The Digitization of SMEs: A Competitive Advantage

The Digitization of SMEs: A Competitive Advantage

The Digitization of SMEs Every business needs to go through a digital transformation process to enhance both its internal operations and market competitiveness.

Due to the pandemic, it is more important than ever to encourage the digitization of businesses, especially small and medium-sized ones, which make up 99.83% of all businesses globally and provide close to 65% of jobs in Europe. According to Social Security data, at the end of 2020, 99.7% of the nearly 45,000 companies that had disappeared during that year had a workforce of less than 50 employees. The crisis that COVID-19 unleashed has wreaked havoc on our nation’s productive fabric, especially the smallest ones.

Initiating a digitalization process was already a strategic asset to ensure competitiveness prior to the health crises, but now it is a need that no company can ignore. It is clear that the digital economy contributes to growth. According to DigitalES, the development of digitization in Spain may have increased real GDP by up to 7.5 billion euros on average each year between 2013 and 2018.

The integration of technology into SME operations and procedures can aid them in overcoming the difficulties provided by their small size, as well as enhance their corporate strategy and resilience in the face of an unstable and shifting environment. By streamlining current business operations and enabling precise measurement and control, digitization helps businesses cut expenses. Additionally, it offers new ways to reach out to new potential clients through electronic commerce and the opportunity to sell through platforms and marketplaces, as well as new ways to better understand the industries in which the company operates (CRM, social networks). As they offer pertinent data to know both internal company aspects and the environment in which the firm operates in real time, big data and analytics have evolved into essential tools to help decision-making. This is crucial in order to be aware of shifts in consumer demand, the emergence of new preferences, and their demands, and to be able to respond to them with the necessary flexibility.

Describe digitalization.

It would be worthwhile to consider what a digitization process is before making a determination on whether businesses have attained an ideal level of digitization. In general, it is connected to the adoption of technology in businesses and carrying out existing tasks using digital tools. Digitalization, on the other hand, is a far more transcendental phenomenon that has an impact on a company’s procedures and culture, as well as its ability to reach new markets and even create new business lines.

The business is able to leverage data management information to inform choices and operate with a customer-centric mindset thanks to the digital culture, which also creates a foundation for cross-functional collaboration and fosters a culture of ongoing innovation. All of this must produce value for all parties involved, including interest groups.

The World Economic Forum bases its digital culture on these four pillars, which are: cooperation within the organization’s ecosystem for the joint development of innovative solutions; data as a compass that directs actions; emphasis on the customer experience; and innovation, defined as the continuous improvement of products and processes, trying new things, and taking risks.

Digital culture calls for adaptability and a workforce capable of taking on new challenges in order to prevent the organization from falling behind. Today’s fast changing settings may be adapted to thanks to technology, which also makes it possible for teams to collaborate remotely and create offshoring collaborative networks. On the other side, it makes it possible to create new business models, distribution methods, and inventive goods and services that fulfill consumer wants.

Digital transformation’s facilitators and obstacles

The process of digital transformation includes a significant change in how a company operates, and it’s likely that SMEs need to put out more effort than larger corporations to change their cultures. Spanish businesses were surveyed by AUTELSI to ascertain the drivers and barriers to digitisation. One of the significant findings is that the majority associates increased corporate competitiveness with the use of technology. The biggest barrier to transformation, on the other side, is resistance to change, which is primarily connected to the integration of open ecosystems, collaboration with technology, and the acquisition of new digital skills.

The organizations consulted agree that they are hiring digital talent, despite the ongoing need for training in strategic, analytical, and social skills as well as technical expertise. Only 4% of the organizations admit that there is a complete misalignment between their digital strategy and their business objectives, whereas more than half of them claim that this is the case. The fact that four out of five respondents claim to have made digital advancements based on fashion or image is also highlighted.

Three-quarters of businesses believe that not all parts of the organization’s culture are prepared to deal with digital change. On the other hand, organizational “silos,” or a lack of communication across the various business divisions, stand out as a barrier to the transition. Regulation is still another barrier in this area; in particular, they point out how the General Data Protection Regulation is hindering the execution of projects for digital transformation. Companies in the banking and insurance sectors, as well as those in the manufacturing industry, are severely impacted by this.

Incorporating cybersecurity into digital advances is something that just one-third of the firms surveyed do, and the majority see it as a barrier to technology transformation initiatives. In this situation, it is crucial to alter firms’ perceptions so that they regard protection as a benefit rather than a hindrance to digital adoption.

Transformational digital solutions

A number of technologies have been identified by DigitalES as being essential for SMEs to use in order to undergo a digital transformation. In particular, it discusses:

Broadband access, both fixed and mobile, serves as the foundation for all digitization efforts.
Teleworking and the digital workplace serve as assurances of the organization’s adaptability and resilience.

Office automation and digital management applications (ERP).

Multi-channel customer management (CRM) platforms are a way to organize and analyze customer interactions, foresee needs and wants, maximize profitability, boost sales, and create unique campaigns to draw in new clients.

Tools for cybersecurity and cloud-based copies of company data.

Websites and online retail solutions.
Platforms for the Internet of Things (IoT) enable the collection of data, maintenance of geographically dispersed devices, fleet management, video supervision, and video surveillance, among many other functions, so that all of this data can be processed and analyzed to lower operating costs, enhance services, or offer new ones.
Digital marketing technologies are designed to process a lot of data quickly and effectively, enhancing outcomes. Email marketing tools, marketing automation, content marketing, content generation and editing, SEO and SEM, benchmarking, online presentation sharing, management and prospecting in social networks, and monitoring of the company’s online presence are just a few of the numerous alternatives currently available. brand, or the evaluation of a business’s social media influence.
Services for business intelligence, including big data platforms and sophisticated analysis technology.
artificial intelligence technologies that support decision-making and scenario prediction.

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