Top 5 Digital Transformation Challenges For Small Businesses

As the digital landscape moves full steam ahead, the way we do business and live will be nothing like before. Here's what every business owner should know.

Many entrepreneurs underestimate the importance of digital transformation, believing it to be little more than a slight enhancement of business operations. However, it is much more than that and experts suggest that in the long run digitization of business will influence society at a level comparable to that of the introduction of steam engine or assembly line production.

As the digital landscape expands and moves full steam ahead, the way we do business, shop, gather information, entertain ourselves and live in general will be nothing like before. In other words, whether to go digital is not a question – you have to if you want to remain relevant.

However, digital transformation isn’t without its challenges. Here’s a look at five common hurdles:


1. Consider scope and degree

The digital transformation of your business isn’t something you can do once and cross off your to-do list. It can be done in a variety of ways. You can carry out a limited transformation, introducing a few new technological solutions without touching most of your business processes, or dive in headfirst, completely overhauling operations. One and the same effect can be achieved with the help of multiple solutions.

For example, a digital transformation across your supply-could entail an investigation as to how digital applications can improve your products and services, costs, agility, and inventory management. The goal is to strategically and consistently implement processes and organizational changes that use digital technologies to improve operational excellence.

One of the first challenges is to maintain the balance between too little and too much. It may be easier to start with a few technologies. A complete overhaul can potentially bring significant results, but requires considerable strategy, investment and will disrupt short-term operations.


2. Bridge employee skill gaps

When we think about the difficulties of a digital transformation, naturally issues of security and budgets are top of mind. However, there is a much more significant obstacle to consider: your employees.

“Digital transformation by definition involves a heavy rework of business operations, the introduction of new technology, and changes in core processes.”

Digital transformation by definition involves a heavy rework of business operations, the introduction of new technology, and changes in core processes. All of this requires skillsets that your current employees may not have.

Some businesses (particularly legacy brands like Montblanc, a manufacturer of luxury goods and the Montblanc watch for example) are traditionally conservative, and by definition, have been around awhile (read: before the internet). As a result, they may have a hard time transitioning to the digital economy, which can lead to open or hidden employee resistance.

Digital transformation should be adopted adjacent to employee training and re-skilling programs. This in itself can put a strain on internal resources and culture.


3. Address budget concerns

Digital transformation is often perceived as a costly affair because it requires a significant upfront investment and can negatively affect the efficiency of your business in the short term. Budgeting for digital transformation often means budgeting for the unknown since there is no cookie cutter approach to suit every company. However, careful planning, collaboration with freelancers, affordable third-party SaaS technology can significantly decrease costs.


4. Address operational security risks

Although technologies commonly associated with digital transformation (e.g., the Internet of Things (IoT), cloud technology, automation, machine learning, mobility, etc.) undoubtedly offer many advantages, they can bring about a host of security risks as well.

For example, the IoT can improve efficiency and customer experience, but without careful planning it introduces inadequately secured devices to the network, providing hackers with multiple new points of entry.

This calls for a change in our general outlook on business security – from that of a uniform perimeter to uphold a connected network of endpoints of varying security measures. As there are many more entry points, business owners must understand that their users (both customers and employees) constitute the most significant security threat. They are people, and people tend to make mistakes and get duped by criminals. So, the goal is to educate your users about security practices to decrease your risks.


5. Encourage user acceptance

Employees may be inconvenienced by the digital transformation of your business and troubled by the idea that they’ll have to adopt new practices. However, in the long run, they have no choice but to accept the change. Regarding customers, circumstances are different – if they are inconvenienced by the new practices too much, they will simply leave and look for a business that better meets their needs for a frictionless and pleasant user experience.

People tend to be set in their ways and don’t take kindly to changes. Therefore, you have to ease them into new systems and clearly communicate the benefits.


The important idea to understand about digital transformation is that it isn’t optional. On a large or smaller scale, you will have to go through it – which means it’s wise to prepare for these challenges today.


Melissa Burns is an independent journalist and business expert at Fcsd Agency. She writes articles and analyses about entrepreneurship, startups, business innovations, and technology. Occasionally, she conducts workshops for promising startups. Connect with @melissaaburns on Twitter.


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