How Small Businesses Can Embrace Digital Transformation
Digital transformation has been one of the most talked-about topics in business the past couple of years, and for good reason. A way for companies to leverage innovative new technologies to significantly reduce costs and improve operations, performance, safety and, ultimately, their bottom line sounds like a must-have for all businesses.
While many of these stories center around large companies (because they can cite larger gains given their size, and they often invest in the latest technologies), I believe small and medium-sized manufacturers need to realize they, too, can use digital transformation technologies to realize tremendous benefits.
My company did just that, and we are a family owned, 60-employee, almost 70-year-old, small- to medium-size business in the manufacturing industry. In fact, through digital transformation, we were able to achieve significant improvements in the efficiency of our manufacturing shop floor, returns and sales quote-to-close ratios — and those are just our first-round results.
So if you are a small to medium-sized manufacturer and you think digital transformation is only for the bigger corporations, it’s time to think again. I learned a few lessons along the way that I believe can help other small businesses get started on their own digital transformations:
Identify the problem.
Digital transformation refers to using new technology to solve problems in your
business. Chances are, there are some areas of your company that you already know don’t run quite as well as they could. While my company’s digital transformation centered around our finance department, companies can really target any area of an organization where a problem exists or improvement is needed.
In our case, it was our vice president of finance who noticed my company's accounting and finance teams were spending nearly half of their time on data collection and validation and not on analysis. Our company was data-rich but insight poor because there simply was not enough time available to extract actionable insights. This was the start of our digital transformation journey.
Select the right transformative technology.
Once you have identified the problem, research digital technologies that have proven successful at solving that problem, and set goals. We chose cloud planning for our situation. Finding the right solution took time, but we had strong advice and certain criteria to help in the research.
My technology mentor provided great advice when we first started working together:
When looking for a new technology platform, spend time researching all options
regardless of your budget. Speak to at least one or two of the top-level companies, and use it as an educational opportunity to see all the functionality possibilities. In addition, speak with at least one platform below your budget to clearly see what less money buys in terms of functionality. Then, review at least two platforms within your budget, and compare all the options. Furthermore, make sure you've established what you're looking for in a solution. For example, we wanted a user experience designed to enable a collaborative process
throughout our company. The specific factors other leaders might consider include an integrated planning and analytics platform or integrated reporting and analytics.
Ensure team member adoption.
The key to a successful digital transformation is taking time to educate employees
throughout your company on the goals and benefits of the new technology, as well as the best ways to use the data for success. In my company's case, this required additional weeks added to our project timeline, but the goal was to ensure everyone understood not only how to use the technology, but also how it would positively impact their specific department.
This additional step can ultimately help provide much quicker adoption of the technology (normally one of the most difficult aspects of digital transformations) and thus, quicker and better results. Each department can feel empowered to recognize and make their own changes.
Measure your results.
Not every digital transformation effort will be a success, and there are a number of possible reasons for this. That is why it is vital to plan a review process to measure the effectiveness of each project. Choosing the right key performance indicators is imperative when measuring the effectiveness of digital transformation, but selecting the right number is just as important. Too many KPIs could actually stall progress because effective action on multiple fronts would be challenging and keep real change from being realized. Work with a blend of KPIs, and keep in mind that KPIs might need to change as transformations and efficiencies are created from the new platform. For example, when we looked at the impact of cloud planning on our organization, the results were all positive. Our finance team was able to increase transparency into important metrics, as well as free up hundreds of hours typically used for compiling numbers and instead use that time for strategic analysis. This eventually led to significant operational improvements in other departments as well.
While digital transformation might begin with a focus on one part of a company, its benefits can extend throughout the organization and externally to customers and partners. For our employees, the time spent on mundane processes around data collection has been eliminated, and they can now use their skills in other ways. This creates a more engaged and invested team that knows their ideas make a difference. These operational changes are also a clear extension of our overall commitment to our customers and help us better deliver products, services and support to help solve their problems.
The results of our digital transformation have been phenomenal — so much so that I encourage every small to medium-sized company to consider undertaking its own journey. There is an arsenal of new and innovative digital technologies to help smaller companies realize significant results. Consider taking advantage of the technologies just like the bigger corporations, and make yourself more competitive. You might be the company people are talking about next year.
Author: Pamela Kan