Overview

Digitalization: SMEs have good opportunities in these three fields

Digitalization remains a hot topic. New technologies and innovative start-ups are increasingly shaking up established markets. And one thing has now reached all management levels: Digitalization is not an end in itself, but serves the company’s goals. When implemented strategically, it makes a strong contribution to value creation and opens up new markets. Large companies are trying to respond to this challenge in a meaningful way, as are SMEs. However, the consequences and first steps in corporate practice are unclear to many managing directors. And some CIOs are still looking for their specific roadmap for the digital transformation.
Yet the opportunities presented by change are particularly relevant for SMEs. Their innovative strength and flexibility are ideally suited to the new technologies and market niches. The adaptability of medium-sized companies in particular can be a decisive advantage: Few players and flat hierarchies make rapid implementation of digitalization projects more likely than in corporations.

More and more efficient, and then what?

Digitization turns analogue data into digital data. In a business context, this seemingly simple process has the potential to completely transform companies: processes, products, customer relationships, the entire business model. The “paperless office” is just the first step. It is about noticeable process improvements in all specialist areas. And it is about the consistent networking of machines, products, suppliers and customers. The resulting data exchange opens up new market opportunities for companies in the three key areas of activity.

1. digitalization and integration of value chains
New technologies can further optimize existing processes, increase cost potential, improve transparency through data analysis and realize synergies. If you ask decision-makers from the SME sector, they would first and foremost like to see process improvements that ensure greater efficiency and relieve employees of routine tasks. This is followed by the optimization of cost structures and the use of the volume of data that is growing in all specialist areas of the company and is just waiting for a meaningful evaluation. This was recently revealed by the Deloitte study “Digitalization in SMEs”.
At the production level, the buzzword “Industry 4.0” is not far off. This is where traditional, mostly mechanical and electronic control equipment, tools and materials are networked – and therefore part of the Internet of Things (IoT). This will result in further significant efficiency gains. At the same time, cooperation models are changing: company processes do not end at the production hall gate, but are dependent on data exchange with partners and suppliers. Especially if they are involved in product development.

2. digitalization of products and services
Digital and individualized products remain competitive for longer or even open up new markets for companies. Digital offerings are in demand, such as apps and gadgets that are networked in the IoT. This is where the physical and virtual worlds merge. A functional ecosystem includes the device, user, communication infrastructure and service/additional services – examples: Smart Home, Connected Car, Amazon Echo and Dash Button. Device usage generates data that makes customer expectations transparent. Offering services and added value here massively increases customer loyalty. But even without IoT, the need for effective communication is increasing on the customer side – on the familiar (social media) channels of the internet. This applies equally to B2C and B2B business.

3. digital business models
New technologies and their sometimes disruptive effects on existing business models must be identified at an early stage – provided they can affect the company’s own industry. New partnerships, for example with start-ups, open up markets and ensure innovative strength. Example one: car manufacturers invest in apps and rental vehicle fleets. In this way, they sell mobility instead of cars. Users find, open and pay for the nearest vehicle via smartphone. Bicycle rental in many cities also works according to this “free floating” principle. Example two: New delivery services enable hundreds of restaurants to deliver food to customers’ homes by bicycle courier. Customers order and track their order using an app. In both cases, it is not a product that is being sold, but a solution.

Current status: Many isolated solutions

According to the Deloitte study, 59% of the companies surveyed currently rate their level of digitalization as very low. The reason: there is only selective support from information technologies and “isolated solutions” without interfaces. If a high level of digitalization is assumed, this assessment is usually based solely on the fact that an ERP system is running that supports the company’s operational processes on the IT side. At the same time, companies are aware that areas such as marketing and HR, but also operational service provision – procurement, production, logistics – still have great potential for digitalization and thus for value creation. This means that many opportunities remain untapped.
Many SMEs are in the process of tapping into the digital potential of their existing and new products and securing digital market and customer access in order to survive in the face of global competition. The basis for this is usually the digitalization of value chains. Digital products and business models can be the next step. You will soon be able to read about the major challenges and obstacles on this path.