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SMEs May Want to Set Their Sights Higher for Digital Transformation

March 31, 2017 by Rodolpho Cardenuto

If there are two distinct advantages of running a small and midsize company, it’s size and simplicity. When compared to their much-larger rivals, smaller firms have the innate ability to fully adopt technology investments quickly while staying laser-focused on specific improvements that will determine implementation success. And for the most part, this mindset has served them well.

According to the IDC InfoBrief “The Next Steps in Digital Transformation: How Small and Midsize Companies Are Applying Technology to Meet Key Business Goals,” sponsored by SAP, 73% to 87% of surveyed small and midsize companies indicated that their expectations regarding technology investments were met or exceeded. But what really caught my eye is the revelation that firms are more interested in achieving immediate needs and quick results:

  • 47.6% focus investment on the greatest need
  • 35.3% choose technology that is easy or quick to implement
  • 27.9% are driven by customer or partner demands

While simple technology implementations and near-term results can generate strong results, it is possible to be too focused.

Are Firms’ Technology Expectations Strategic Enough?

In all my years of working with firms around the globe, I commonly hear boardroom executives ask how to improve competitive advantage:

  • “Which changes will lower operational costs?”
  • “How can we increase revenue?”
  • “What innovations can boost productivity so we can reach and serve more customers?”
  • Although everyone’s intentions are good, clear, and precise, these questions and many more give executives a very narrow view of their technology investment.

Imagine that you are running a logistics company. For this industry, the focus is on the number of trucks available because a bigger fleet means more revenue that pays dividends over the long term. Anything not related to that specific figure or to the cost of maintaining fleet operations is rarely considered. So this firm may miss out on opportunities to reduce costs in other functional areas, serve customers in a new way, or become more competitive in the digital economy.

The same is the case for every small and midsize company. The financial and resource constraints that they face every day don’t allow them to invest in full technology suites – of which only a small percentage of the total functionality is used. Instead, firms tend to invest in targeted solutions that address specific functions and needs.

Whether the key performance indicator is increased foot traffic in stores, more transactions on an e-commerce site, or improved revenue growth and cash flow, point solutions have become great enablers of achieving business goals. However, at the same time, these technologies may not be as flexible in meeting new customer requirements or shifting economic environments.

A Simple Tip for Seeing the Forest Beyond the Trees

The key to delivering on the specific promises of technology while watching out for unforeseen risks is maintaining deep expertise and a strong connection with the business. Failure often happens when there’s a departure from accepted norms, including a merger or acquisition, economic instability, or leadership changes. Handling such events requires a level of know-how and expertise that most firms do not possess in-house.

Looking back at the research, it’s encouraging to see that 41% of firms are learning from past implementations and using those experiences to better plan the deployment of future investments. And more specifically, 27% are realizing the value of involving third-party services more often.

By embracing lessons learned and third-party services, firms can develop flexible strategies, technologies, and processes that open them up to insights and changes that could address internal and external shifts as they happen. Third parties help small and midsize companies not only make the most of innovations based on unique objectives, but also avoid common mistakes, build awareness of potential risks and opportunities, and adopt best practices.

To learn how small and midsize companies are digitally transforming themselves to advance their future success, check out the IDC InfoBrief “The Next Steps in Digital Transformation: How Small and Midsize Companies Are Applying Technology to Meet Key Business Goals,” sponsored by SAP. Be sure to check every Tuesday for new installments to our blog series “Road to Digital Transformation.”

Rodolpho Cardenuto is president of Global Channel and General Business at SAP.

This story originally appeared on the Digitalist.

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