It’s not a digital transformation, it’s a transformation of your business.
Key insights
Harnessing digital tools to solve your business problems
Setting a digital direction
Digitisation versus digitalisation
Destination DX
A roadmap for the future
1. Done correctly, digital transformation (DX) can strip significant cost out of a business, while allowing it to execute business processes faster, sharpen the customer experience and become more agile.
2. Digital Technology works best when put to work solving a real and often urgent business problem.
3. Evaluate error-prone and time-consuming processes and look for those that are the source of employee or customer frustration.
4. Use digitised data and digital technologies to transform manual business processes into a more streamlined, automated workflow.
5. Understand that digitalisation isn’t necessarily about removing human workers from a business process. Look for ways to augment human capabilities with digital data and tools.
6. Digitalisation offers exciting ways to transform the customer experience.
7. Think about IT in a new way, not simply as an efficiency tool, but as an enabler for strategic growth.
8. Consider how business models, technology stacks, processes and people evolve to keep pace with a changing customer and technology landscape.
9. Look for tactical opportunities, but also have a long-term plan underpinned by a robust strategy and architecture.
CEOs of small and medium businesses (SMBs) often react with scepticism to the term ‘digital transformation’. It sounds like an undertaking for large corporations with lots of money to throw at cutting-edge tech and pricy management consultants – not a venture for an SMB worried about keeping its doors open in the face of load shedding, rand/dollar volatility and rising input costs.
But digital transformation needn’t leave a business mired in complex tech implementations that take years to complete. Done right, it is all about making it cheaper and easier to do business. When effectively harnessed, digital tools can strip significant cost out of a business, while allowing it to execute business processes faster, sharpen the customer experience and become more agile.
One of the big lessons of the pandemic is that today’s digital tools and technologies can deliver immense benefits without lengthy implementations or heavy capex. Indeed, many SMBs enabled entire teams to work from home in a matter of days during the first hard lockdowns of 2020. Others created ecommerce sites within a week or started accepting contactless mobile payments for the first time.
Behind the scenes, reliable cloud infrastructure and software-as-a-service platforms helped them to move online at minimal cost and high velocity. Were there tech teething problems? Sure, but for most businesses, the digital pivot was surprisingly quick and smooth. Their people, too, showed remarkable adaptability in learning new ways of working when the necessity arose.
This highlights an important point about digital technology: it’s at its best when put to work solving a real and often urgent business problem. As SMBs look to build on the digital advances they made in the pandemic, an effective approach is to evaluate what their biggest business challenges are and then to find solutions that solve their problem or unlock their opportunities.
A good place to start is to evaluate which business processes are particularly error-prone, take too much time to complete or are the source of employee or customer frustration. Whatever challenges an organisation is facing early in its digital journey, the chances are that there are some compelling answers to their needs.
Businesses that are only just starting their digital journeys may reap enormous rewards from automating and digitising some of their basic business processes. Digitisation is the process of converting information from a physical or analogue form into a digital format—for example, scanning a paper document or ‘ripping’ a CD or DVD into an MP3 or MP4 file to be used on a computer.
For many businesses, there are quick wins to be found in digitising paper as it comes into the business. Smart scanning solutions allow an organisation to easily convert paper documents—including handwriting and machine print—into electronic files that can be edited or captured in a structured database.
Benefits include reducing the handling costs of physical media (such as storage and printing costs) and making information available as bits and bytes that can be used to drive a digital business process. That brings us neatly to the opportunities of digitalisation—using digitised data and digital technologies to transform manual business processes into a more streamlined, automated workflow.
The opportunities are manifold. Many smaller businesses can generate significant return on investment from simply putting in place an automated solution for generating quotes and turning them into invoices. This can free up hours of labour that can instead be used to add value, while improving process accuracy, speeding up the process and offering a better customer experience.
Digitalisation isn’t necessarily about removing human workers from a business process. It can also augment human capabilities with digital data and tools. For example, a company might automate accounting and payroll using a cloud-based subscription service. Although such software will automate capturing data and doing calculations, making sense of the numbers still needs human expertise.
Digitalisation offers exciting ways to transform the customer experience. With an ecommerce platform like Shopify, a business can put together a slick transactional website with secure payments in a matter of days. An SMB will not need to spend a fortune on integration and consulting to get up-and-running. And once a website is up, it costs only a few hundred rand a month in subscription fees to keep it going.
Another example can be seen in the growing selection of payment instruments available to SMBs, ranging from cash, debit and credit cards, and EFT through to instant EFT, QR codes, mobile wallets and subscription billing. Fintech platforms make it cheap and simple for any SMB to offer their clients a wide choice of payment options, which enhances the customer experience and improves cash flow.
A piecemeal approach is a great way to get started or to get some momentum going, However, as an SMB’s success and confidence with digital tech grows, it needs to think about IT in a new way—not simply as a tool for doing tasks better, quicker, cheaper and more accurately, but as an enabler for strategic growth.
This means looking beyond those quick win projects and proofs of concept to achieving a wider transformation of the business. SMBs should be thinking about how they can scale and sustain their early digital successes, and connect them to the company’s vision and strategy. This is where we get into the real meat of digital transformation.
Digital transformation, sometimes called DX for short, means embedding digital ways of operating into every process and component of the business. It’s not just about the tools and technologies the enterprise implements—it’s also how its business models, technology stack, processes and people evolve to keep pace with a changing customer and technology landscape.
Again, many of the key questions are as much about the business as much as the tech. Who will the customers of the future be? What will they want? What channels are best to reach them? Where will the next competitors come from and what are their strengths? Who could the business partner with? How will ways of working need to change?
A key part of the conversation will revolve around how the organisation modernises its technology environment via hybrid cloud, hyperconverged solutions and agile methodologies. Further down the line, successful businesses will want to connect technology and business siloes to allow for higher levels of collaboration, automation and visibility across their business.
We are still some way from maximising the potential of digital tech. As such, SMBs should take both a top-down and bottom-up approach to their digital transformation: look for the tactical opportunities, but also have a long-term plan underpinned by a robust strategy and architecture. This helps a business get started, bank quick wins and avoid analysis-paralysis, while having a coherent roadmap for the future.
For an example of how digital technology is changing the ways companies compete, look no further than TymeBank, the digital bank majority-owned by Patrice Motsepe’s African Rainbow Capital. It took the bank just three years to reach 4 million customers and the institution claims to be onboarding new customers at a rate of 140,000 a month.[4]
TymeBank has achieved this milestone with relatively low overheads compared to the Big Five incumbents—it doesn’t run a massive branch network or complex legacy systems, for example. The secret behind its success is a flexible IT platform and core banking system that runs completely in the cloud.[5]
TymeBank makes extensive use of the Amazon Web Services (AWS) cloud platform. It is here where TymeBank links up to its software-as-a-service core banking system, Mambu. For TymeBank, Mambu provides a highly secure ledger for customers’ accounts, managing the debits and credits incurred by customers every day.
One of TymeBank’s competitive differentiators is the way it has embraced the world of APIs (Application Programming Interfaces). This architecture makes it relatively easy for the bank to integrate with other companies’ systems, enabling it to rapidly launch new products and bring distribution partners on board. This can be seen in the way the bank connects with Pick n Pay’s Smart Shopper system.
The bank has deployed hundreds of TymeBank kiosks at Pick n Pay and Boxer stores countrywide. It has made smart use of commodity hardware to create a cost-effective yet customised solution. TymeBank manufactures these kiosks, which are built on an Android tablet for the customer interface; a power and peripheral management unit connected to a Raspberry Pi; and a debit card printer and storage facility.
Booking a room in a stranger’s house in a city you’ve never visited before without uttering or writing a single word, and paying for it without holding money or even seeing that person, is an experience that would not only have been considered impossible a few decades back but indistinguishable from magic.
Hailing a ride in a stranger’s car, speaking to a device that uses artificial intelligence to interpret your needs, immersing yourself in a version of reality rendered by software and enabled by a headset, using satellites to navigate your way around a new neighbourhood – these are all experiences that were not only barely imaginable a few years back, but indistinguishable from magic.
Being digital is not about acquiring hardware or software. It’s not about upgrading infrastructure. Instead, it’s a shift in attitude. Being digital is being critical of the status quo, and specifically of legacy thinking, that worked in an analogue time. It’s moving digital from a department to a strategic imperative. It’s building digital literacy and capability in the most senior decision-makers in your business.
In an increasingly digital world, being digital is simply being able to adapt. – Mike Stopforth, founder of consulting firm Beyond Binary and co-founder of social media crisis consultancy 48HOURS[6]
References
[1]COVID-19 Boosted SA’s Digital Transformation, ITWeb, March 15, 2021
[2]The Digital Transformation of SMEs, OECD, 2021
[3]2020 Small Business Digital Transformation, Cisco, June 2020
[4]Tymebank Hits Milestones, Reaches 4m Customer Mark, ITWeb, November 5, 2021
[5]TymeBank: The Making of a Digitally Smart Bank, TymeBank, February 26, 2019
[6]What Do You Really Mean by Digital? Beyond Binary, retrieved April 6, 2022
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