Even if the German economy consists largely of small and medium-sized companies, there are still many deficits compared to large corporations with regard to digitization. Although most SMEs now recognize the importance of a digitized company as an essential and absolutely necessary step, this area is not infrequently characterized by strong doubts.

Why does digitization often fail in SMEs?

It often fails due to the financial aspect in particular, where many small and medium-sized corporations consider digitizing internal processes to be too time-consuming and above all cost-intensive. This often results in situations like the one in the following graphic.

In particular, the fact that digitization is not a sure-fire success causes many SMEs to shy away at first. The management levels of small and medium-sized companies are often afraid of the seemingly long-term and cost-technically difficult to calculate effort of digitization. As a result, many SMEs see themselves lagging behind the competition in direct comparison. But is this fear really justified?

What measures can SMEs take to digitize themselves nonetheless, but also cost-effectively?

Because even if digitization appears to be a time-consuming and cost-intensive step for SMEs, every company can take a few options to adapt to the new challenges without breaking the bank.

A first step is to try out free trial versions (often 30 days) of software or to install open source community editions. Apart from a little effort, there are no costs. If these software components turn out to be useful, the license can be converted into a chargeable enterprise version.

In this context, SMEs can, for example, use software to automate certain processes and work steps, which can lead to permanent cost minimization.

Digitization projects in SMEs are often implemented alongside day-to-day business and thus result in an additional burden. One more way the expenses are to be distributed through cooperation between SMEs. At the same time, there is access to additional knowledge and resources.

In addition, SMEs often receive orders from customers to identify new processes, services or products, which are also paid for directly by the customer (e.g. large companies). This type of digitization is therefore easy to implement for SMEs and also low-risk.

Another advantage of cooperation is that SMEs are often highly specialized and require special knowledge. However, small and medium-sized companies can generate this through global collaboration and the digitization of knowledge processes. With the help of new locations and suitable IT, experts can be accessed worldwide. In the context of recruiting, SMEs can also fill vacancies.

Conclusion

Complete automation often does not make sense for SMEs due to the less complex process landscape. Nevertheless, through cooperation with suppliers, unit numbers can be increased, the synergy effects of Industry 4.0 applications can be improved and costs can be reduced

Basically for SMEs: Digitization does not always have to be complex and initial successes can often be achieved with existing tools, free test versions or open source software. You often have more digitization and data in your company than you think.

Tip: Read my book: SMEs in digital change at Springer Gabler or book me for a talk .

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Dr. Dominic Lindner
Author

I blog about the influence of digitalization on our working world. For this purpose, I provide content from science in a practical way and show helpful tips from my everyday professional life. I am an executive in an SME and I wrote my doctoral thesis at the University of Erlangen-Nuremberg at the Chair of IT Management.

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