Published January 31, 2022

What digital transformation means for SMEs

Partner Alex Thomson discusses some of the key digital transformation themes that SMEs are now embracing and benefitting from.

The last decade has been dominated by  businesses who have adapted to technology, both as a disruptive threat to legacy business models, but also an opportunity to reach new customers, automate processes and completely evolve ways of working.

When we discuss “digital transformation” we tend to think of how the US tech giants such as Microsoft, Google and Apple have transformed our lives. Yet these businesses have been in existence for decades (and in the case of Microsoft and Apple approaching their 50th birthdays). UK SMEs have been working with these tools for a long time but many businesses have only relatively recently embraced how to harness technology as a key element of their operations, ways of working and growth plans.

Businesses that operate across traditionally “offline” sectors such as manufacturing, real estate, retail and professional services have exploited opportunities to digitise traditional business models, engage with their customers in different ways, extend their service offerings and leverage their scale using the right tools and working methods.

There are some key themes that SMEs have embraced over the last decade and these have only accelerated through the last two years of pandemic response:

Automation – the simple process of replacing a paper based or manual process with a digital one has transformed how SMEs can scale without constantly adding administration layers and overhead. Supply chain, HR and finance are just a few of the areas where off the shelf or bespoke products can reduce cost, improve timeliness and accuracy and bring efficiencies for SMEs.

Data – the huge potential of Machine Learning and AI is well documented. But for an SME, it can simply be about implementing a comprehensive data strategy – what information can be captured, how should it be structured, how can it be interrogated to inform better business decisions? Relevant and focussed KPIs backed by real time data is a huge opportunity.

Ways of working – why is work organised in a particular way and is it optimal? Work patterns are often the result of one person’s idea (a founder, a former CEO?) of how things ought to be done, an organic evolution that reflects office politics and turf wars or potentially something copied from larger firms. Digital transformation enables an SME to rethink how work should flow, what can be automated, how do different departments hand over work, where should oversight or quality review sit and where are the constraints that frustrate production or progress?

Time and space – a lasting legacy of the pandemic will be remote working. Companies that were previously site based had no choice but to adapt and the vast majority did so successfully. As a result of talent shortages and changed expectations there is little chance of going back to an exclusively on-site future.  Digital tools enable SMEs to adapt to and exploit these changes which complement the natural advantage of better visibility across a smaller organisation, shorter reporting lines and tight-knit cultures.

At GCP we are fortunate to work with some exceptional growth companies and we have seen the opportunities that digital transformation has unleashed first hand. Businesses such as Arrow Communications, Chaucer Consulting, Infinity Works, CubeLogic and Hippo Digital have produced significant growth through technology selection, adapting ways of working and great talent management.

Examples include generating data from the business to inform and drive strategic and operational business decisions, seamless operational scaling from the home, to digital first engagement with end clients. Essentially it is possible to do more and do it better without having a corresponding growth in headcount, complexity or overheads.

We are at a really exciting time for SMEs to exploit these trends and technologies. Large organisations have no choice but to adopt digital systems and ways of working to manage the business and produce basic reporting. SMEs can use the same tools and adapt processes to drive efficiencies and growth. Essentially it allows them to properly exploit their natural advantages of being nimble and responsive compared to their larger competitors.

Alex has recently discussed the growth opportunities within our partnership with digital transformation consultancy, Hippo Digital.

You can read more about Alex’s experience here.