SMEs And Digitalisation

There is a belief that digitalisation is not for SMEs. However, by the nature of what SMEs are – small to medium size enterprises – digitalisation can be leveraged to improving return in investment.

SMEs have limited resources. To get the best out of these resources, efficiency is paramount. To achieve efficiency, one needs to understand the operations, their interdependencies and the processes involved. Most important of all, one also needs to understand the purpose of the processes. This is not to discount the fact that SMEs also need the right talent. 

How does digitalisation promote efficiency? To answer this, we need to understand what digitalisation means. Digitalisation can come in the form of digital marketplaces, Big Data, online marketing, automation, AI, blockchain and so forth. In finance, digitalisation typically involves the minimizing of mundane manual processes through the use of “bots” or the transition into a digital environment. Basically data is kept in digital form to allow for automation and deep dive analysis. 

With this basic understanding, one can begin to understand why SMEs tend to shy away from digitalisation – cost and accessibility. Other reasons include difficulty to justify the ROI and lack of IT expertise to name some of the key reasons. However when we consider 

  • Man hours on manual processes i.e. inefficiency 
  • Insights to assist business decision making 
  • Visibility and transparency 
  • The need for accuracy 
  • The need for speed 
  • Autonomy, accountability and empowerment digitalisation is a clear champion to process improvement and long term cost savings

Rather than tackling the wholesale implementation of digitalisation, a simpler and more effective approach is to breakdown the different business processes and tackle each area accordingly. 

Let’s look at AP processes as an example. There are still companies that process paper invoices which rely on manual keying of data into the system. Even when invoices are sent electronically, AP still print them out for data entry and payment approvals. Some ERP suppliers that service SMEs have partner organisations that provide OCR solutions for invoice management. 

This means (1) they are better suited to understand the requirements and limitations of SMEs and (2) they can provide a more holistic approach to system integration. The OCR of paper invoices is the first step of streamlining AP processes. The data capture into digital form reduces inaccuracy that can happen during manual processing. 

This can further improve approval workflow because approvers can now view the documents in the system when they approve invoices for payment. A further benefit to improving AP processes is improved cashflow management. Greater visibility can be achieved which also promotes accountability. With data accurately captured in the system, cashflow forecasting can be improved.. 

We are not looking for bells and whistles but efficiencies and improved accuracy. In this way, finance team can be freed up for more value-add business partnering activities e.g. providing insightful analysis and enable the business to make more informed decisions. 

There are a few considerations when implementing digital transformation: 

1. Research 

It is important to do your research. This is not only about the potential provider. One also needs to understand the current processes and business drivers. This gives you a better control over the chosen solution, its implementation, the resulting data quality and the delivery of insights.

2. Buy-in 

A successful implementation needs the support from management as well as its workforce. The greatest obstacle to any successful process improvement is the human factor. Therefore it is critical that the workforce is engaged and understands the benefits from digitalisation.

3. Talent retention 

It is sometimes inevitable that digital transformation can lead to loss of workforce. However this does not always have to be the case. The workforce should be upskilled to tackle new opportunities. This is key to successful and sustainable change. 

With the cost of technology becoming more accessible, digital transformation is no longer the preserve of large corporations. It is also not a single time activity. Digital transformation takes time and will need continuous fine tuning if it is to bear fruit.

By Simone Collins, FP&A professional. 

Disclaimer: Any views or opinions expressed are solely those of the author and do not necessarily represent those of any companies that the author has been and is working for. 


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