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Blog post from March 11, 2021

SMEs and digitalization – five steps for implementation

Companies of all sizes and industries are confronted with the challenges of digitalization. While many larger companies and corporations have already achieved a high level of digital maturity, small and medium-sized companies (SMEs) often still have some catching up to do. Find out here how you can pave the way to digital transformation in five steps to take advantage of the opportunities of medium-sized businesses 4.0.

Status quo: Determine the level of digitalization

The path to becoming a digital company begins with an inventory of the current state. At this point you can get an overview of where your company currently stands. The question that needs to be clarified is what digital infrastructure already exists in your company. You should also answer the question of where the digital means can still be expanded. It is also conceivable that you have to start from scratch at certain points in the company.

Danger:
The improved business processes should provide measurable added value. Therefore, it is important to have a clear understanding of current business processes and their performance. Depending on the size and structure of your company, this step may take a certain amount of time.

A small start-up will find it quite easy to figure this out. Processes such as customer acquisition, ordering work materials or accounting can be recorded quickly. A medium-sized manufacturing company will need significantly longer to get an overview of relevant business processes. Knowledge of business processes is not only relevant with regard to further steps in digital transformation. It is an essential basis for successful corporate management.

A small hint:
Simple overview diagrams help you to know processes and identify potential for improvement. You can adapt and revise these with the following developments.

When taking stock, employees and their knowledge of digitalization must also be taken into account. Here you need to determine who already has digital skills and where there is a need for further training. At this point it should also be clear to you which personal motivations can promote or hinder your digitalization project.

Determine digitization goals

Once you have provided an overview of the current status, you should next set clear digitization goals. Digitalization is seen as an opportunity to advance your company’s success. Your reasons and motivations for a digitalization strategy can be varied. 

The need for a digitalization measure can, for example, be the desire to increase production. Technical progress requires the conversion of new machines or production facilities. Another reason may be a change in customer requirements. Clients or customers may develop new technical needs that require a digitalization strategy. In other cases, the digitalization initiative may stem from the need to modernize outdated IT in the company. 

Several digitization goals or combinations of these goals are also conceivable. In any case, it is important to prioritize and precisely define the goals. A digitization project can be associated with high time, financial and personnel requirements. The goals should be clearly communicated to your employees. This includes clarifying the question of which processes will be affected and in what time frame the digitalization measures should take place. 

What exactly needs to be digitized can vary greatly depending on the size, industry and customer base of your company. Examples of processes that need to be digitized include accounting, purchasing or sales. Documentation obligations towards supervisory authorities or clients can also benefit from digitalization. When it comes to automating your company's preparatory accounting and having all documents digitally and securely in one place, you can GetMyInvoices help:

 
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Identify resources

What is required for digitalization? The resource requirements for your digitalization initiative can vary. In this step you determine which infrastructural, technical and personnel requirements must be met. The involvement of the workforce must also be clarified at this point. New specialists may be required to help with implementation or employees may need appropriate training. There may also be external support from consultants or Medium-sized businesses 4.0 competence centers in question.

The digitalization of an SME is often associated with expanding or replacing the IT infrastructure. You should therefore determine which existing IT components are sufficient and actually needed. If necessary, new components can be integrated into the existing landscape or a new infrastructure needs to be set up. 

As far as the technical implementation is concerned, you should seek external advice if necessary. Specialized IT service providers offer customized solutions that are specifically tailored to the needs of the company. Before making your selection, you should clarify exactly what the IT infrastructure should achieve and what requirements the company has in terms of data security and data protection. The need for data security increases with the level of digitalization. It is therefore also a matter of weighing up the opportunities and risks as to which areas need to be digitized.

 

Determine costs for the digitization project

After digitization needs and goals have been clarified, you should clarify the costs and financing issues. Subsidies should also be considered for financing. You can do this from, for example government funding programs or obtain from development banks.
go digital
 
 
 
 
 
 
 
 
 
 
Source: itelligence

When determining costs, you should consider aspects such as digital infrastructure, facilities and staff. You should also not neglect the subsequent costs, for example for maintenance. You should also ask yourself which of the required investments should be financed from your company's resources and which should be financed from outside sources. For many purchases there are funding programs or banks that step in as financing partners for certain purchases. Consultations with your bank or your tax advisor can help with your financing questions.

 
Every change will involve certain investment costs. An important question is when the costs will be paid off. The financial burdens resulting from the digitalization of processes should be calculated in good time.
 

Realization of the project: Implement digitalization

When planning the implementation, the focus is on the question of what overall impact the digitalization project will have on your business operations. It is important that everyone involved is informed in a timely manner. Both managers and employees must be prepared for the changes. Other stakeholders who need to be informed in a timely manner include suppliers, clients and external service providers. Their preparation is a prerequisite for ensuring that their needs and expectations can be included in the planning. This involvement is in turn a prerequisite for understanding and acceptance of the planned measures.

As a manager, you have to define the distribution of competencies when implementing the digitalization project. Depending on the complexity of the project, you can delegate tasks to different employees. Other projects may require external consultants. In principle, business operations must not be disrupted as a result of the measures. Precise agreements between company management, employees and those responsible for digitalization are recommended.

All points at a glance:
  • Determine the current business situation
  • Define digitization goals
  • What requirements are necessary? (technical/personnel)
  • What costs will you incur? Should you apply for funding?
  • Plan and communicate implementation in a structured manner

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