Digitization in the midmarketWhy digitization is so important for SMEs
How business processes and products become smart
The world is undergoing rapid digital transformation: school lessons via video conferencing, payment via smartphone app and automated invoicing – digitization is influencing more and more areas of our lives. What exactly do we mean by digital transformation and why is digitization so important in the SME sector?
“Alexa, start digital transformation!” For the voice assistant of the large online retailer, this order may be feasible.
For many companies in Germany – especially from the SME sector – the digitization of production and business processes is still a headache. At the same time, companies have realized the importance of digital processes for their success: According to a survey of more than 500 German companies commissioned by the digital association Bitkom, only twelve percent still doubt the benefits of digitization for their company. At the beginning of 2020, more than a quarter of companies were still skeptical about whether digital transformation could help their company move forward.
What is meant when we talk about digitization? Basically, it’s simply about transforming the analog into the digital. In this respect, digital transformation is old hat. Clock radios, wristwatches and cameras have been controlled by chips since the last century. And companies like Google and Amazon have been digitizing the world since the 1990s.
Everything becomes smart
To grasp the scope of digitization for living and working environments, it is worth taking a look at the digital transformation of business processes and products. The digitization of business processes is primarily about efficiently designing and standardizing recurring activities and processes within the company and between business partners. In most cases, standard software then also controls this process.
A classic example of the digitization of standardized business processes is the management of customer data.
Digitization in SMEs: The first step is for companies to start managing their customer data and documents digitally. Whether via Excel spreadsheet or with the help of a special CRM or ERP application. Here, customer data, order status, invoice history and other data are bundled and processed in one software. This makes it possible to have a central overview of invoices, customer requests and delivery times and to react promptly to deviations.
Comprehensive digital processes
In the second step of the digital transformation, customers, suppliers/service providers and business processes are then integrated. Consistent digitization of processes offers a number of competitive advantages, and not just for medium-sized companies:
- Automated processes and digital workflow management create flexibility and cushion crises. For example, companies that have digitized their processes have the ability to work independently of location and across channels. Especially during the Corona pandemic, corporations and SMEs had to quickly develop solutions to enable mobile working from the home office, for example – without interrupting the workflow.
- Digital workflows are more user-friendly and easier to document: If all relevant data is available in one platform/tool, employees can work on projects more easily – even from the home office. All processes can be tracked and documented in a structured manner. In addition, assignments and areas of responsibility are clearly defined.
- Automated processes also improve monitoring, for example of project milestones. Regular automatic reporting also ensures that potential for improvement can be identified and subsequently work more efficiently.
No half measures
To take full advantage of these benefits, companies should digitalize their business processes consistently and comprehensively. Old-established SMEs in particular, whose business model had previously worked well in analog, often face problems here. While a start-up can set up its business processes digitally and automated from the outset, many conventional companies build digital processes on top of an existing IT infrastructure. This may optimize some business processes in the first step. In the long term, however, the goal should be to automate all processes to the extent that the company remains competitive.
If the company operates an online store, for example, it should be completely embedded in the corporate processes. This means that all purchasing platforms and ordering options (website, e-mail, social media channels) are integrated into the store system. Ideally, all customer data then flows into the company’s customer database in an automated and structured manner. At the same time, the software controls order processing at best. In this way, inventories and delivery times, invoicing and after-sales are stringently managed from a single platform.
The Internet of Things
We live in smart homes and in the not distant future will simply let the car drive itself. In the factory, robots and RFID chips control the production lines. And when we call the customer center of our electricity provider, our service contact will be an AI-supported voice bot. What sounds like a vision of the future has long since become reality in many areas. And the development continues at a rapid pace. The Internet of Things, with all its networked products, cannot be stopped. Whether it’s a self-driving car or a wristwatch that analyzes countless health parameters: Software based on algorithms is making for ever “smarter” products.
For the product development of medium-sized companies, the digital transformation to smart products opens up a wide range of business options. The basis for “self-thinking” products – in contrast to the digitalization of business processes – is individually developed software that is precisely tailored to the goals and requirements of the product. trinidat develops such individual software solutions. The advantage: clients receive unrestricted usage rights and can use the application in-house as well as market it as a product or as a digital component of a product. In this way, custom-tailored software enables the successful digital transformation of business processes and products and creates real added value.
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