Australian organisations that approach business change as a shape-shift within a greater strategy, rather than a company overhaul, are poised for greater success in digital transformation, according to new research from Microsoft.
The report, Embracing digital transformation: Experiences from Australian organisations, is based on detailed qualitative interviews with 30 senior leaders of business and government organisations to uncover the success factors and obstacles involved in digital transformation.
We spoke to Steven Miller, SMB Group Director at Microsoft Australia, to find out what the findings mean for small to medium-sized businesses.
#1. What are the most important findings in the report that apply to SMEs?
Strikingly, the report uncovers that most organisations, irrespective of size, are still early on the path to digital transformation. Even among leading Australian businesses, the majority have only started building their transformation plan in the last two years, as it increasingly becomes a competitive necessity. Further, the next five years are earmarked as where the bulk of transformation will occur, coinciding with an influx of new technology, from VR to AI. It means SMEs who haven’t yet approached digital transformation, are not at all behind the eight ball; in-fact if they get on the front-foot now, they’ll actually have a good chance at being leaders in the space.
The report also highlighted a key measure of success that SMEs have in spades; a dedicated workforce and leaders that have emotional buy-in to the digital transformation of the businesses. This ‘corporate mindset’ was the most pervasive success factor in the report, helping businesses build a culture that thrives on innovation and supporting the business through disruption. SMEs, which often have a small and agile workforce, are primed to more easily empower employees and bring them along the journey.
#2. The words ‘digital transformation’ evoke a sense of big business, why is it increasingly relevant for small businesses to understand and respond to changes in this space?
Customers don’t distinguish between big business and small business; what they focus on is the experience. It’s therefore important for SMEs to ensure the experience they provide customers aligns to their expectations in a digital, connected world. It makes it an imperative that all organisations look to embrace digital across the touchpoints of their business.
Many SMEs also look at the challenge of digital transformation and see it as a “big business” problem; reserved for those who have budgets to implement such sweeping changes. However, digital technology has the potential to level the playing field for SMEs. The challenges and opportunity of digital is applied equally, irrespective of the size of the organisation. It means even the smallest of businesses can compete on a world stage, developing offerings that push the boundaries and bringing forward new innovation.
Further, the impact of digital transformation will increase over the next five years as technologies such as cloud computing, the Internet of Things and AI emerge from sci-fi and into reality. All business are already impacted by digital and as this is only set to increase, it’s important that SMEs take steps to future-proof their businesses now.
#3. What key factors hold small businesses back from responding to digital disruption?
Small businesses are often held back from responding to digital disruption as they don’t know where to start. Transformation hits all pillars of a businesses’ outputs; operations, product, customer and staff. It makes it a whole of business challenge and difficult to approach.
SMEs are held back from moving forward with digital transformation as they believe technology is the key to responding to disruption; fighting tech with tech. In reality, technology is a secondary factor to successful transformation, emerging as a priority after a company gets it corporate mindset geared to change. Having a culture that breeds innovation is a critical success factor, creating leadership buy-in, and bringing staff on the journey with the business.
#4. How can small to medium-sized enterprises make digital changes?
The key for any SME looking to make digital changes is to jump in and get started. Businesses often get stuck in the details, looking for the perfect, whole of business transformation plan when it simply doesn’t exist. There is no such thing as the “right path” for digital transformation; all journeys are business-specific and require commitment to change. We recommend businesses put in place a wider strategy but focus on small ‘shape-shifts’ towards the end goal, rather than overhauling the business all at once. The benefit of this approach is it allows a business to be agile but to also adjust, creating further support through the process from executives and staff. This helps build a corporate mindset that fosters change. Once a digital journey is started, it can be amended to accommodate budget requirements, resources and the tolerance for disruption.