Nine problems in SMEs that we can solve with digital transformation

Nine problems in SMEs that we can solve with digital transformation

The justification for developing a digital transformation plan should always focus on solving problems occurring within our company. We might fear that our company will quickly become obsolete due to a sense that technology will dictate the future of our organization. While this intuition is correct, the primary goal should be to solve day-to-day problems.

We are convinced that the digital transformation of SMEs offers a unique opportunity to address the major issue that hinders the creation of competitive companies, as discussed in our previous post about the well-known problem of the lack of competitiveness of Spanish SMEs, but it can be generalized to any country in the EU region.

In this article, we aim to compile a total of nine problems that, in our opinion, are among the most relevant that any organization may face today in order to scale its business. We will show how, from the perspective of digital transformation, we can generate value.

1. Lack of Vision and Business Strategy

Companies wishing to prosper in the future will need a long-term perspective vision. The day-to-day life of small businesses involves continuously putting out fires: meeting obligations, managing incidents, paying taxes, and so on. This survival mode makes it virtually impossible to work towards more ambitious goals. This is precisely the foundation of a digital transformation plan: we generate a renewed vision of the business thanks to the opportunities provided by new technologies, covering the lack of definition in key areas that prevent us from managing effectively and that are as important as strategy, business model, and corporate culture.

2. Inefficiency in Operations

Another problem affecting many companies is inefficiency in executing processes, which may be due to multiple factors: manual processes, disorganization, lack of standards, etc.; this only leads to an increase in operational costs and a lack of predictability in the expected results, ultimately resulting in a loss of competitive ability. One of the areas within a digital transformation plan is the optimization of core business operations: through the discovery, modeling, analysis, and performance measurement of the main processes within a company; we can later decide what changes to introduce and what technologies (there are many options in the market) can help us boost productivity.

3. Obsolescence for Not Keeping Up with the Market

The pace of change in society and the economy is so high that even large companies with the capacity to invest in R&D are often unable to adapt in time to new technological advances, falling out of the market in a short time. Famous cases include Kodak with digital cameras or Blockbuster in the video rental sector (although it is a phenomenon that spans the economy). A digital transformation plan must detect the technologies that will have the greatest impact on our sector and line of activity and, although we cannot know exactly what the future will hold, various scenarios should be considered so that our company is prepared for the threats and opportunities that may arise.

4. Excessive Dependence on Management

In small companies, founders are often very involved in day-to-day operations instead of dedicating themselves to management and supervision, creating a dependency that can be very detrimental. The level of overall competence decreases, as the larger the workforce grows, the more blockages and obstacles occur, resulting in lack of motivation and stress. A digital transformation plan can help us define KPIs (Performance Indicators) to have greater control and security over what happens in our business. On the other hand, the development of a new corporate culture could lead to a new form of organization based on the development of autonomous teams that work independently but are aligned with the vision and strategy of the business.

5. Lack of Employee Loyalty

The lack of motivation of employees in their workplace continues to increase after the pandemic and can entail costs not only economic but also social such as lack of recognition, commitment, and development that everyone needs to feel satisfied. Teleworking has opened the door to new ways of working that increase satisfaction through better reconciliation with personal life; various studies indicate that the vast majority of employees value very positively that the company offers some form of teleworking. Teleworking has become a reality for companies, but the key is not to stay only in "it's possible", it's a resource that should be actively used as a strategy to attract and retain talent, and must be linked to other complementary measures such as training and career development.

6. Poor Knowledge Management

One of the causes that can lead to losses in productivity generated by the company is poor management of one of the most valuable resources: knowledge. A company, as it develops its activity, generates knowledge that must be fed, agreed upon, and shared within the organization. In this sense, the knowledge that is lost and does not arrive in time to make decisions really generates economic losses. A digital transformation plan can help us define how we are going to generate and share all that information by relying on technology: cloud applications, wikis, online training platforms, real-time communication applications, etc.

7. Dissatisfaction in Customer Experience

Today's customer wants to receive your company's services in the same way they interact with the digital apps we all know such as Facebook, Gmail, Instagram, etc. Consumer habits have changed more deeply as a result of the pandemic and many of them are likely to settle, so if you want your company to grow in the immediate future, you will need a digital strategy in the development of user experience that is increasingly hybrid, they can choose between buying physically and online indistinctly. A truly satisfied customer will be willing to pay more for your services and will be more inclined to repeat the purchase experience, opening opportunities to grow by adding value.

8. Maintenance and Control of Asset Costs

The assets of the company are all those physical assets of the company that produce a return on investment and that are necessary for the development of productive activity (machinery, equipment, vehicles, etc.), but which at the same time also produce a maintenance cost that must be controlled and minimized. Digital transformation has opened up new possibilities to improve the management of these assets, for example, through predictive maintenance: by collecting a large amount of data in real time, we can determine when preventive maintenance is necessary based on the machine's previous history to avoid a particular breakdown. There are also applications on the market for calculating the depreciation of an asset based on the activity it generates, such as in the case of heavy machinery, transport vehicles, etc., something that will become increasingly critical in any logistical environment.

9. Difficulties in Complying with Regulatory Framework

Companies face a growing regulatory framework consisting of a set of regulations and standards that a company must comply with and justify when executing its operations. For example, measures related to data security and protection demand systems that guarantee data confidentiality and security against external threats. Other sector-specific cases are, for example, regulations in food quality; having a traceability system from origin to destination in case of food poisoning would only require certain batches to be withdrawn without affecting the entire production; or also the case of environmental regulations: we can track and monitor all waste generation, treatment, and management to demonstrate that the practices comply with current environmental regulations.

In Conclusion

As a conclusion, a digital transformation plan, although focused on generating a long-term business vision, must also tackle the real problems that your organization suffers today and that hinder its progress.

If you have identified with any of these problems, do not hesitate to contact us, letting yourself be advised by a dedicated team of experts in various areas (digital, marketing, operations, etc.) who will develop a digital transformation plan tailored to your needs.