Digital Transformation of SMEs in India – Part I: What is Digital Transformation

Lotus Tech-The Content Lab-Understanding Digital Transformation Part 1

Executive Summary: Indian SMEs are poised for explosive growth through digital transformation. This article, part one of a two-part series, discusses the digital transformation of SMEs in India.

Reading Time: 3 min.

India’s small and medium enterprises (SMEs), also known as Micro, Small, and Medium Enterprises (MSMEs), have a great story to tell. Here are some statistics*:

  • 51 million units
  • SMBs command
    • 7 Cr employment
    • 14 L Cr assets
    • 5% CAGR
    • 496,000 Cr exports
    • 5% of GDP (2012-13**)
      • 7% of manufacturing GDP
      • 5% of services GDP

* Annual Report 2016-2017, Ministry Micro, Semi, and Medium Enterprises.

** Contribution of MSME in the economy, Press Release by Ministry Micro, Semi, and Medium Enterprises

A KPMG report, based on a study by KPMG in India and Google, titled “Impact of internet and digitization on SMBs in India” (January 2017) reveals a huge gap in technology adoption and a mega opportunity:

  • Number of Indian SMBs that are completely offline: 68%
  • Number of Indian SMBs actively promoting their businesses online: 2%

And it is also a widely published fact that Indian SMBs can add $1 trillion by 2020 to the Indian economy by going digital. While this is a huge opportunity for the SMBs themselves, the service providers who help the SMBs make the transition are set to gain as well. And this blog attempts to understand this opportunity and the role of content in two parts:

  • Part I: What is Digital Transformation
  • Part II: The Role of Content in Digital Transformation

What is Digital Transformation?

What was once bought from a shop near home is now bought from an online vendor. That is, customer behavior has changed. And the whole nation is going through this shift in behavior. And this is what digital transformation is:

The definite shift of customer behavior towards digital and a business’s response to let the customer interact and transact with the business digitally no matter where the customer is or when.

In a digitally transformed enterprise, the business’s ecosystem made up of prospects, customers, partners, vendors, government, and so on interacts and transacts with the business digitally.

Is There a Metric to Measure the Success of Digital Transformation?

Yes. There is. It is Customer Experience.

Examples from the Fitness and Ecommerce Spaces

The other day, I was wondering if one of the most personalized fields such as fitness training could be sold and consumed online. I searched and found some offerings. I promptly clicked a link and watched a short YouTube video about how to use the online fitness training service. Sadly though, I failed to understand how their offering was different from watching a fitness trainer on a 7.00 AM TV show.

That made me recall my earlier experience with a particular yoga posture. The challenge for me was that the trainer would move her limbs in sync with the narration in the background. But since I didn’t know what was coming up next, I had to replay the video several times to understand what the trainer was doing. This experience leads to a frustrating start. And I am sure many would give up.

At another time and place, I tried to buy an address book from an ecommerce portal. It took me to the global shop, and I was asked to upload an ID proof. I don’t quite understand why I should upload an ID proof to purchase a mundane item made of paper. I can understand a cautious approach when the item being bought has many uses and can be a possible security threat. But why this process for a book?

There are two key challenges here:

Teaching fitness or any motor skill online has to be different from the way it is taught in the real world. In a gym or classroom, there are many visual cues and motivating factors. Crafting them into digital learning needs a close look at psychology, user experience, and how people learn in real life.

If a business can’t tell a prospect very quickly how it can make a difference, or makes it difficult to buy online, the customer is lost. In the digital world, the customer comes to the business. The business doesn’t go to him. (This is true even if the business does digital marketing. The prospect clicks a link in the ad to access the business.) So, if you can’t impress him the very first time he is visiting your website, he will be gone, and retargeting may not be easy, or worse still, may not work. (At another level, isn’t it good to spend minimal money on retargeting?)

Now, step back and take a look at these key challenges. They are not specific to that business but are a matter of customer experience offered by any business. Hence my conclusion that customer experience is the litmus test for determining the transformation of a business into a digital business.

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