SMB Digital Transformation Initiatives and Barriers

SMB Group recently completed our 2019 U.S. Small and Medium Business Digital Transformation Study. In an earlier post, I discussed small and medium businesses (SMBs) understanding of digital transformation, and how the drivers and challenges regarding digital transformation have evolved since 2017, when we fielded the first version of the study.

In the survey, we asked respondents if they’d heard of digital transformation, after which we provided the following definition of digital transformation to align the rest of their responses around a common meaning for the term:

Digital Transformation: how businesses use digital technologies to create new/modify existing business processes, practices, models, culture and customer experiences. 

This post looks at how SMBs are aligning technology investments to new initiatives to help grow their businesses and their views on the technologies they perceive as being most critical to their businesses as they look ahead.

Top Business Initiatives for Technology Investments

SMBs are investing and making plans to invest in technology to help support a wide variety of business goals.

Improving employee productivity, personalizing the customer experience and improving decision-making top the list in terms of current investments. Looking ahead, creating a new line of business/delivering a new product or service, entering a new customer market, and improving/accelerating product and service development rank highest for planned investments.

After reading the definition we provided for digital transformation, roughly two-thirds to three-quarters of respondents said that they view these initiatives as part of their company’s digital transformation strategy.

Value of Technology Investments

Among SMBs currently investing in each type of initiative, SMBs’ indicate that adding a new sales channel and personalizing the customer experience (both of which are also among the top five current technology investment areas) get the highest marks for return on investment.

The next three areas that SMBs rate most highly for return on investment are improving/accelerating development of new products/services and creating a new line of business/delivering a new product or service. These are not in the top five for current SMB investments, but are the top three areas in which SMBs plan to invest.

SMBs are Investing More in Established Technologies than Newer Ones

SMB current technology investments center on adding or beefing up existing capabilities in more established technology areas. More than 40% of SMBs are currently investing in security, social media, mobile, analytics, integration and the public cloud.

Looking ahead, however, about one-third of SMBs are planning to invest in newer technologies, including the Internet of Things (IoT), AI and machine learning, and converged infrastructure—rivaling plans to invest in many of the more established technologies.

Barriers to SMB Digital Technology Transformation Are Significant

Most SMBs understand that they need to use technology to adapt their businesses and remain relevant in the digital era. However, most also need help to effectively put these technologies to work to support their business goals, citing their top three challenges as:

  1. Difficult to integrate new technologies with existing systems
  2. Hard to figure out which solutions will help us
  3. Not enough IT skills/staff to support new technology.

In addition, only 19% of SMBs strongly agree that their company has a well-defined digital business strategy—down from 23% in 2017.

These challenges underscore that SMBs will need much more strategic and tactical support from vendors to plan and implement new projects.

An In-Depth View of SMB Digital Transformation 

These are just a few key insights from our research. The full U.S. Small and Medium Business Digital Transformation Study offers a detailed picture of SMB attitudes, appetite, readiness, priorities and requirements for business and digital transformation, including:

  • Drivers and challenges for digital transformation
  • Specific current and planned technology business transformation initiatives
  • Perceived value of current and planned technology business transformation initiatives
  • Technologies used and planned in digital transformation projects
  • Budgeting and decision-making
  • Perceptions of leading technology vendors
  • Areas in which SMBs are investing in entirely new solutions, versus areas in which they’re augmenting existing solutions.

The study also analyzes and segments differences based on company size, age of business and industry.

Want More Information?

Results from this study provide technology solution vendors with essential information to help develop, plan, position and market products and services for SMBs.

SMB Group’s Retainer clients automatically receive study results as part of their retainer service. The study is also available for purchase separately. Please contact Lisa Lincoln for a full table of contents, methodology, study pricing, and any other information: or (508) 734-5658.

© SMB Group, 2019

Source: Laurie McCabe’s Blog

Leave a Reply

Your email address will not be published. Required fields are marked *