Algorithms taking over

There are many misconceptions that SMEs have about Digital Transformation. One of the biggest misconceptions is that they believe digital transformation to be taking an existing product and putting it on an e-commerce site or simply just digitizing a customer experience. However, digital transformation is much more than that. It is constantly rethinking and reinventing the business itself. 
There are many great examples of SMEs in the Danube region that have done just that. One is a company founded in 1966 that completely reinvented it's business and is now making 10 million € per year. Another such company is a company in the creative industries that underwent massive changes in its value proposition with digital transformation. Such great case studies, offer us a unique opportunity to learn from companies that have undergone this journey.
Another company that we interviewed is a company with 20 employees and 1,3 million € in yearly revenue. It was founded in 1994 and is operating in the creative industry sector. 

The 1994 business model 

It was started by the founders as a way of self-employment in the industry of media communications. The company operated with very limited funds and was very restricted in terms of product offerings. However, they soon developed a big innovation. They discovered that there was a great market need for the media monitoring and media analysis for companies. So, they offered clients the service of finding all the media where they were mentioned and provided them with reports. 
The process for doing this was manual. They would manually cut out articles from all printed newspapers and magazines and record radio shows and TV shows on cassettes and dictaphones. The only machinery they used was a photocopier from a nearby shop. They would then deliver these press clippings through the post office. 

Algorithms taking over

Nowadays all this manual work of finding content with client mentions is done by a special software that they developed with outside partners responsible solely for the software development. This software finds articles, radio shows, video clips, social media posts, mentioning a client's name and archives it. 
All the company's employees have at least one computer, however, their work is focused only on content editing to ensure that the software gathered content is relevant to the client at hand. Their clients then get press clippings in a .pdf file. Clients can also view media clippings 24/7 through a web service and mobile app. For this business model to be sustainable for a longer time period, the company operates with a subscription-based business model with 4000 clients from 36 countries. 

Top down and bottom up 

The idea for the digital transformation came from the top, however, all levels of the company were included in the process. With the inclusion of all levels of employees, it immediately gave the company great inputs and exposed possible bottlenecks. 
The process started with the identification of problems by all the levels of employees, followed by communication of these problems with developers. After that was the testing phase of the software. Then the company reflected whether the software was an improvement or not and reacted accordingly. Finally, the fine tuning was done, before moving into companywide adoption. 
This software is a part of the company's digital strategy. The company is in a constant search of improving their software and digitizing more elements of their business model. 

Challenges in the transformation process

Digital transformation represents a big change in the way a company does business so some challenges are bound to happen. 
The main challenges of this company were: 
  • limitation of technology at the beginning of the process (text and picture recognition)
  • finances in the beginning – costs of development were very high
  • getting employees on board for change
However, they overcame these challenges and now because of this digital transformation the company has to do much less manual work, offers a much higher service quality, brings a new value proposition to customers, and is thus staying ahead of competitors. 

Lessons learned

Through this process they learned some interesting lessons that other SMEs from any sector can also take up:
  • SMEs should do Digital transformation step by step in iterations. They should avoid major revolutions and overhauls. 
  • If an SME is working with an outside contractor the SME should always be the one setting the goals and expectations. Furthermore, it is imperative that SMEs actively participate in the product development. Nobody knows their business like the SMEs themselves do. 
In conclusion, digital transformation is a live process. Companies have to pay attention to technological trends in the markets and see how they can incorporate them into their business. They also have to have the vision and boldness to go ahead with these changes. Even though some other SMEs avoid changes, they have to realize that in a successful business the only constant is change. 
If you are an SME from the Danube region looking to learn more about digital transformation you get more information here:
Author: Urban Lapajne, 11.1.2018
Do you want to be informed about new startups, events and other fine things?
Quick, subscribe to the email list!