Pentingnya Digitalisasi Bagi UMKM dan Manfaat Yang Dirasakan

The Importance of Digitalization For SME

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Small and medium enterprises (SMEs) are the foundation of the global economy. In developing countries, SMEs contribute up to 40% of GDP and create seven out of 10 jobs. While the pandemic is unforgiving for all businesses, SMEs have been some of the worst affected due to the double hit of ballooning costs and a cash crunch.

The pandemic has prompted a new phase of adoption of emerging technologies, and offers an unprecedented opportunity for SMEs to reap the benefits of digitization on the road to recovery.

While incentives for digitization abound, there are inherent risks to any investment, and SMEs need to understand this risk curve in the context of their particular business and customer environment to maximize the impact of their investment on recovery and sustainability.

When I pioneered the strategy for the first enterprise resource system for a large manufacturing company, everyone was so excited that we were overwhelmed with input and suggestions from all sides, and we started to lose focus and purpose. I learned that you must ultimately streamline your strategy by focusing on the core front-end departments first and then adding additional value to the business as you move towards sustainable, holistic digitization.

It is also important for a digitization strategy to include some metrics for monitoring investments to ensure that money is being spent wisely and delivering the desired return for the business. Given the typically low research and development budgets in the SME sector, and especially given the costs businesses are still incurring as a result of the pandemic, it is imperative to follow money and take these key considerations into account to guide your digitization decisions.

Productivity boost

For most businesses, the main goal of digitization is to automate processes so that you can deliver services faster and more efficiently. Switching to cloud storage, for example, can offer enormous value to your staff members, who can then work flexibly and from anywhere, enabling them to be more productive.

Capital expenditure constraints

Switching to cloud computing and using a pay-as-you-go model for useful applications often results in significantly lower costs than buying or building the technology yourself. You can gain access to anything from finance, sales, and marketing packages to cutting-edge AI and pay for only the bundles or apps you need, cutting down on capital expenditures and enabling greater deployment of digital services.

Back office digitization

Typically, there is a tendency for new customer-centric investments, and this can lead to a focus on developing customer-centric digital solutions at the expense of other key value chain areas. According to an article published by McKinsey & Company, organizations “can extract as much value, if not more, from investing in back-office functions that drive operational efficiency.” This appears to be especially true in the service sector.

The incremental approach is the way to go

Investments in digital transformation should not be spread across the organization under the overall digitization circle. Focus on small steps and take a milestone-based, step-by-step approach on the road to full digitization. It should be an evolution rather than a revolution, and it should not weaken your focus on the main goals of your business. Make sure you have an ongoing strategy to embed digitization in your company culture to continue to embrace this digital change as it will most likely be an ongoing process rather than an isolated one-off exercise.

Follow the money

Inevitably, the issue of resource allocation will be a major challenge in making digitalization decisions, and the solution will largely depend on the nature of your business and its competitive objectives. Large businesses tend to benefit from cloud investments, whereas smaller businesses are less likely to have the cash for expensive cloud investments. Your decision-making process will require a lot of focus, and it will remain a dynamic process.

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