What does a digital strategy mean for Canadian SMEs post-COVID?

The pandemic changed how many small and medium enterprises (SMEs) look at their digital investments. We asked nearly 300 employees how their company’s strategy has changed and how successful it has been.

The term ‘digital transformation’ has been used for so long in business that it’s easy to forget how powerful a concept it can be. At one end of the scale, it can simply refer to the digitization of old systems— something that has been happening for half a century. But at its best, digital transformation represents a fundamental shift in mindset, using the best of technology to bring new business models to market.

During the pandemic, businesses of all sizes were forced to look for new ways of working when their physical operations were put on hold. This influenced the adoption of digital technologies, such as remote collaboration tools. Other companies had to figure out how to keep revenue streams up via the web. For some, the pandemic acted as a reset button, giving them time and space to invest in long-overdue projects.

Two and a half years on from the start of the pandemic, we surveyed nearly 300 employees, owners, and managers at SMEs in Canada that have a digital strategy in place. We wanted to understand more about their strategy, their investments in change management, and how all this is transforming business. You can scroll down to the bottom of the article for a full methodology.

Why do SMEs adopt a digital strategy?

Among the SME professionals we surveyed, most (85%) believe their company currently has a well-established digital strategy in place. Responses suggest that there are diverse reasons for pursuing this. Of the 13 options provided —where participants could select up to three— no one answer attracted more than one-third of responses.

Industry momentum towards greater digitization appears to be a significant factor. Nearly one-third have adopted a digital strategy to meet customer demand, and one quarter have done so to keep up with competitors. Roughly a quarter of respondents each were looking to build brand awareness and/or their digital presence. Fixing specific problems, such as stagnant sales appears to be less of an influencing factor.

The overall picture is one where SMEs see digital transformation as a proactive way to stay at the forefront of their industry rather than as a way to address tactical needs within the business.

The fact that client demand is the biggest driver of digital initiatives among SMEs in our survey reflects a basic shift in customer expectations. People are used to slick digital experiences when they buy online, consume media, and order food. This expectation has seeped through into what business customers expect as well —one-third of respondents to the GetApp survey work at SMEs with a business-to-business model— showing that a digital presence is becoming important in all types of company.

Among the SMEs that feel they do not yet have a well established digital strategy (represented by 15% of respondents), there were four key areas that they were looking to improve or implement, according to the employees surveyed:

• Marketing channels (including eCommerce, search, and social media)— 64%
• Digital marketing strategies (such as SEO, SEM, and email marketing)— 59%
• Customer service and support tools (CRM, chatbots, customer service software)— 48%
• Cloud-based collaboration and communication tools— 48%

How much has the pandemic influenced SMEs’ digital investments?

In short: a lot. For more than half of the people in our survey (53%), their company accelerated its existing digital strategy during COVID because it was not sufficient for the current circumstances. 27% didn’t even have a strategy in place before 2020 and were pressed into doing so by the pandemic.

We can uncover more detail by digging deeper into the individual components of a digital strategy. Implementing these elements over time gives teams a chance to spread the cost of the strategy, learn as they go, and adjust their approach as they roll out the strategy. We wanted to understand which elements were in place before the COVID-19 pandemic, which were accelerated because of it, and which remain to be done.

The overall picture here is complex. For most of the elements in question, SMEs were most likely to have implemented them during the pandemic. The exceptions were email marketing, customer relationship management (CRM), and a social media presence, which many already had in place before the pandemic. The element with the lowest level of adoption so far was an omnichannel strategy. 28% of respondents said that their SME has not implemented this yet.

Below we explore some of the tools SMEs may want to consider as part of their digital strategy.

5 software tools to help your digital transformation

Digital transformation involves much more than the implementation of digital tools, but they are a crucial component. Here are five common types of software that can help with digital transformation.

1. Change management software

Perhaps the biggest challenges in a digital transformation are the organizational and behavioural changes required to adapt to new ways of working. Change management software can help SMEs plan, orchestrate, and adapt to transformation. The software includes features such as task and workflow management, audit trails, and activity management to ensure a smooth transition as the organization grows.

2. Data analysis software

Good decisions are driven by data, so it makes sense to have a full understanding of your company’s operations before and during your digital transformation. In our survey, 23% said that collecting valuable data was a driver for their digital strategy, and 74% implemented data-based elements of their strategy before or during COVID. Data analysis software lets SMEs discover, visualize, and report on their data to support decision-making. Some tools also use artificial intelligence (AI) to help make predictions about future performance. 

3. Customer relationship management (CRM)

Meeting client demand was the most frequently selected driver for digital transformation in our survey, and CRM tools are an important part of measuring and responding to it. Indeed, 71% of participants in our survey said their SME already has this software in place.

CRM tools help companies orchestrate interactions with customers, manage the relationship from one platform, and engage with customers in the most relevant ways to improve their experience and boost sales. The software functions as a database of customers and can integrate with many other tools, including sales, marketing, and customer service tools. This helps automate the flow of data around the business, streamlining internal processes and external interactions.

4. Multi-channel eCommerce software

Respondents in our survey identified eCommerce and omnichannel marketing as important parts of their digital strategy. 78% already have an eCommerce site, but an omnichannel strategy was the element that respondents were least likely to have in place— 28% said their company hasn’t implemented this strategy yet.

Multi-channel eCommerce software can help SMEs reach more customers through more channels. It helps them sell through online marketplaces and social media with a single common inventory and product information system. Some tools also include search engine optimization (SEO) to further meet customers’ expectations when they are shopping online.

5. The cloud

While the cloud isn’t a piece of software in itself, it represents a fundamental shift in how SMEs buy and deploy their digital tools and is a significant driver in building tomorrow’s digital experiences.

In our survey, 77% said their company has invested in cloud software, and 48% of those who don’t have a well established digital strategy said that cloud based collaboration and communication tools were an aspect that could be implemented or improved.

Cloud-based software allows companies to quickly implement the tools they need on a pay-as-you-go basis. The hosting is managed by the software provider, meaning customers can begin working quickly —often in minutes. Cloud software is particularly valuable to SMEs, because they don’t need to provide or manage expensive servers to run their software, and they can manage costs with predictable subscription-based pricing.

Has digital adoption affected employment?

Because new digital methods can streamline business processes, they have the potential to make some manual work redundant, and therefore may result in job losses. On the other hand, digital strategies require skills and expertise to devise, implement, and manage, so companies might actually have to hire new people.

The SMEs represented by participants in our survey were affected in various ways by the digital strategies their companies adopted.

Overall, less than one company in ten solely fired people because of its digital strategy. Most had to seek help, either by hiring (58% overall) or by outsourcing to third parties (2%). A plurality of companies —just under one-third— managed to complete the process with the skills and experience of their existing employees.

Of those who did hire, hand-on experts and technical specialists were the most sought-after roles. On the other side of the equation, the roles most commonly lost as part of a digital strategy were consultants in general, marketing, and accountants and finance. 

The 32% of companies that managed to implement a digital strategy with existing staff approached the task in different ways. 45% said they already had staff with experience in digital strategy. 30% said they first took part in training (either in-house and/or external) and then migrated to the digital strategy. Finally, just over one-quarter (26%) rolled out the digital strategy alongside day-to-day operations without receiving specific training.

What can go wrong with a digital strategy?

Despite all the efforts that SMEs go to to transform their business, success is not always guaranteed. Before embarking on any initiatives, it is worth knowing what can go wrong so leaders can spot the common pitfalls and address them before they become a problem.

• Poorly-defined goals: Digital transformation for its own sake is little more than a technology buying exercise. SMEs should consider at the outset why they are looking to transform and what the outcomes should be. This information can then guide more tactical activities within the business.

• A narrow focus on technology: Technology can be a solution to solve problems, but it won’t deliver change on its own. It is easy to be excited about new trends like artificial intelligence, quantum computing, or blockchain, but without a business use case, these projects could prove to be expensive failures.

• Scope creep: As digital initiatives roll out, it is not unusual to discover new challenges. Rather than sticking to the task at hand, it can be tempting for organizations to broaden the project, but this can lead to a never-ending list of tasks. Deadlines then get pushed back, and realizing business benefits becomes a secondary concern. While flexibility is an important mindset to have, don’t let teams be distracted from the common goals.

Next time

In part two of this series, we look at digital trends and ask how SME owners, managers, and employees view their digital maturity in comparison to larger organizations.