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SMBs not yet achieving full digital business transformation potential

Increasingly, SMBs are gaining benefits from digital business transformation efforts, but implementation is tougher than expected, according to a new IDC survey.

While midsize and small businesses are increasingly benefiting from digital business transformation efforts, many also are finding that efforts to implement the transformation are tougher than anticipated, according to a new IDC survey.

The Next Steps in Digital Transformation survey indicated a majority of SMBs that have adopted digital applications said they have met or exceeded expectations in a number of areas: better access to information (86% met or exceeded expectations); improved workers' productivity (78%); increased sales or revenue (74%); decreased costs (72%); and increased competitive advantage or market share (72%).

However, the survey also suggested that, overall, SMBs are just getting started with digital business transformation projects, and progress may be slowing down. Only 35% of companies surveyed said they were well on their way to adopting or deriving business insights from digital business transformation applications and technologies. This compares with 45% from a similar study conducted last year.

Companies realizing complexity of project

This may indicate that SMBs are beginning to realize digital business transformation projects may be more complex than they had anticipated, according to Ray Boggs, IDC's vice president of SMB research.

The survey was intended to find out more about the actions SMBs are taking for digital business transformation and their available resources, as well as their attitudes or their sense of progress.

"Compared to a similar study we did last year, there's been greater progress; there's also a greater understanding that there's a whole lot more to do," Boggs said. "Folks actually told us they've got so much more work to do. Whereas last year, they were saying, 'We're there; we got it covered.' They're seeing progress, and they're pretty happy with it, but they're beginning to understand that this is not a one-and-done -- it's an ongoing process."

For the report, commissioned by SAP and conducted in November 2016, IDC surveyed business and IT decision-makers in just over 3,900 small and midsize companies around the world. Small companies were defined as having between 10 and 99 employees; midsize companies were defined as having between 100 and 999 employees.

Full potential not yet realized

SMBs generally include the following technology capabilities in digital business transformation activities, according to Boggs: hyper-connectivity with anytime and anywhere communication; unlimited computing power on diverse platforms; cloud computing, with easy access to hosted software and services; proliferation of sensors and mobile devices that provide continuous streaming of information; and reliably secure access to data that supports the use of the data, while minimizing internal and external vulnerabilities.

Although adopting these technologies and applications would appear to be a no-brainer for SMBs, and many have derived benefits from them, the survey indicated their full potential is not being realized.

Boggs explained that SMBs, in theory, have a greater flexibility to leverage cloud applications because they have less at stake in terms of installed base and hardware investments. However, SMB owners are often concerned with security and are more conservative in their approach to cloud resources. Digital business transformation technologies are also often perceived as being more complex than they are, leading to slower adoption.

This perception is, to some extent, based on an outdated and inaccurate knowledge of the modern tools available to SMBs, according to Mika Yamamoto, SAP's chief marketing officer for SMBs.

Gap between perception and reality

"There's a perception-reality gap there, where they perceive that it's going to be onerous probably because the systems they know from the past weren't really right-sized for SMBs the way we see solutions today," Yamamoto said. "It's also a bit of a leap of faith for a lot of SMBs. If you're a brick-and-mortar company that was paper-based and analog, it's challenging to make that leap to digital, but it's about realizing the possibilities."

The survey's other findings:

  • The most widely adopted digital business transformation applications include collaboration software for document and calendar sharing (identified by 60% of respondents); CRM software (54%); and e-commerce, including online order taking and billing (51%).
  • SMB digital business transformation focuses on practicality. The most common response driving adoption was to meet the area of greatest organizational need (48%). Other common drivers are the easiest or quickest implementation (35%) and the quickest or highest ROI (27%).
  • Deployment preferences were evenly divided between on premises and cloud at 42%, with 16% indicating no preference. However, cloud use is growing, as more than half of small businesses and three quarters of midsize firms worldwide use at least one cloud-based resource.

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