MSME & Small Business – Digital Transformation for Growth

Digital revolution started taking place in the 1990s and now the digital revolution has spread spells and bounds, reaching new milestones every time. Initially, digital technology was an expensive affair and was available for only huge corporations but now, it’s not that expensive for procuring technology and it is available at both small scale and individual level and the credit needs to be given to the Internet giants like Google, Yahoo, Facebook, etc.

As the business processes are getting automated, and are slowly reducing the human interventions, the concepts like Internet of things, Cloud computing, SAAS, Artificial Intelligence and Machine learning is changing the way, the companies used to do business.

What is Digital transformation?

A business attains digital transformation when the digital technology is integrated into all areas of the businesses which helps in empowering employees, optimize operations, modify products and engage customers so that they can receive enhanced value.

What is the Digital Transformation Benefits for MSMEs?

1. Enhanced Customer experience – 24*7 availability is possible to serve the customer using artificial intelligence, machine learning and chatbots. The customer experiences delight and the trust of the organization becomes stronger.
2. Cost Reduction – Predictive business analytics and machine learning helps in the identification of defects in the production which further helps to reduce the cost
3. Accurate Decision making – The data collection of the existing customers, potential customers, competitors can be extracted easily which helps in the well-informed decision making in the areas of marketing, production & sales by understanding customer behaviour, purchase decisions, current trends
4. Enhanced efficiency – Automation of the business process reduces the human intervention and eliminate the chance of human error resulting in higher productivity and efficiency
5. Increased Profitability – Adaptable to the advanced technologies results in improved and upgraded products resulting in the profitability of the business.

Also Read: How Digitization Can Help SMEs In India?

What is the barrier to the Digital Transformation for MSMEs?

1. High set up cost – Transforming the existing business set up from physical to digital attracts high initial cost that the firms shy away to implement
2. Complexity in integration – Certain areas of the business where the human interaction or the manpower is required
3. Not urgent – Those businesses which are traditional and defy change, do not feel an urgency in bringing their business in the digital platform
4. Lack of digitally skilled workforce – Businesses cannot take the advantage of the digital revolution completely if there is need gap between the digital knowledge and the digital execution, hence the existing workforce does not have the expertise of transitioning into the digital world smoothly

How can digital transformation help small businesses during COVID?

The pandemic caused by the COVID 19 has resulted in the unprecedented changes that have made the businesses to rethink their existing business models and new ways to create value for the customers. The businesses need to focus on the following areas before digital transformation:

• Need to identify new customers as the existing customers have cash constraints or the demand for the product reduced – all the efforts need to be focussed in generating leads and should be customised as per the demands.
• Need to ensure that the existing customer is serviced effectively through frequent communications, politeness and hassle-free customer support through digital channels which will help them to upsell in the future.
• The supply chain needs to be streamlined as the majority of the industries are suffering from bottlenecks & broken supply chain. There has to be some long term alternative to the current supply chain as the effects of COVID 19 is here to stay.
• Maintain the motivation of the people to work – employees should be motivated by ensuring a higher level of engagement through collaboration, upskilling and new roles establishing benchmarks for the productivity

Also Read: Top Challenges faced by MSME due to COVID

What are the various possibilities that the digital transformation offers?

The segments that the digital transformation will help MSMEs to focus on are:

1. Online Presence – As the virtual footprints of the consumers have increased multi-fold in the last few years, a company needs to have a robust website, mobile application or the e-commerce site for the strong online presence
2. Cloud-Based Solutions – Various cloud-based solutions need to be explored like Accounts, CRM, Team collaboration, etc. for efficient and hassle-free functioning
3. Social Media Presence – Presence in social network channels will help capture new markets and expand existing markets
4. Data Tracking – Digital process has backend supports and analytics that helps generate reports and broaden the scope of knowledge through access to the important data.

Apply for MSME Loan

There are a lot of unused data that has not been utilised properly to generate business insights that can change the track of business and help it grow exponentially. It is imperative that there has to be the right approach to interact with the data effectively and combining it with various models helps in generating business ideas.