Companies in the UK have faced immense challenges due to the coronavirus pandemic, with many SMEs successfully shifting their business online and digitising their processes in response to the crisis.

Of course, adapting business models and increasing adoption of technology to improve resilience come with their own challenges and require a considered approach. 

So, what do business owners need to know about switching from analogue to digital processes and implementing a reliable digital infrastructure to encourage innovation and boost performance?

Digital business technologies, often hosted in the cloud, have evolved at a dizzyingly rapid pace in recent years. Bookkeeping tools are now available for the finance function that remove the need for data entry by importing emails, bills, bank statements and receipts into a single digital location, using a form of artificial intelligence (AI) to search documents for key information.

Accounting software solutions by the likes of FreeAgent, Xero and QuickBooks can deliver huge efficiency gains in the back office. Many software packages also now offer Open Banking feeds, allowing businesses to feed in banking data directly.

Many businesses are starting to explore robotic process automation (RPA) to improve productivity and transform manual business processes. For example, AI, machine learning and RPA software can help the accounts payable function to be completely automated. Optical character recognition technology uses learning algorithms to ‘read’ and understand invoices, cutting the invoice processing time from weeks to just a few days.

New businesses, run by people who are comfortable in the digital world, can implement these sorts of tools from day one in a greenfield environment. But for many, the transition to digitisation may be delayed both by the limitations of the technologies already used by the business, as well as employee resistance or concerns about change.

Kevin Salter, a partner at accountancy firm Glover Stanbury, has been encouraging businesses of all types and sizes to use digital business tools for years. He says that attempts to introduce digitisation are often foiled by employee resistance or inexperience.

“One big issue has been cost, despite the fact that making these changes might save people hours and hours of time,” says Salter, “but some people are just stuck in their ways.”

With the majority of business activity disrupted or being conducted remotely due to the pandemic, many businesses could use this opportunity to make more use of digital tools.

The crisis has forced more consumer-facing businesses to take payments online or via cards in-store, including through contactless payment. And more consumers than ever before are now comfortable with digital payment methods.

A cashless society is not good news for everyone: consumer groups and charities have highlighted the difficulties faced by some demographics and there will be problems in places where poor or non-existent broadband coverage makes digital payments more difficult.

But technology can make the transition to digital payment methods a source of useful data, helping businesses and ultimately improving the service consumers receive. 

Dan Salanson, chief commercial officer at Tyl by NatWest, says SMEs are increasingly using digital payment technology because it’s becoming more secure, can be customised and used on different platforms including websites and smartphones. In the future, he says, groups of small businesses will even be able to create personalised marketing offers and local loyalty schemes.

Just a few years ago, customer relationship management (CRM) software was only really affordable for larger corporations, but that’s no longer the case. Smaller businesses can now move from spreadsheets and paper-based processes to compete head-on with the big guys. 

CRM technology like Salesforce.com or Microsoft Dynamics helps businesses more effectively capture customer data, track customer interactions and follow-ups, and tailor their marketing to ensure they manage their relationship more effectively.

While there are many benefits to digitisation, businesses must also manage the risks. Many cloud or digital solution/service providers offer state-of-the-art security, but the responsibility for securing data and ensuring regulatory and legal compliance still rests with the end-user business.

Other risks relate to the need for effective management of digital business tools throughout their lifecycles. Management of these end-of-life systems is important, because software providers will stop producing active support for older technologies, creating security, regulatory or legal risks.

The success or failure of a digital project will be determined to some degree by buy-in from employees. “What’s most useful for people is to understand what these technologies are good for,” says Paul Henninger, partner and head of data-driven solutions at KPMG.

Addressing business problems and improving efficiency is, after all, the ultimate purpose of digitisation. Businesses seeking to benchmark progress towards digitisation can use various online tools to do so, from those that enable comparisons of the efficacy of marketing content, or of customer feedback on social media, to sector-specific or more generic digitisation benchmarks developed by consultancies.

But no business should be attempting to achieve digitisation for its own sake. “The starting point must be a problem you are trying to address,” says Henninger. “Are you trying to understand customer demand or trying to be more profitable?”

He also emphasises the importance of having a vision or model of where the business is headed. “What does your business look like in three years? You can measure your progress towards that. Look at the projects in terms of what they achieve for the business,” he explains.

In the end, sales, profitability, customer feedback and staff retention are still the most important metrics – but one advantage of digitisation is that it makes it easier to gain a more accurate view of all these metrics in near real time. The well-managed, digitised business is a better business, in every sense. It’s not about the technology you happen to use, but how well you use it.