Choosing to become a digital business can seem like a huge task for midsize enterprises – but it doesn’t have to be. Learn more about Gartner recommendations!
There is a difference between digitizing business and digital business.
Unfortunately, this misconception can delay digital transformation.
As technology-driven small and mid-size businesses shirk the status quo and adopt tools to maintain productivity, keep pace with competition, and satisfy existing customers’ expectations while attracting new ones, they are also working to stay focused on building their digital business.
What steps should midsize companies take and which trends they should follow? We have that information and more in this Trends blog!
Digitizing Business Versus a Digital Business – What’s the Difference?
Why is digital business both valuable and daunting for midsize businesses? Gartner states, “’Digital’ describes the representation of physical items or virtual processes or activities through binary code. It refers to the use of technologies to improve organizational processes, to improve interactions between people, organizations and things, or to make new business models possible.”
On the other hand, a “digital business” is defined as an “organization — or a unit inside an organization — whose product set and business model are only made possible by the use of information and digital technology.”
Digital technology changes the underlying structure, economics (e.g., income statement, balance sheet) and the operating model of the business. Through optimization, digital technology is used to improve existing business models. With business transformation, digital technologies are used to create new business with a strong business model.
Starting Your Digital Business Journey
The line between digital business and other concepts like digitalized processes can be a bit murky. As a result, sometimes well-meaning digital strategy initiatives can go astray as midsize enterprises struggle to both define their digital business ambition and start the effort.
Gartner outlines four steps to help guide digital business initiatives:
1. Educate leadership on digital versus digital business – Many CIOs and business leaders confuse digital processes with digital business. Further, digital business transformation implies a significant business and financial model change, which can encounter resistance from leadership. Therefore, in order to successfully pursue becoming a digital business, senior leaders must be made aware of potential ambitions for their digital business while aiming to improve business performance. This business strategy can include:
a. Leaping directly to digital business transformation by creating a digital product and/or operating a digital platform
b. Optimizing the existing business model by creating or using a digital platform, then adding a digital product
c. Optimizing the existing business model by first adding a digital product, then converting some of the traditional business into a digital business by using a digital platform
d. Creating a digital product OR using a digital platform
e. Don’t pursue digital products or platforms at all
2. Put together digital elements – The combination of digital elements (like digital products and services, digital channels, digital platforms, and digital assets) with digital business and financial models can create a digital business. Gartner recommends that midsize businesses start with what their business does well in the market now and then evaluate the digital elements above to determine what could be added to create a digital business.
3. Set goals with digital ambition – For a digital business to work, its performance must undergo significant improvements that arise from optimizing or changing one or more facets of the business model. This can include changes to customer experience, redefining the value proposition, reconfiguring finances, or reimagining capabilities.
4. Evaluate ecosystem partners – Midsize enterprises will likely require the help of new partners in order to launch a digital business. When choosing a partner, look for those that have built a digital platform with public APIs or other ways to connect simply and quickly. To start, review the components of the business model that need to be transformed; then, determine which entities excel in those areas.
Best Technologies for Midsized Businesses to Embrace
The newest digital transformation tools will arm midsize businesses with important benefits like streamlining how a business operates, reducing costs, and improving employee productivity. According to Forbes, the following technologies will help businesses embrace success:
- Mobile cloud computing offers – Even though most businesses already use cloud-based services, businesses need to push more of their internal operations to the cloud in order to become fully digital organizations. Some of the potential benefits of cloud computing include cost savings, better data security, more flexibility, and greater mobility that can lead to competitive advantages. Further, cloud computing allows access to corporate data via smartphones and other mobile devices, ensuring your teams are always securely connected and in the loop.
- Artificial intelligence – Midsize businesses can harness the competitive advantages of AI with minimal spending. AI and machine learning technologies can cheaply automate repetitive tasks within a business, leaving human workers with more time to focus on more complex tasks. The results? Streamlined operations, error-free work, and 24/7 support.
- Software-defined wide area networks (SD-WANs) – SD-WAN solutions for midsize businesses combine edge devices, software, and a flexible management platform that can adapt to business needs. This approach can translate to better network visibility, simplified and centralized administration, robust security, and optimal network performance. Further, business-critical applications can be prioritized to attain the best possible performance.
- Internet of Things (IoT) – IoT technology is empowering companies by offering options to collect more data that can help make informed decisions. Further, IoT devices are providing powerful insights to create efficiencies and competitive advantages.
- Data and analytics – Boost your bottom line by paying attention to and analyzing the data your business is generating. Data analytics can help, for instance, to identify customers who always pay invoices on time, are low maintenance, and poised for growth. After high-value customers are identified, businesses can focus on nurturing these relationships and more.
Stefanini: A Midsize Enterprise for Similarly-Sized Midwest Enterprises
Headquartered in Southfield, Michigan and with an office in Davenport, Iowa, the Stefanini Group is a midsize enterprise with a global footprint. We are manufacturing, banking, retail, education, analytics, artificial intelligence, and more. Further, our global partnerships with entities like Servicenow, IBM, Microsoft, and SAP allow us to provide the best, most customized services to clients.
Have you been looking for a partner with the right connections to take your business to the next, digital level? We’ve been waiting for you. Reach out today!