Gartner, the global research and advisory firm, defines digitalisation as “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; the process of moving to a digital business”. Digital technologies include social technology platforms, Mobile, Cloud, Internet of Things, Artificial Intelligence, Analytics, Virtual Reality, and Blockchain, amongst others.
All these technologies can be harnessed to introduce new digital business models by changing and enabling better internal processes, customer experience and operating models. Digitalisation can be a source of unapparelled competitive advantage when adopted and applied correctly, and conversely, great handicap, for SMEs that fall behind the curve. Both academic research and anecdotal evidence point to digitalisation drastically reducing the cost of capitalising businesses – a continuous bane amongst SMEs.
Challenges besetting digitalisation in SMEs
Although the digitalisation wave has been gaining global momentum in the last five to eight years, it has not been part of mainstream training offerings in Africa. African SMEs will need training in creating digital strategies encompassing digital marketing, cloud and mobile technology, digitally-enabled revenue models, utilization of analytics for drawing insights, and collaboration tools. Digital skills training will engender a holistic understanding of the benefits of digitalisation and enable small businesses to actively and fully engage it. Small businesses will need to understand digitalisation beyond the clichés and buzzwords around it, to realise the true benefits. The availability of, and access to, digital advisory services would help small businesses on this journey.
African SMEs could also benefit from programmes similar to Vodafone Hungary’s Ready Business Index. The index is an online, questionnaire-based evaluation of an SME’s digital readiness, in view of the industry it operates in, and its competitors. The process ends with the company being informed, immediately, of the value-added solutions Vodafone offers to help the company with improving its digital maturity. Similar services could go a long way in assisting African SMEs. The biggest challenge is probably Internet access. Access to internet services is the linchpin of digitalisation. SMEs in Africa could benefit from cheaper and more accessible internet services and so would their customers.
SMEs will continue to be looked on to help create employment in Africa, but this will only be truly realised if they take advantage of progression levers like digitalisation. Here is some food for thought:
Would it not boost township economies if, for example, spaza shops started allowing customers to order groceries online and then delivering them? This would expand their market reach and attract more customers;
Would it not create more employment opportunities if plumbers, carpenters, electricians, beauticians ran campaigns on Facebook or Instagram, or created a virtual marketplace for their services?
SMEs will have to take full advantage of digitalisation capabilities to help African economies to grow and digitalisation could very well help SMEs to readily grow into big businesses, faster.