3 Mistakes SMBs Make When Digitizing Their Business Processes
By Didi Gurfinkel, CEO of DataRails FP&A Solution
It was true before COVID-19, but the pandemic underscored the reality: For companies across industries, digitization and business process automation are the future. Without robust digital capabilities and intelligent investments in automation, businesses risk losing their competitive advantage to nimbler, savvier rivals – which is why so many companies are making serious investments in digital transformation and automation.
In a recent survey of IT leaders, 97% said that their organizations pursued digital transformation efforts last year. As for automation, the 2020 McKinsey Global Survey found that two-thirds of respondents’ businesses had at least begun piloting automation projects, up from 57% two years ago.
But while businesses are ramping up their innovation initiatives, they’ve encountered plenty of hurdles. Indeed, according to the Boston Consulting Group, only 30% of digital transformation projects fully meet their objectives. Working alongside a wide range of small businesses, I’ve seen firsthand how these challenges uniquely affect SMBs. The shortcomings of their digital transformation and automation efforts typically boil down to the same three problems: improper or insufficient use of data, organizational silos, and poor goal-setting.
By addressing these issues head-on, SMBs can avoid common pitfalls and achieve success in their efforts to make their businesses higher-performing and more efficient.
Use of Data
For all the talk about how data is the modern economy’s new oil – and for all the abundance of data generated by a proliferating number of sources – many companies, especially SMBs, often struggle to extract meaningful value from data.
According to Forrester, as of last year, fewer than 50% of firms made decisions based on quantitative considerations as opposed to subjective opinion or experience. Furthermore, a study by Accenture found that less than a third of companies realize tangible and actionable insights from data.
Without proper data management, businesses miss out on a continuous stream of evidence to drive better decision-making, predictive analytics that can help them anticipate future trends and needs, and deep insights into gaps and opportunities in their market strategies. Of course, it’s often the sheer ubiquity of data that makes unlocking these benefits such a tall order: With such a dizzying array of data out there, it can be difficult to properly capture and frame it for business use cases.
This gives rise to a classic chicken-and-egg problem. Data itself helps drive digitization, and once they have the right digital infrastructure in place, companies can better manage and utilize data. But starting the process requires a leap of faith that’s understandably difficult for many businesses seeking to protect their bottom lines.
To overcome hurdles to innovation, it helps to take note of what’s worked elsewhere – and McKinsey finds that businesses that prioritize effective communication enjoy the most success when implementing automation. Regular engagement of key stakeholders across the business helps secure their buy-in on new initiatives – and prevents digital transformation and automation efforts from stalling and sputtering before they’ve even proven their business value.
Yet according to the Harvard Business Review, executives overwhelmingly agree that cultural challenges – including communication, resistance to change, business alignment, and so on – impede data-driven changes, with more than 90% voicing this view.
Eliminating these barriers first requires eliminating the organizational silos that lead to miscommunication, misalignment, and missed KPIs. Each team brings a unique skill set, perspective, and expertise to the business, and that’s why businesses must seek their input and keep them apprised as they go about innovation projects.
Just as no two teams or no two companies are entirely alike, no two digital transformation initiatives are quite identical. Different businesses have different needs, capabilities, workforces, target markets, and resources. Accordingly, when it comes to digital transformation and automation, businesses should define success in a way that reflects their individual profiles.
Unfortunately, many businesses fail to set clear and measurable goals, which in turn makes it likelier that they’ll ultimately deem their innovation efforts a partial success at best. But each business should identify and focus on the most important parts of their business process which can benefit the most from automation. Setting SMART goals is key, and defined KPIs can keep businesses on track and help them fine-tune their strategies when their results are coming up short.
As any entrepreneur already knows, challenges and setbacks are inevitable speed bumps on the journey to business success. But simply coming to terms with the nature of those obstacles can help businesses overcome them and reach new milestones of ingenuity and innovation.