The pandemic has underscored the importance of digital transformation, and SMEs especially need to digitalize and plan for their future.
The COVID-19 pandemic has accelerated digital transformation for many, but as the economy looks towards recovery, businesses have to go beyond the short-term approach of only tackling current symptoms.
What do SMEs need to consider to avoid falling behind in the next few years? Digitalization isn’t simply about adopting digital tools; it’s more about planning for the long-term to seize growth opportunities.
Pauline Sim, Head, The FinLab, an innovation accelerator that helps SMEs and startups transform their business digitally, shares with DigiconAsia some best digitalization practices for SMEs and entrepreneurs to sustain their innovation journey for the long term.
As businesses implement digital solutions to solve COVID-19 related pain points, they may fall into the trap of easing symptoms rather than taking the opportunity to transform their businesses holistically for the future. With this in mind, what do SMEs need to consider to avoid falling behind?
Balancing their business needs with a long-term digital transformation strategy is key for small- and medium-sized enterprises (SMEs) to build a sustainable business and to remain competitive. To do so, it is essential for them to start with the fundamentals. This means that SMEs must first review their business model and identify the areas in which technology can deliver the greatest impact on business performance before determining the right digital solutions to adopt as they prioritize in these areas.
This is why at The FinLab, an innovation accelerator powered by the United Overseas Bank (UOB), our approach is to begin by guiding start-ups and SMEs through a holistic evaluation of their key business challenges and needs. This gives companies clarity on the root causes of their business challenges and how a digital transformation strategy can address these issues and enable long-term growth.
During this process, we also tap UOB’s eight decades of expertise in serving ASEAN SMEs and its deep understanding of doing business in the region to guide our SMEs on how they can continue to grow sustainably.
What are some common digitalization pitfalls SMEs face and how can they overcome them?
Sim: Having helped many SMEs over the years, we have found that digitalization is often viewed as an expense rather than a long term investment. Given the current economic slowdown, businesses that have started to invest in digitalization may be tempted to step on the brakes. However, it is important for these businesses to stay the course and to remember that this investment is necessary to facilitate recovery and to build a business that can weather future uncertainties. Only with the right mindset can SMEs reap the full benefits of digitalization.
We also recognize that many SMEs may lack the knowledge to determine the right digital tools that best suit their business needs. At The FinLab, we support SMEs through this journey by matching them with relevant technology solutions and guiding them as they implement these solutions. We also connect our SMEs to The FinLab’s community of like-minded SMEs, technology providers as well as consultants and mentors across the industry and from UOB, and provide them access to our business transformation programmes so that they can learn about new innovations and best practices.
Another common pitfall we have seen is SMEs overlooking the importance of measuring the success of their digital transformation strategy as they embark on their digitalization journey. Establishing a set of success metrics is essential for SMEs to measure outcomes and return on investment. To help SMEs maximize the outcomes of their investment, we guide them on how to pilot digital solutions and to evaluate their success so that they can course-correct before committing to a full-scale rollout.
What are some key lessons SMEs in this region should learn from the pandemic?
Sim: The impact of COVID-19 on SMEs has underscored the importance of digital transformation in long term business sustainability. While tapping digital solutions enables SMEs to tackle immediate business challenges, a long-term view of digitalization is what will make them nimbler in capturing new growth opportunities and become more adaptable to changes brought about by disruption and crises.
Strong leadership is also key for any SME to succeed in its digital transformation journey. Leaders must be open to innovation, willing to take a step back to evaluate how digital technology can drive the business forward, and be committed to test new ideas and to work through change management. Only by doing so can digitalization become a long-term strategic initiative across the company, rather than a string of disjointed projects and technological solutions.
As the pandemic continues to accelerate the trend of e-commerce, digitalization has become a necessity for businesses to create new revenue streams and to respond more effectively to changes in consumption behavior. This trend will to continue post-pandemic so it is imperative business have a digitalization plan to sustain them over the long-term.
How can businesses sustain momentum to drive digital adoption for the long haul?
Sim: People must be a key focus in a business’ digital transformation drive. It is important for SMEs to encourage employees to embrace technology and change by demonstrating the benefits of digitalization in their work and in driving the company’s long-term growth.
One way that SMEs can do so is to invest in their employees to ensure that they are equipped with the knowledge and skills to tap new digital tools and to enable new digital processes in the long term.
The SME Digital Reboot programme is a collaboration between The FinLab and NTUC LHub to help SMEs train their employees in the areas of digitalization. For example, SMEs can tap the expertise of consultants as well as the training courses under the programme to enable employees to deepen their knowledge and skills of using new digital tools. SMEs that are part of The FinLab Online can also access the masterclasses on our digital platform to deep dive into the different areas of digitalization such as robotic process automation, digital marketing and change management
Being part of a like-minded community also plays an important role in helping these SMEs through their transformation journey as they get to learn best practices from other start-ups, SMEs and mentors.
This is the reason we launched The FinLab Online in June, a digital platform guiding SMEs and entrepreneurs to help them understand their technology needs, gain access to learning resources, and connect with relevant solution partners to receive implementation support.
For companies that have taken the first step towards digitalization during the pandemic, we encourage them to stay the course as part of driving long-term success.