Digital Transformation (DT) is the process of redefining the entire company strategy by implementing the current and evolving digital technologies to drive the business to maximize sales and provide significant value through strategic plans and organizational change.
Digital transformation is having an increasing effect on the market and IT ecosystems of small to medium-sized enterprises (SMEs) and provides fresh and prolific opportunities for participation in the global economy.
Providers of business software, technology, and infrastructure providers have recognized and capitalized on the power of emerging technologies such as Cloud, Big Data, Mobile, Social, Sensors, etc., considering the development of with these powers’ nexus.
Expanding access to the internet and rising users of smartphones are bound to transform the world economy’s future.
Yes, digital transformation has brought a big change to the conventional methods of producing, managing, storing, and transporting items. In order to ensure the scalability and elasticity required by consumers, digital transformation is about leveraging emerging technologies.
The figures below display the projected IT spending of small-to-medium-sized enterprises (SMEs) in 2017, 2018, and 2021 worldwide. In 2021, US$684 billion is projected to be spent by SMEs worldwide on IT hardware, software, and services, including business services
Compared to offline firms, digitized SMEs are able to diversify customer segments in a short period of time through
- Growing revenue.
- Providing access to a larger client base
- Increasing operational efficiency.
- Enhancing Customer experience.
Increase in Revenue
The higher the revenue, the higher the business growth, which is the most important target of a company. In companies since the digital transformation, a gigantic effect is seen in terms of sales in particular.
High profitability was shown by SMEs which adopted the technology. Online company profits have been shown to rise by 19% annually and offline business sales have increased by 10% according to research.
These figures clearly demonstrate that SMEs have been incentivized by digital transformation in terms of revenues.
Higher Consumer Base Accessbility
Having only an offline presence restricts the consumer scope of an enterprise form. Customizing technology and providing an online presence leads to remarkable opportunities for SMEs in local and overseas markets to develop and enhance their game.
Increased digital participation makes it possible for SMEs to enter new markets, helping them to compete with the industry’s biggest giants.
By investing in improved customer service and support for better supply chain strategies, e-commerce sites broaden regional boundaries. This enables businesses to sell 24/7 and quickly expand their customer base with limited operating costs.
A significant observation is that 100% of high-web SMEs in India have a presence in e-commerce and 75% of low-web SMEs have an online presence.
When drawing parallels with other developed countries, as can be seen in the following figure, a similar pattern can be observed.
This means that even small and medium-sized businesses with a minimal online presence and an insignificant presence in emerging markets are starting to understand the importance of an online presence.
Increased Operational Efficiency
A study by TechMahindra found that through increased capital and labor use, emerging digital technologies can reduce operating costs by 20-30 percent. By optimizing operating and marketing costs, digital transformation enables SMEs to decrease overall expenditure.
In the current climate, IT-driven intelligent tools and techniques such as Information and Communication Technology (ICT), Digital Integrated Production Planning, Shop Floor Management, Supply Chain Solutions, and Cloud-based ERP have improved the operational efficiency of SMEs.
Enhanced Customer Engagement
Having a deeper understanding of consumers, business intelligence, and data analytics has provided opportunities for SMEs to make informed decisions.
SMEs with next-generation customer experience capabilities have been revamped by the use of customer intelligence and analytics to analyze and anticipate customer desires, developing new goods to satisfy their demands and clever delivery of the right products at the right time at a cost-effective price.
The emergence of cloud-based platforms and freemium models where basic software is delivered free of charge, while features, virtual products, or proprietary features can be charged; have allowed SMEs to build capabilities and improve customer experience.
Invasion of Digital Marketing
Many young and ambitious entrepreneurs nowadays yearn for creativity and are risk-takers. With a plunge into online marketing strategies, many SME owners have recently entered the market with digital marketing as their primary source of acquisition as it promotes their company at a low cost.
To promote their company, SMEs primarily use social media marketing. Yahoo, Instagram, Google, etc. are the ruling social media handlers who have supported companies in the promotion.
About 65 percent of SMEs consider social media ads efficient, according to Statistics, a market research study, and 51 percent of small enterprises rely on social media to develop their business.
Need Of Digital Transformation techniques that benefited SMEs:
- To achieve the desired results and to increase income for SMEs, campaigns such as CPC (Cost per Click) or PPC (Pay Per Click) modes can be used.
- Helped SMEs in the global scenario to look for a versatile business opportunity that would directly impact their revenue and make more money.
- The most cost-effective approach to reach the intended audience is known to be digital marketing.
- Small and medium-sized enterprises (SMEs) may also come into close contact with experts in this sector who are in regular contact with recent updates or development. They will therefore ensure optimal ROI by doing so.
- SMEs are granted the freedom to make the required improvements to their ongoing online marketing strategies through the use of effective digital marketing methods when the need arises.