized with the ERP system?
- How do field technicians connect to provide service updates and associated T&M?
- Are all of these and many more daily interactions mobile and being managed by a central system that is fully integrated with systems of record like the ERP solution?
Even in today’s connected digital economy, there are still processes and interactions around a business’s ecosystem that are email-based, spreadsheet-based, even paper-based. These methods are decentralized and do not leverage investments already made in systems of record, like the ERP system. In these cases, in our experience, there is a meaningful and achievable digital transformation opportunity.
The second approach to digital transformation is a “change the business” endeavor. To undertake this, a business should identify and involve people with an entrepreneurial spirit. Here, the business must consider its model in the context of a digital economy.
Is digital transformation as simple as making sure its products are available for purchase online? Perhaps. Or maybe the business has an opportunity to innovate new value leveraging its expertise and data assets unique to its domain. Perhaps this could lead to new types of services that can be deployed more readily in the connected, digital space that create new value, new types of customers, and generate new revenue streams.
Pursuing this kind of digital transformation requires business leadership to set time aside on a regular basis for brainstorming and discovery. What makes sense will depend on the company, the sector of industry, market forces, and other factors.
Breakthrough collaborative problem-solving methodologies, like Human Centered Design, have helped both name brand enterprises and small businesses put their customers and new value creation first in their pursuit of this type of digital transformation.
The Connected Opportunity
Products like Third Wave’s Versago, a web/mobile platform, with Bizweaver, integration and process automation, together with ERP solutions like SAP Business One, offer an opportunity to small and mid-size businesses to become more connected across their trading ecosystem and internally. They enable a business to centralize, automate, and streamline human and system interactions like those listed in our first prong and hundreds more.
As compared to developing new digital business models in Prong 2, centralizing and mobilizing information sharing as in Prong 1, is simple. The ROI is proven. A business can get started on this today.
It’s more important than ever for small and growing businesses to assess their business model in the context of digital transformation. Do the amazing connected technologies available today offer an opportunity to innovate new value and revenue streams? Businesses must go through this self-evaluation. In the meantime, with applications like Versago and Bizweaver, there are immediate and affordable ways to become a more connected business on behalf of customers, suppliers, and employees to replace old solutions with a digital solution that people prefer.
About Third Wave Business Systems
Third Wave Business Systems is an SAP Gold Partner with decades of industry experience implementing and integrating SAP Business One for small to mid-sized enterprises. Begin transforming your business with an ERP solution that centralizes and streamlines processes across your business for richer insights, faster production, enhanced business agility, and a competitive edge in your market.