How SMEs can Profit from Accelerated Digital Transformation

The onslaught of the pandemic has proved that adopting digital transformation is imperative for MSMEs. The advancement brought in by millennials and Gen Z has made it amply clear that digitally modifying their setup is vital for them to increase their reach, resilience, and profits. The increasing use of digital technologies in business functions like finance, HR, marketing, supply chain management, and logistics, etc., is resulting in a better customer experience by adding extra value to the pre-existing services and reducing the time and efforts of the business enterprises. 

Specifically, as India went into a lockdown in 2020, SMEs who were operating offline found themselves trapped: with no feet-on-street sales teams, and with physical distribution models totally disrupted, they could only watch as their rivals who had adopted e-commerce continued to serve their enterprise clients. 

Automation and AI are helping more and more MSMEs find a place under the sun in post-lockdown times. These technologies are helping them reach out to more customers and stay relevant in a dynamic market. However, in India, MSMEs often hesitate to adopt emerging digital technologies and processes. It is estimated that there are more than 70 million SMEs/ MSMEs in India, but then the digital penetration does not show a corresponding number. The silver lining here is some success stories where MSMEs that have understood the benefits of digital adoption have managed to improve their competitiveness. For example, the textile spinning sector, an energy-intensive industry where power cost is a major factor, has reaped dividends by going digital.

The MSME sector has understood that going digital is no longer an option, and the following factors that can help nudge them to cross the digital divide:

Conversion of Capex into Opex - The majority of SMEs are unaware of the benefits available to them as they have not been exposed to digital tools and aid before. There has been a myth that going digital is an expensive proposition. However, the fact is that going digital is not a cost but an investment. With a proper plan in place and with a good partner, going digital can be one of the most transformative decisions. With SaaS products now available and zero expenses on capital goods, a significant advantage is brought to the balance sheet. Also, users need not worry about updates and downtime once they opt for subscription-led, cloud-hosted digital solutions. 

Better Customer Service - Going digital would also mean that existing customers are being serviced more effectively, leading to forming new opportunities and word-of-mouth publicity. Today, every customer demands value for money. By adopting a digital sales and distribution platform, SMEs can redeploy manpower into more productive tasks and also be responsive to customers in real-time.

Motivating Workforce - Remote working will be a norm for quite some time to come. This is a perfect opportunity to create a digital way of working to foster higher levels of employee engagement through collaboration, upskilling, and building a bridge between the roles and the new competencies required.

Whether we like it or not, we have to deal with the fallout of the pandemic. We can think of this uncertainty as an opportunity to remodel our businesses into a more agile and resilient version. The immediate need is to steady the business and to come out of the storm as unscathed as possible. The next phase amongst MSMEs will be to move into the big league with the ability to face any such eventuality in the future. This is where digital selling will play a critical role: not as an alternative but as an imperative.