Digital Transformation: A Must Have For Start-ups

Change your business game plan by joining the digital world.


Established in 1980 Ramnarayan Blue Art Potteries deals in the art of Rajasthan blue pottery. Blue Pottery is a traditional Indian art from Kot-Jewar in Rajasthan, A labour-intensive craft, it has been facing a downfall due to lack of infrastructure and marketing resulting in more and more artisans abandoning it. RN Blue Art has been putting great efforts to revive this unique craft. A family business, run by the second generation works with rural artisans and workers and provides employment to rural workers. Today, the company exports to various countries after the company was driven to digital transformation.

Most organizations big or small have been facing unprecedented challenges since the last decade more so in the year 2020, this scenario has coagulated the value of digital transformation. The organizations high up in digital maturity ratings are performing better than the ones which are lowly ranked. Digital transformation enables businesses to interact and engage with the customer in a better way. Also, the adoption of digital technologies helps a business to collaborate better with partners and even employees eventually boosting business performance. Businesses and society at large are undergoing a digital change, and small businesses are no exception. Not engaging in digital transformation is not an option and businesses can’t choose to be out of it, it is a necessity and a question of survival.

The contribution of Small Businesses to the growth of an economy is undebatable. According to the World Bank the small businesses worldwide contribute to about 90% of total production. They specifically play a vital role in developing economies. In India, the sector significantly contributes to the country’s GDP. Apart from their contribution to the country’s total output, they also widely cater to the large industries sector and act as an ancillary unit. Their role encompasses beyond economic contribution, since they play a vital role in creating jobs, as a matter of fact, this sector employs around 60-70% of workers in both developed and developing countries. These units promote inclusivity by employing a workforce from rural and backward areas and nurture local sustainable development. The small businesses range across various sectors from manufacturing to transport, from construction to retail.

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Small businesses worldwide contribute to about 90% of total production. They specifically play a vital role in developing economies.

- World Bank

Digital transformation is primarily digitalising business processes, with a major objective of optimizing the operations with the support of digital tools and technologies like AI, mobile, AR/VR, etc., and certainly social media. Digital transformation can exist at various echelons from using customer data analytics, automation of processes and workflow, using cloud technologies, and making the most of widespread social media presence.

A yearly report by Cisco on small businesses and digital transformation conducted by IDC reveals that around 16% of the Small and Medium Businesses of the Asia Pacific region have reached the advanced maturity stages of digitalization. However, still, a large 31% of SMBs have not yet embraced digital. In other words, the majority of SMB’s are digitally indifferent.

The study also describes the region-specific data and reveals that about 68% of Indian SMBs have undertaken the path of digital transformation and have digitalised various products and services. Around 60% are aware of digital transformation efforts by competitors and are willing to adopt further to match up with the rival’s efforts. Additionally, 50% of businesses are considering using digital technologies due to the shift in customer preferences. India currently ranked 9th in Asia Pacific AMB Digital Maturity Ranking List whereas it ranked 44th in World Digital Competitiveness Ranking. 

Enhancing Customer Experience

Customer-driven by the internet and technology, social media, and mobile culture is more connected than ever. To drive customer value, integration to digital technology is essential for all big enterprises as well as small businesses. An increase in competition and a need to enhance the value for the customer has made Customer Experience a top priority. It is established that companies offering better customer experience are more profitable. For holistic and sustainable growth small businesses should place the customer in the centre of all the decisions related to goods and services they offer to them. New technology offerings can give these businesses an edge to develop an enriching customer experience. 

Essential for Customer Acquisitions

Evidently, customer loyalty is at its lowest in the last decade, when a retained customer is more profitable than acquiring a new one. This is where the new technologies which are part of digital transformation like AI provide support to the businesses. On the other hand, a strategy to acquire a new customer by widening the customer base cannot be ignored. Small businesses can use increased digital engagement to cater to a large customer base with minimal increase in operational cost.

Digital not only provides improved customer experience and connects organizations with new customers but also helps them to improve their supply chains and permit the small businesses to compete with their bigger counterparts in the industry.

Digital transformation can help organizations especially small businesses to focus more on customer-centric strategies. To be customer-centric a business needs to understand their customer, their buying journey, and insights into their buying behaviour are imperative. Data comes into play here. The amount of data available now through digital techniques is humongous and very insightful. This available data can be leveraged by the small businesses to enhance the customization and provide better services to their customer in the process making the organization a customer-centric organization. 

Providing Agility

The customer-centric organisations are inclined to be more agile and responsive to any shifts in consumer demands and patterns. Using this generated data supports the goal of small organisations to cater to consumer needs by personalizing the products and services and helps in predicting consumer needs and usage as well. 

Streamlining the Operations

Reducing costs has been on the agenda of business organisations for long, more so it is an important aspect for small businesses since most small businesses listed lack of financial resources as one of the major constraints they face. Automation, robotic technologies help small organisations to reduce the operating cost and enhance their productivity which successively leads to more profitability. The cost of digital infrastructure set up and acquiring a customer is much more economical through digital methods than traditional methods and small businesses can capitalize on this.

Small Businesses do not aspire to become big organisations which is quite agreeable but they want to grow to their full potential. Small Businesses with limited budgets find themselves constricted in static business solutions and find scalable solutions more relevant.  Digital transformation can help small organisations achieve the scalability they desire. Cloud-based solutions are one of the examples of techniques of digital transformation which has proven to be a principal enabler for small businesses and assisting them to be competitive with bigger organizations in the market.

Digital transformation reduces redundancy in organizations by automating monotonous and tedious tasks. It can help eliminate human errors in the day-to-day tasks, consequently increasing the efficiency and optimizing usage of other important resources.

Nurturing Partnerships

Apart from, being an enhancer on the consumer front, digital transformation can be a facilitator of business partnerships as well. Today customers look for a complete solution from a single touchpoint. However, to provide this convenience an organisation has to integrate its value chain. To create an effective network with numerous vendors, digital transformation is highly effective. Digital provides a framework which encourages and enables collaboration and communication across departments and organisations as a whole.

Digital Transformations supports Exploring new Business Models

Undoubtedly, today the organisations have a different business model as compared to earlier times. Data-driven products and services dominate the markets now. Digital transformation allows an organization to investigate its existing business model and offers tractability to change to the appropriate business model and in turn, helps the organisation remain relevant. Besides, flexibility and agility are the hallmarks of small businesses and it empowers them to adapt or change into the newly adopted appropriate business model.

Not A Cake-Walk

Although digital transformation is a boon and a necessity for small businesses, digital transformation should not be considered as means to an end. It is not a prescription and cannot fix a bad process. Of course, it does provide an opportunity to the organization to undergo scrutiny and see the loopholes in the system but then again it can involve making difficult choices, revamp the way business is done, but it will not be able to magically turn things into gold. Needless to say, digital transformation is not blindly picking up new technology for implementation but a well-laid strategy that complements the business strategy as a whole.

Requires Cultural Change

Digital transformation is not only the adoption of technology, it also involves the change in the culture of the organization and how people working in the organization adopt it. Its results are dependent on the reaction of all the stakeholders of an organization, customers, employees, and organizational partners. The right mindset of people and organisations is one of the reasons why digital transformation efforts of some organisations have been successful whereas for few others it fails. For the successful implementation of digital transformation mechanisms, the organisations should embrace a corporate culture encouraging a digital mindset, which facilitates the implementation of digital technologies. But then again, a higher level of digital literacy and adoption of a digital mindset could be a longer process than thought to be.

The study administered by Cisco on Indian Small Businesses clearly depicts that Indian small businesses find the absence of digital skills and access to talent as one of the major challenges they face on their digital transformation journey. Furthermore, these businesses have low digital awareness and make it difficult for them to choose the right platform required to cater to their requirement. Additionally, they also lack basic technological infrastructure due to both awareness and financial constraints. Despite these challenges, it is recognizable that small businesses need to adopt digital technology tools for survival in the present data-driven ecosystem. Ignoring technology may lead to a loss in the competitive advantage held by these small businesses. It can harm sales too, in fact, a study by Google showed that organisations that shifted to digital increased their revenue by 27% apart from various other strategic advantages.

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Digital transformation allows an organization to investigate its existing business model and offers tractability to change to the appropriate business model and in turn, helps the organisation remain relevant.

Government Initiatives

Realizing how crucial digital transformation is for small businesses, the Government of India has been proactive in its approach to promoting this transformation. To address the basic gaps like inadequate awareness, shortage of digital skills, and lack of technology infrastructure, the Government of India has launched many initiatives. Coincidentally, the private sector has also pitched in this effort of the Government. To improve the access to information public, increasing transparency to reduce corruption, the Government has taken governance online. E- governance assists small businesses to register online, make available expert advice, and formation of virtual clusters. Another program Digital India has a wide scope and has a clear objective of Digital Empowerment of Citizen along with Digital Infrastructure Development. Localization of production and focus on zero dependence on imports of ICT devices are part of the mandate in an effort to develop the digital infrastructure. Seeing the biggest challenge faced by the industry is the lack of skilled human resources in this area, the Government has launched many skill development initiatives under the Digital India Program.

Small businesses will be able to reap benefits by acknowledging data trends. The key to success in the future lies in the set of factors, which includes building capabilities for the workforce to take leverage of digital, technical skills training, and a cultural shift that radically supports digital is necessary. Additionally, communication is the key to the successful implementation of digital transformation.

Digital transformation has proven a successful strategy if implemented accurately and has a great scope for small businesses as it can help these businesses to retain their competitive advantage, bring in more profit and improve their business performance. Digital transformation can empower Small Businesses tremendously, as revealed by Cisco SMB Digital Maturity Study 2020, adoption of digital transformation by Small Businesses may add US$ 158 to 216 billion to India’s GDP by 2024.

DU Desk
DU Desk
Stories from DU Desk are the collective efforts of our in-house authors, guest authors and subject matter experts who collate and distill their ideas and thoughts to bring out actionable insights for our readers.

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