The COVID-19 pandemic has caused large-scale disruptions for businesses across the globe and forced organizations to evolve and adapt in a short timeframe. According to a recent survey of BDO Canada clients, most of them identified digital transformation as one of their top priorities. Check out this article captured by SBX partners BDO Canada for steps you can take to meet the new realities of business.
The pandemic has caused many small and medium-sized business to accelerate their digital transformation by up to five years. Many were unprepared for this wave of disruption, causing organizations to reevaluate business models, reassess cash flows, and reprioritize resources to meet the new realities of business.
As organizations either kick-start their digital transformation or reprioritize their plans, we recommend that you start with assessing the organization’s culture and the appetite to undertake a transformation as well as how technology can improve your value chain.
Digital transformation is typically associated with significant change, such as shifting business models, including new products or services. The best start to a digital transformation, however, is by making small yet impactful changes that solve everyday problems your business or customers face.
We recommend that organizations start by building a list of pain points the business is trying to solve, including:
- What pain points do your customers feel in their pre-purchase, purchase, and post-purchase experiences with your business?
- What are your customers asking for that you’re not providing?
- What pain points do your employees continuously bring forward about day-to-day operations?
This list should be reviewed by all stakeholders to ensure its completeness and relevance. Once the initial list is completed, we recommend organizations evaluate each idea across three key hurdles:
- Does it align with your organization’s strategic objectives? Will solving this pain point help achieve the organization’s strategic plan in the next 12 to 18 months?
- Does it have the required return on investment (ROI) that you’re seeking, either in the form of revenue-based ROI, efficiency gains, or intangible value (such as employee or customer satisfaction)?
- Can the organization internally or with external support effectively implement the suggested changes?
To assist with the adoption of a digital strategy, you should review best practices, hold lunch and learns, and put together a communication campaign to emphasize the benefits of a transformation for both the company and employees.
The transformation doesn’t have to be a complete overhaul all at once. There are some low-risk, high-yielding items that can be tackled during the creation of a digitization road map—which takes about three to four months to implement. It should be noted that this timeframe can vary, but you can use that time to establish ongoing improvements and create a proper digital structure and road map for long-term benefits.
“The pandemic has shown us the importance of adapting quickly to meet unexpected challenges. This investment will help vital workers gain the skills they need so they can confidently face new challenges and continue to thrive.”
– Monte McNaughton, Minister of Labour, Training and Skills Development
The program is available to eligible Ontario employees at any manufacturing business at no cost. Courses will be offered as an in person and/or virtual format depending on employer and/or employee preference.
Common digitization strategies
There are several ways we’ve seen small and medium-sized companies start to digitize the workplace. Here are some of the most popular strategies:
- Digital collaboration tools—Widespread lockdowns initiated at the beginning of the pandemic caused companies to immediately adopt collaboration technology such as Zoom, Slack, and Google Docs to allow connectivity amongst their employees. This was an immediate reaction to the pandemic and continues to evolve.
- Customer-enabling solutions—Many organizations have incorporated customer engagement tools to respond to changing customer expectations and buying behaviour to allow for a two-way interaction with their audience. By having dynamic and relevant interactions with their customers, organizations are better able to assess demands and enhance customer experience.
- Cloud strategies—Leveraging cloud strategies that are scalable and flexible allows growing businesses to maintain an IT infrastructure that’s capable of keeping up with the rest of the organization without the additional costs of hardware and equipment.
- Implementing an enterprise resource planning (ERP) system—A popular choice amongst enterprises, an ERP system affects the entire business from accounting to human resources. This is the most expensive solution, but also the most rewarding in terms of productivity and long-term cost reductions.
The number of technology investments that fail to realize their intended value is very high. Our experience tells us that organizations that focus on the following are more likely to achieve their intended outcomes:
- Enable agile people and processes—Organizations are all striving to be agile in response to an environment that changes quickly. Client expectations and new challengers seem to drive the most critical types of changes. To respond to these challenges, you need to have people and processes that are ready, willing, and able to change.
- Enable, encourage and reward innovation—Organizations of all sizes are trying to foster and enable innovation. Doing this effectively can make you a market leader and cause your competitors to take action.
- Define outcomes and measure performance—The typical measurement of success for most technology projects is whether it’s on time and on budget. However, outcomes need to measured more broadly. These investments are trying to deliver efficiency, client experience, or so much more.
- Manage the people side of change—Technology deployments almost always impact a large set of the employees within your company. Managing the employees is normally the difference between achieving or not achieving your intended outcomes. Setting a change management strategy that engages the employees to drive the outcomes is essential.
The benefits of digitization aren’t just the amount of money and time saved; it can also improve your market reach.
For instance, companies without an online presence (such as retailers) may lose business because their suppliers, vendors, or customers aren’t able to transact with them. Also, there have been changes in customers’ expectations and behaviour. The inability to connect with them can make it look as though you’re lagging behind your competitors.
Having the latest technology can help retain talent. If your employees are becoming frustrated due to lack of investment in technology that can improve their productivity and/or allow them flexible work options that are emerging in the marketplace, they’ll be more likely to leave. It will also be more difficult to attract employees if you’re using outdated technology.
A digital transformation also has the potential to improve customer engagement and loyalty, help you compete more effectively and enter new markets, increase efficiency, and give you access to real-time data to make more effective and timely business decisions.
Preparing for the new normal
The costs of digitizing can be high. This will depend on the number of employees you have, how current your existing systems are, and where you want to take the business. However, the cost of not digitizing can be more expensive in the long run.
An important factor that companies must consider is how technology can improve your value chain. You should then create a relevant digital road map rather than succumbing to the pressures of market hype. Once you’ve decided to move forward, you should establish your objectives, who your stakeholders are, and what your stakeholders’ key pain points are and how they can be solved in a way that’s most useful to them.
A recent finding from Microsoft’s 2021 Work Trade Index report finds that business leaders are faring better than their employees: 61% of leaders say they are thriving compared to 38% of the employees without decision-making authority. As such, understanding the balance between productivity and workforce exhaustion will be key for businesses.
As consumer demand patterns and expectations continue to shift, your company’s digital road map should consider the customer of tomorrow and their expectations. Incorporating end-to-end insight to gain visibility over the supply chain to make relevant decisions that drive better customer service may be an important consideration for your business.
Along with digital transformation, attention must be paid to security risk exposure. A recent study from technology services provider NTT notes that the manufacturing, healthcare, and finance industries saw cyberattacks increase by 300%, 200%, and 53%, respectively, in 2020. Those three sectors combined accounted for 62% of attacks worldwide last year, up from 11% in 2019.
Digitizing the workplace is important for small and medium-sized businesses as complacency is no longer an option for those that want to succeed in the new normal.
A digital transformation is a massive undertaking that can be difficult to accomplish without the right advice. Understanding how a transformation aligns with your company’s unique selling proposition, culture, and workforce will help set up your organization for long-term success.
Medium-sized clients look to BDO for market scans, detailed recommendations, and assistance with ensuring they achieve their target return on investment from their technology spend. Smaller clients have a more do-it-yourself approach and a more effective role is to coach and guide the management team in ensuring successful transformation. Contact BDO to find out how they can help.