SMEs and digitization – five steps for implementation

Thursday, 11. March 2021 | 0 Comments

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

Status quo: Determine the level of digitization

The path to a digital company begins with an inventory of the current state. At this point, you get an overview of where your company currently stands. In doing so, you must clarify the question of what kind of digital infrastructure is already in place in your company. You should also answer the question of where the digital resources can still be expanded. It is also conceivable that you will have to start from scratch at certain points in the company.

The improved business processes should provide measurable added value. Therefore, it is important to have a clear understanding of the current business processes and their performance. This step may take some time depending on the size and structure of your company.

A small startup will have a fairly easy time figuring this out. Processes such as customer acquisition, ordering work materials, or accounting can be quickly grasped. A manufacturing company in the midmarket will need much longer for an overview of relevant business processes. Knowledge of business processes is not only relevant concerning further steps in the digital transformation. It is an essential basis for successful corporate management.

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

When taking stock, you also need to consider the employees and their knowledge of digitization. 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 become clear to you which personal motivations can promote or inhibit your digitization project.

Determine digitization goals

Once you have an overview of the current state, you should next define clear digitization goals. Digitization is seen as an opportunity to drive your company’s success. Your reasons and motivations for a digitization strategy can be many and varied. 

For example, the need for a digitization measure may be the desire to increase production. Technical progress requires the conversion of new machines or production equipment. Another reason may be a change in customer requirements. Clients or customers could develop new technical needs that require a digitization strategy. In other cases, the digitization initiative may stem from the need to modernize outdated EDP 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 communicated precisely to your employees. This includes clarifying which processes will be affected and the time frame in which the digitization measures are to take place. 

The specifics of what needs to be digitized can vary greatly depending on the size, industry, and clientele of your company. Examples of processes to be digitized could be accounting, purchasing, or sales. Documentation requirements vis-à-vis supervisory authorities or clients can also benefit from digitization. When it comes to automating your company’s preparatory accounting and having all documents digitally and securely in one place, GetMyInvoices can help you:

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Determine resources

What is required for digitization? The resources required for your digitization 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. External support from consultants or SME 4.0 competence centers may also be an option.

The digitization of an SME is often associated with the expansion or replacement of the IT infrastructure. You should therefore determine which existing IT components are sufficient and are needed. If necessary, new components can be integrated into the existing landscape or it may be necessary to set up a new infrastructure. 

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 be able to do and what the company’s requirements are in terms of data security and data protection. The need for data security increases with the degree of digitization. Therefore, it is also a matter of weighing up the opportunities and risks as to which areas are to be digitized.

Determine costs for the digitization project

Once the digitization needs and goals have been clarified, you should clarify the costs and the question of financing. Subsidies should also be considered for the financing. You can obtain these, for example, from government funding programs or development banks.
When determining the costs, you should consider aspects such as digital infrastructure, equipment, and personnel. You should also not neglect the subsequent costs, for example for maintenance. You should also ask yourself which of the necessary investments should be financed from your company’s own resources and which should be financed externally. For many purchases, there are subsidy programs or banks that act as financing partners for certain purchases. Consultations with your bank or your tax advisor can help with your financing questions.

Every conversion will involve certain investment costs. An important question is when the costs will be recouped. The financial burdens arising from the digitization of processes should be calculated in good time.

Realization of the project: Implementing digitization

When planning the implementation, the focus is on the question of what overall impact the digitization project will have on your business operations. All those involved must be informed in good time. Both managers and employees must be prepared for the changes. Other stakeholders who need to be informed in good time include suppliers, clients, and external service providers. Preparing them is a prerequisite for including their needs and expectations in the planning. This inclusion is in turn a prerequisite for understanding and acceptance of the planned measures.

As a manager, you must define the distribution of competencies in the implementation of the digitization project. Depending on the complexity of the project, you can delegate tasks to different employees. Other projects may require external consultants. As a general rule, business operations must not be disrupted in the course of the measures. Precise agreements between the company management, employees, and those responsible for digitization are recommended.

All topics at a glance:
  • Determine the current state of the company
  • Define digitization goals
  • Which requirements are necessary? (technical/personal)
  • What costs will you incur? Should subsidies be applied for?
  • Plan and communicate implementation in a structured manner

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