By Gary Turner, Managing Director and co-founder, Xero
While Ireland is home to some of the world’s greatest tech goliaths (Apple, Facebook and Google to name just a few), small to medium sized businesses remain the lifeblood of the economy. They make up 98 per cent of all businesses in Ireland, and traditional businesses continue to play a vital role in the economy.
In particular, the agri-food sector remains a key player. In 2016, there were 589 SMEs in the agri-food sector, exporting €2.7 billion of goods. And this thriving sector is turning to technology to help it grow. Apps such as Figured, a complete online livestock, crop and production tracking, farm budgeting and forecasting tool, helps farmers digitally transform the management of their business processes and is helping to keep them relevant and efficient.
But more could be done to digitally transform Ireland’s SMEs as a whole. According to Microsoft research, four-fifths of Irish organisations overestimate their digital readiness, and PwC’s Irish Family Business Report found that 40% of businesses here feel vulnerable to digital disruption, compared to 30% in the rest of the world.
For many SMEs, digital transformation can seem daunting – it’s a term that makes it seem as if the whole company needs to be turned upside down. We prefer to use the phrase ‘business transformation’, which Deloitte describes as the opportunity to “rethink your business operating models to deliver breakthrough value.”
Once you start thinking of digital transformation as improving business processes, it makes a lot more sense. And, it’s one of those things that’s worse in theory than in practice. Taking the necessary steps to digitise admin tasks or automate labour-intensive processes can not only help your small business run more efficiently and effectively, it can also lower the cost of doing business while boosting profitability.
It’s worth taking the time to really understand the purpose of the transformation, identify why you’re doing it and predict how it can help your business. Then, you can identify which processes you want or need to address first.
Understanding the need for digital transformation
To understand digital transformation, you need to think from the customer’s perspective. Their service expectations have increased – they’re used to using slick websites, having fast delivery choices and plenty of payment options. Once you understand these customer expectations, you can start to anticipate what they’ll want (and maybe more importantly expect) next.
This is where digital transformation comes in handy. There has been an unprecedented change in the tech tools available to SMEs (instant chat services, collaborative work management tools and cloud accounting software to name just a few) that help business owners work smarter and more efficiently. By using technology and software that’s agile, adaptable and scalable, you’ll be in a much better position keep up with your customers as their needs change. Not doing so could put you at a serious disadvantage to your competitors.
Developing your digital transformation strategy
The rate of technological change can feel overwhelming. In fact, a recent survey by Ricoh & Coleman Parkes suggests 61% of organisations in Ireland are not in a good position to take advantage of new digital technologies. What’s more, four out of ten SMEs expect to have taken steps in terms of digital capabilities in the next two years compared to 57% of their global peers.
As a business owner, you’ll need to take charge of the digital transformation strategy, but you shouldn’t have to do it alone. It’s worth getting the whole team together to understand gaps in resources and how they’re using the technology currently installed. Once all concerns are listed, you can begin to prioritise.
Identifying the right technology
Where you choose to focus your digital transformation efforts first depends on your business priorities. Maybe it’simproving customer experience with chatbots, operational agility or workplace culture – every business is different and there certainly isn’t a right or wrong place to begin.
Processes that businesses often find time-consuming and error-prone are generally administrative and financial. The tools that many businesses use to manage these (think Word and Excel spreadsheets) may not be agile enough to give you a true representation of the financial health of your business.
This is where cloud-based solutions come in handy. They’re easy to deploy and are updated in real-time, meaning you can make more informed business decisions based on accurate data. This works well for the finance department, too. Instead of manually issuing and chasing invoices, cloud-based software can do it all for you and keep you updated on where payments are in real-time. Accounting software like Xero will be able to connect directly with your business bank account to give you accurate updates on the company’s finances, which helps you run your business better.
Change is hard – but falling behind is worse. If you open your business up to the opportunities that digital transformation offers, you’ll be in a better position to move the business forward. The sooner you start your digital transformation journey, the sooner you’ll overcome the implementation hurdles and see the benefits.