Do you know what digitization is? Have you ever heard of digital transformation in companies and SMEs? Are you ready for the change? If there is one word that is in trend, it is the word digitization, a more specific concept within digital transformation; both are related and both words have come to stay. Yes, you better get used to these words because we are going to have them very present everyday. We can say that it is the industrial revolution 4.0.
You may have an idea in your mind of what digital transformation means, but it may be an inaccurate image. Read on to find out what digitization really is and what it encompasses. I assure you that when you finish reading you will have a complete idea of what digital transformation means as a general concept, and more especially, in companies and SMEs.
Index
Digitization, what it is, a change in global culture
The digital transformation in a company
Digital transformation in SMEs
Benefits of the Digital Transformation of companies and SMEs
Digital transformation in examples and success stories
How to design a strategic plan for digital transformation
Keys to the digitization process in companies
Digital transformation in companies as a cultural and global change
Digitization, what it is, a change in global culture
Digitization is a word that has been with us for a long time. We have been talking about it since the ’90s, but it is now more than ever after the COVID-19 crisis that it has resurfaced with even more strength. Well, digitization is really a process that seeks to implement one or more digital technologies in any area of society. Yes, you heard it right, although we are more accustomed to hearing it as a business term, it applies to everything in life.
“SMEs make up 99% of the Spanish business environment”.
The concept of digitization or digital transformation has spread throughout society. The Internet and the Internet of things are present in the lives of nearly everyone. From yourself reading this article, to government agencies and all levels of schools. The digital transformation implies a cultural change and a way of seeing and doing things totally different from traditional methods. It really seeks to make people’s lives easier.
The digital transformation of the company
Now that you know what digital transformation is as a general concept, it is time to delve deeper to know what is the digital transformation of the company. To put it simpler way, the digital transformation of the company consists of applying and implementing new methods and new digital technologies to each area of a company.
This is key because, normally, each area of the company has an IT side, and that is where the main failure of the digital transformation of companies lies. Digitalization must start at the top of the company, and must be carried out simultaneously in each area of the company.
“Being a proactive company rather than being reactive can give you a huge advantage over the competition.”
Changing the entire culture of the company will avoid disparities. If not, there are always departments that, due to their characteristics, will develop more easily than others. Obviously, the technological or marketing area will be more predisposed to change than the accounting or human resources department.
In short, it is a question of carrying out a long-term strategy, which must involve a lasting cultural and technological change.This must not be something revolutionary and quick, but rather a progress in which the company evolves and changes little by little.
Digital transformation in SMEs
SMEs are a large part of the economy in Spain. These small and medium enterprises, popularly known as SMEs, make up 99% of Spanish companies. Since there are such a large number of SMEs, there is also a large amount of disparate data about the levels of digitization. As a result, there is a large majority of SMEs that are digitizing the company and others that are not.
As an interesting fact, in 2018, it was found that 81% of Spanish SMEs do not have a specific digital transformation plan. Despite what it may seem, this does not mean that SMEs are not interested in digitization. This means Spanish companies are carrying out partial digitization of their structures.
“Only 2% of companies consider digital transformation a strategic priority”
According to a study done by Dell Technologies, 70% of Spanish companies are already investing in technologies that facilitate the digitization process. However, if we delve deeper into the data, only 2% of companies consider digital transformation a strategic priority.
Although progress is being made positively, the pace can indeed be a little slow. It is vital that companies adapt to the new digital environments as much as consumers are doing so, if not, they run the risk of falling behind. For almost any SME, it is better to be proactive than reactive and anticipate change.
Benefits of the Digital Transformation of companies and SMEs
Now that you are clear about what digitization is for companies, it is likely that you are considering implementing a digitization strategy for your company or SME. But, in case you are still not completely convinced, we are going to detail the main benefits your company can achieve by implementing this digital transformation strategy:
- Breaks geographical barriers: The Internet will open the doors to the whole world. You can sell to anyone in the world or work from anywhere. Connectivity and the Internet allows us to be connected anywhere and at any time.
- Improve your presence: This is related to the previous advantage. If we are present on the Internet, we can say we are present everywhere. Today this is key for any company.
- It gives you a competitive advantage over the competition: As we have seen before, not all companies have a digitization plan, so if you are in a sector that is not very digitized, it is time to stand out from your competitors.
- Change the culture of your company: Companies that are fully digitized are much more flexible and open to change, meaning a revolution in corporate culture, leaving behind the past and moving into a new environment.
- Improves internal communication: Taking advantage of these new technologies facilitates more fluid communication between departments of the organization, and this will significantly improve teamwork.
- It makes your processes more efficient: This is one of the best advantages digitization offers. Digitizing processes allows you to see how the company behaves in its most critical aspect, being able to obtain data and results in real-time to improve or even redesign these processes. This will reduce costs and improve the company’s efficiency.
- Productivity improvement: Productivity is directly related to the main objective of the digital transformation of companies. It is the final product resulting from all the improvements. If processes become efficient and workers are more agile, productivity will increase.
- It allows you to collect more data: Today, data moves the world. Having data about your company and about your consumers offers almost unlimited possibilities. With helpful data it is much easier to make decisions. Also, big data is one of the pillars of digital transformation.
- Improve the customer experience: The customer should always be the center of all our strategies so we must focus on him/her. Improved processes and collected data should be used to make the customer happy.
- Better decision making: As you have already seen, the purpose of data collection is better decision making. Decision-making is key for any company, goals that must be set, strategies outlined and new product launches, etc. All this would be impossible without data.
- It helps customer loyalty: Making customer-oriented decisions and being able to improve the customer experience will logically lead to a higher rate of customer loyalty, something that is key for any company today.
Digital transformation in examples and success stories
Maybe, so much text overwhelms you and it can be difficult to understand because it is a somewhat abstract concept. So, what is better than looking at success stories and examples very close to us? You will read about companies that everyone knows and whose success is largely due to their level of digitization. Large, small, and medium-sized companies from any sector that have hit the big time thanks to following a global digital transformation strategy.
Netflix
Netflix is currently one of the best platforms for series and movie streaming. But, it was not always so. Netflix started as a simple video store that, in exchange for a monthly flat fee, sent unlimited DVDs to its users. The interesting thing was that Netflix noticed a trend in the market where people preferred to consume the service on the Internet instead of renting them, and in less than a year, launched an Internet rental service.
This was something disruptive. Many of the Netflix’s employees did not believe in the new methodology. Therefore, Netflix began to offer incentive leaves to employees who did not believe in the company, and more than half of them left it. Today it is one of the giants of the Internet.
Domino’s Pizza
Domino’s Pizza is another clear example of success due to digital transformation. In this case, Domino’s has always been one of the leading fast-food companies, but today it can boast of being a leader in Pizza Delivery worldwide. On the one hand, they improved product quality based on customer and employee feedback using social media as the main source of information.
On the other hand, it is also worth highlighting their digital adaptation along with their search for perfection in order fulfillment. At Domino’s Pizza, you can place orders from virtually any device; and more that half of their orders come in online.
Caixabank
The banking sector needs a big digital transformation strategy to reduce tedious paperwork, long queues and extended waiting times. That is why Caixabank followed a digital transformation strategy in all facets, and has been named the “best digital bank in Western Europe”.
Their strategy is mainly based on its mobile application and data mining. The application allows us to perform a remarkable amount of functions quickly, thus, avoiding going to a physical branch and saving us a great deal of time. In short, a much more agile and rapid response improves the user experience.
Lego
Lego is a legendary toy company. Almost everyone has played with them at some point. Lego’s constant search for customer loyalty has led to a variety of products that keeps their followers participating many times in the creative process of the company. Let’s see how!
Lego created a platform called Lego Ideas whose main objective is to promote innovation through ideas provided by the consumers themselves. Yes, you heard it right, the ideas are created by the customers themselves. A very interesting way to include the customer in the process, and thus, motivate interaction between the brand and the user.
Airbnb
Airbnb is the perfect example of creating a new business model through digital transformation. It has radically changed the game in the tourism sector; Airbnb can rent apartments, rooms and houses without owning a single unit. As crazy as it may seem, Airbnb is only an intermediary that puts people in contact with each other.
How to design a strategic plan for digital transformation
Designing a strategic plan for a company or an SME is not an easy task; this is why we are going to give you some keys to digitize your company or SME. But, first of all, you should know that every plan must follow some objectives and answer the questions: What? How? What for? And when? After answering these questions, these are the steps to follow to create a plan:
- Include digital transformation in the strategic plan: This is something basic and is the main aspect of digitization because it is a long-term investment. Therefore, it should be included in the strategic plans of companies to give it the importance it deserves.
- Digitizing personnel management: When we talk about digital transformation, we are talking about digitizing processes; one of them, and a very important one, is personnel management. That is why the human resources department must lead the charge and change by implementing personnel management software. These allow improved recruitment and personnel control.
- Encourage training: Not all workers in our company are experts in new technologies, so apart from hiring people with digital skills, it is important to train senior employees so that inequality is not created.
- Establish priorities: Digitalization is a really long process, and if you do not have a large company with unlimited resources you must allocate resources and time to those parts of the business you deem most appropriate.
- Adapt to the digital environment: Organizations that are digitally transformed are usually much more horizontal as far as communications between employees and superiors. It is much more agile so you must try to adopt a much more agile organizational structure.
- Implement a CRM: The CRM or Customer Relationships Manager is the cornerstone of any digital transformation plan. Creating a CRM will allow you to get a lot of data concerning consumers and even your workers; from managing orders and processes, to managing employee tasks.
- Establish a process review plan: Business processes in the value chain are fundamental to any company. That is why you must perform an audit on processes to see what can be done more efficiently.
- Make a digital marketing plan: Every business today must be visible on the Internet, and this usually includes a corporate website or e-commerce. You must follow an Internet and Social Media strategy to increase your visibility.
- Monitor and evaluate the plan: Finally, every plan must have a control and contingency plan (a plan b, in case things go wrong). As far as control is concerned, it is important that the objectives we have set for ourselves can be reviewed from time to time to see how we are doing.
Keys to the digitization process in companies
Once you have established the company’s digitization plan, you will have taken a very important step. But this should not stop here, you must continue working on it over time and return to it to review and improve according to the data you collect. Therefore, as a summary, these are the key aspects of the digitization process for any company:
- Always plan before executing: As you have already seen, we have always talked about having a plan. Many companies jump into the sea without knowing what they are doing based on trial and error. This is something that can be useful, but you will advance much faster if you have a plan.
- Know your users well: Customers are at the center of everything. Knowing your users well and collecting all kinds of data about them through CRM will allow you to segment much more and be able to target them more effectively.
- Involve the whole company: As you have already seen, the change must come from the company’s culture, that is, from every area and every part of the organization. From the executive to the worker, everyone must be mentally prepared to favor the change.
- Add objectives: Measure everything you do. Adding objectives will allow you to carry out strategies and actions with much more sense. It will also allow you to see from time to time how your company is evolving and to know what you are doing right, and what you are doing wrong.
- Train your employees: Employees are the engine of your company so they must be trained to face new changes. There is no point in implementing a CRM if no one knows how to use it.
- Analyze and measure results: This aspect is in line with the objectives and strategies. Add KPIs (Key Performance Indicators) to the results you are getting from the new actions, and you will have a general idea of how things are going.
- Review and update the plan: You have to keep in mind that this is a long-term strategic plan and it should be reviewed from time to time to see how things are going so that you change them to improve and adapt them to your new needs.
Digital transformation in companies as a cultural and global change
If you have already convinced yourself, and you are ready to initiate a cultural and global change in your life and in your company, I hope this article has been useful for you. As you can see, the article is useful for large companies as well as small and medium-sized companies, but you need to take into account that initiating the change in a small company will always be easier and less costly, than doing it in a large company that already has its own mechanisms, something that will involve much more effort.
Apart from the great advantages of carrying out digitization and the examples of success you have seen, there are important points to remember: the digital transformation must be an integral change in all areas of the company. It must be part of the strategic plan and it must be done over time, evolving gradually along with the tools. Also, always remember to put the customers and the employees at the center of all operations.
