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Full Potential of Digital Transformation for Small and Midsize Firms Worldwide Still Untapped

Newsbyte | February 15, 2017 by SAP News

WALLDORF — Four out of five small and midsize businesses (SMBs) worldwide see tangible benefits as they embark on a digital transformation, according to a global study developed by IDC and commissioned by SAP SE (NYSE: SAP).

These benefits include increased sales, decreased costs, ease of information access and improved customer service and worker productivity. However, many have yet to unlock the full potential of digital transformation: less than 7 percent of SMBs have gone beyond integration to derive real-time insights that drive optimization in processes and workflows to yield business results.

“Digital transformation could quickly become a cost of doing business for small and midsize businesses that want to maximize growth and profitability,” said Barry Padgett, president of the SMB team, SAP. “This study shows that smaller companies are being proactive and strategic in how they invest in digital technologies. These investments, many of which have minimal requirements in terms of capital investments and IT staff, enable unprecedented opportunities for scale and efficiency by providing access to capabilities that were once out of reach for smaller companies.”

The survey, which focused on the progress of digital transformation for SMBs across 13 countries around the world, found:

  • SMBs are taking a “practical and tactical” approach to digital transformation. Almost 44 percent are investing in technology to make an immediate difference in supporting current processes.
  • Midsize firms with 500–999 employees are more prone to take a long-term view. Close to half (46.5 percent) said their active participation in the digital economy will be essential to their company’s survival in the next three to five years. Just over a third (38.2 percent) of small businesses with fewer than 100 employees felt the same way.
  • The use of the cloud for implementation has made digital transformation simpler for smaller companies, with two in five stating that the rollout of their first solution was either easier than expected, or took no extra effort.
  • Use of collaborative software, customer relationship management (CRM) and e-commerce applications is widespread among SMBs. These application often serve as the first points of entry to digital transformation. One in three smaller firms polled said that they preferred that these applications be delivered through the cloud.
  • Almost three-quarters (73 percent) of companies that have adopted digital applications report that their expectations regarding technology investments were met or exceeded.

“SMBs globally are increasingly recognizing the benefits of digital transformation and continue to add advanced technology resources,” said Ray Boggs, vice president, small and medium business research, IDC. “But the challenge is in connecting different technology areas for maximum impact. Firms that do that tend to grow faster and be more successful in an increasingly competitive environment.”

Though hesitancies remain, more than one-third (34 percent) of respondents have dedicated additional budget, staff and resources to digital transformation, ensuring that SMBs will be able to flourish as the digital economy grows.

An infographic of the survey is available here.

For more information, visit SAP News Center. Follow SAP on Twitter at @sapnews.

Methodology

The IDC SMB Digital Transformation survey was conducted by IDC on behalf of SAP, and consisted of feedback from 3,900 SMB* decision makers across 13 countries spanning a variety of industries, including manufacturing, retail, utilities, health, finance and public sector (government). The survey is the second chapter of IDC research to be released regarding digital transformation among small and midsize businesses, and provides a closer look at cloud adoption, priorities and tool selection. The IDC custom study, commissioned by SAP, is titled “SMB Digital Transformation” (IDC document IB_2090_SAP).

Media Contacts:

Angelika Merz, SAP, +41 58 871-7216, angelika.merz@sap.com, CET
Erin Albright, FleishmanHillard, +1 (617) 692-0543, erin.albright@fleishman.com, ET

*An SMB is defined as a company with up to 999 employees.
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