How small businesses can leverage digital solutions to their advantage
Small and medium businesses (SMBs) did not pay much attention to digitisation until the COVID-19 pandemic struck. While many SMBs failed to survive amidst the pandemic, many were able to minimise business disruption due to the early adoption of technology.
Lethargy and lack of awareness, budgetary constraints, cost of ownership, talent deficit, adoption, and usage issues are some of the reasons why SMBs stayed away from leveraging technology to streamline business operations.
Now that digital transformation has become critical for small companies to survive and grow, SMBs need to find ways to overcome these challenges. Here are a few ways.
The power of digital transformation for SMBs
In the last quarter of 2020, Dun & Bradstreet surveyed 250 SMB owners to understand the impact of COVID-19 on their operations. While about 54 percent said they have managed to reduce operational costs through digitisation of daily activities, 51 percent revealed adoption of new technologies/digitisation has enhanced their competitive positioning.
Digitisation enables enterprises to expand their market reach and acquire new customers, better customer engagement by using social media and other customer relations tools, enhance productivity and operating efficiencies, and better manage cash flow.
How to go about digital transformation?
For large companies, digital transformation brings better efficiency, productivity, and profitability, whereas small enterprises leverage it for their survival.
Most large enterprises have already weaved in technology in their core businesses and back-office functions, and they pursue technology enhancements to compete in the market to scale and grow.
SMBs, on the other hand, cannot adopt all forms of technologies in various areas in one go because of their inherent weaknesses. The leadership or owners must evaluate their pain points and list them out in order of priority before they initiate digitisation.
In most cases, SMBs start with business functions that have more pain points and are critical for their survival and growth.
Generally, sales and marketing operations are critical for any company. Once this is taken care of, SMB owners can target digitising the supply chain network (for a manufacturing or trading company) and back-office functions like finance, HR, etc.
Moreover, business solutions like ERP and CRM take care of most of the business functions and back-office functions in one go.
For most SMBs, the entry point depends on their operating sector. For example, for a retailer, going online can be the starting point, or for a business that involves post-sales service, introducing automation of services or CRM in a sales-driven business is a starting point.
SMB owners should not create silos of multiple disparate digital systems through this kind of model, which will be suicidal in the long term. The best way to solve this dilemma is to have solutions for the most painful areas first and have everything else together in an integrated manner.
Cloud environment and SaaS
The emergence of cloud computing has unleashed various avenues for businesses to avail of technology solutions without the need to invest large funds upfront.
The cloud ecosystem has brought two benefits to businesses, particularly SMBs. First is the subscription payment model that has transformed technology investment from Capex to Opex. Second is the flexibility to discontinue services — platform, infrastructure, or software — if it does not meet the needs.
Initially, for on-premise models, SMB owners have to invest a large amount in server hardware and software, operating systems, networking, application licenses, team, etc.
Besides making non-physical infrastructure and platforms available, the cloud computing ecosystem provides software applications and tools — from web-based applications to CRM and ERP — on an on-demand subscription model.
Till recently, emerging technologies were beyond the reach of SMBs because of huge costs involved, lack of skilled manpower, etc.
New-age technologies, including artificial intelligence (AI), internet of things (IoT), machine learning (ML), robotics process automation (RPA), Data Analytics, Blockchain, etc., can be leveraged to solve various pain points in business processes, provide post-sales customer services, gather strategic data about the trends, changes in customer behaviour and markets, and automate processes.
The greatest advantage SMBs have is that all these technologies are available on-demand through the cloud.
Application development platforms
Developing an application was a difficult task for companies, especially for SMBs, who don’t have the technical resources or funds to buy or engage other companies to develop applications and tools.
With the advent of low-code or no-code development platforms, SMBs can now use any non-technical business or back-office employee to build applications. They can also avail such tools on subscription through the cloud in the SaaS model.
Opportunities for Tech SMBs as technology solution providers
Digital acceleration among companies of all sizes, thanks to the inevitability created by the COVID-19 pandemic, has opened many opportunities for big and small tech companies.
SMB tech companies, who have proven their technical capabilities and credentials, have the potential not only to cater to the technology needs of SMBs but also large companies, thanks to the cost and timeline advantages.
In fact, these SMBs can compete with large tech companies because of the low cost, flexibility, agility, and responsive support they offer.
Areas of opportunities
Segments estimated to register tremendous growth in the coming years, and hence, can provide abundant opportunities for SMB tech companies are:
- Edtech and fintech domains, where India has already produced unicorns and decacorns, including BYJU’s, Paytm, Unacademy, PhonePe, etc., to name a few
- Delivering applications and tools through the SaaS model
- Developing and providing low or no-code software development platforms
- Argitech and ecommerce
- Ecommerce and online platforms that can help SMBs.
The success of small tech companies in taking advantage of the demand for technology solutions depends on their credentials by way of customer success stories and testimonials, availability of top talents with required skillsets and expertise, customer care feedback, agility, and reliability.