By Christian Horak, Global Vice President of Solution Marketing, SAP
Representing 90% of businesses worldwide, small and medium-sized organizations exposed a significant deficit as quickly as the pandemic set in – the digital divide. Every company was thrust into a dramatically changed business environment where in-store and local interactions are limited and digital experiences are the preferred – and often only viable – consumer experience available.
This current crisis has exponentially accelerated the need for digital transformation, throwing a sharp limelight on the necessity of an end-to-end strategy that addresses the changing needs of all customers, employees, and suppliers. Even the most conservative business leaders realize that an end-to-end digital strategy required to stay open.
Unfortunately, most organizations are vulnerable due to a lack of readiness, know-how, and preparedness. According to Oxford Economics, medium-sized companies have adopted ERP software and intelligent technologies (such as artificial intelligence, machine learning, and the Internet of Things) in proportion to their revenue size. In other words, larger businesses tend to be more digitally mature than their smaller competitors in terms of progress and digital transformation.
It is also important to note that this digital disparity is not just a problem for retailers, restauranteurs, and consumer goods brands. It’s a gap felt across all industries – from healthcare and education to manufacturing, sports and entertainment, and professional services – that could impact their ability to respond to new opportunities when the economy recovers.
Taking the first step towards progress
As startling as the digital divide may be, Oxford Economics’ research does reveal a silver lining. All senior leaders from medium-sized businesses indicated that ERP software was either actively used at scale and in some functions or, at a minimum, planned to be invested and implemented.
This level of attention paid to ERP adoption and use is a critical step toward closing the digital divide. With ERP at the foundation of the IT infrastructure, businesses can build up their data collection, processing, and analysis in preparation for more intelligent applications such as process automation, predictive analytics, and machine learning-supported decision-making.
Take, for example, I-D Foods Corporation. The Canadian fine foods exporter and importer determined that a modern ERP platform was the best start for enabling process automation and advanced analytics. These capabilities helped the company support increased sales volume, boost operational productivity, and provide better customer insights with greater speed, efficiency, and agility.
This platform also inspired I-D Foods to go even deeper into transforming its operations to continue growing and keeping customers coming back for more. Automated warehouse management opened the door to reduced stock, expanded product offerings, increased availability, and faster fulfillment. In-depth, real-time business insight also allows the company to better understand and predict demand.
By beginning its transformation journey with their ERP foundation first, I-D Foods demonstrates a path that can give medium-sized businesses a strategic advantage over their larger competitors. New business models can be created to improve products, services, and shopping experiences to win over more customers.
More importantly, digital barriers are removed. This development means that businesses – no matter their size – have the equal opportunity to pivot as quickly as customer preferences change, employee expectations evolve, and market dynamics shift. At this point, their only limitation is their ingenuity, workforce skills and readiness, and willingness to flex operations when needed.
Preparing for a future where digitalization matters
If a business was not already underway in their digital transformation before the pandemic, I think it’s safe to say it is now. Digitalization trends once predicted to reach the mainstream by 2030 became the unspoken expectation in a matter of months. And it’s unthinkable that customers, employees, partners, and suppliers will expect less digitalization – in fact, they’ll expect even more.
So, while smaller businesses may have more difficulty competing with larger firms now, they are already heading in the right direction toward closing the digital divide. Whether planning an implementation of ERP software or actively using it, medium-sized businesses can gain the efficiencies, insight-driven understanding, and innovation capabilities they need to participate in the economic recovery ahead.
Put your small and medium-sized organization on the right path to recovery with three digitalization identified in Oxford Economics research study, “The Agility Engine.”