SME’s and Digitalization: The Biggest Challenges and How To Overcome Them

Digitalizing and digitally transforming manual, repetitive processes and tasks sounds like a big, costly, and time-consuming project. This can easily scare off some smaller businesses from grasping the opportunities which lie in digitalizing workflows. But it does not have to be a big and unmanageable process to automate certain workflows and tasks. SMEs and digitalization might not sound like a perfect match but actually you can benefit a lot from digitalization as a small- or medium sized enterprise.

In our latest webinar, Digital Business Development for SMEs – Advice and Implementation of New Technology, we sat down with Claus Finderup Grove, CEO at Konsolidator, and Jette Thelin, Country Manager for Denmark at Konsolidator.

We tackled the question: How can SMEs get started on digitalizing their business and benefit from digitally transformed workflows and tasks?

In this blog, we summarize the answer to this question and let you know how you easily can get started and overcome the challenges which might unnecessarily hold you back. 

Your role in the finance department is changing

Your role in the finance department is changing. When talking about SMEs and digitalization  you need to make sure that you are able to adapt to this change. It is important to know what kind of skills you will require to be an asset to the finance department just a few years from now. What the finance function needs in the coming years is someone who is good at analyzing data. But you also need to be able to visualize and communicate the data you find to the management.

The big change lies in how you as a finance professional should communicate the data you find. You will move from communicating what has happened to communicating what could and needs to happen. Finance professionals have to go out and talk to the whole businessother departments, employees, and managers to figure out how the financial team can create value.

One way to get this communication going is to talk to people about what you find in your financial data. Another way is to present financial data in a much easier way for non-finance professionals to understand. You have to move away from the classic column layouts in Excel, and try to think much more creatively about the way you present your data to management, for example. Presenting data to your management in large Excel files will not benefit anyone. You need to present data in a way that is easy to read. Your data should provide a clear overview that enables fast strategic decisions. Power BI is one way to create an overview. Through predefined filters, slicing and dicing data, and a user-friendly interface, Power BI is an easy way to quickly get up to date with financial insights.

Innovator or laggard: Which one are you?

When talking about adopting and implementing new digital tools it is also relevant to talk about how fast you are to adopt new technology. 

On the graph below, you will see a curve divided into five segments. The first segment is the Innovators. Innovators must try out the latest new technology before anyone else no matter if it is fully tested and flawless or not. Early adopters jump on board a new technology trend when the product is starting to get bigger and a bit more used on the market, but it is still in the very early stages. The Early majority is one of the two biggest segments on the curve. Here the product has some references. It is still relatively new on the market but it is tested and works. Then there is the Late Majority which is just as big a segment as the early majority. The late majority adopts new technology when it is absolutely clear that the product works and is efficient.  At the bottom of the curve, we find the Laggards. The people and businesses who find themselves in this segment are the last ones to join the technology trend. They are the ones who are still not using smartphones for instance. 

If you find yourself to the right of the curve, you need to find a way to move closer to the middle or beyond. Because if not then you are missing out on great opportunities while your competitors are outrunning you. So, if you or your business are in one of the last two segments on the curve, you need to push further to the left. You can do this by stepping out of your comfort zone and embracing new technology. Start slowly with smaller projects and move on once you feel comfortable.

Covid-19 emphasizes the need to digitalize now

We are in a time where it is extremely important that we can adapt to big changes very quickly. Before the world pandemic, digitalization was moving along but not every process was digitalized and not everyone felt the need for digitizing their business. Now, digitalization is moving at an incredible speed. Since entire countries were locked down and we had to enable remote work, the need for online and digital tools has increased.

As a small- or medium-sized enterprise you can benefit a lot from automating manual tasks through online software. Even by taking small steps towards the digital transformation, you can get far. And don’t hold back on digitalization because you think that:

– You don’t have the needed IT-skills in house
– You don’t have time
– You don’t have the financial resources
– You need to customize any solution before they add value
– You find it too hard to get a clear overview of the different systems on the market
– You have too many projects going on 

These reasons should not hold you back. First of all with cloud tools you don’t need internal IT support. The cloud provider hosts and supports your software. Secondly, no customization is needed and that is also why the cost is much lower. Software does not need to be customized to add value to the business. Often, you can find a great Saas/cloud product that will suit your needs and does not require in-house skills and maintenance.

So don’t let assumptions like these act as a barrier towards digitalization. The rest of the challenges are easy to overcome if you just take them one step at a time.

1) Make a specific plan for where you want to begin and create different, smaller projects rather than one big project which very quickly can seem unmanageable. 
2) Allocate some resources, especially time, to individual projects.
3) Let your management know the need for digitalization and where to start at your finance department.
4) Use some time to explore the possibilities. The market is full of free and inexpensive products that can make the work easier for you and your team. 

Would you like to know more about SMEs and digitalization or how to get started on digitalizing as a small- or medium-sized enterprise?
Then sign up for our webinar on October 22nd: DIGITIZATION FOR SMALL AND MEDIUM-SIZED ENTERPRISES: HOW CAN YOU OPTIMIZE THE FINANCE FUNCTION? or sign up for one of our other webinars for finance professionals.