To find your way in the digital world of business, it helps to distinguish between the terms digitization and digital transformation. Digitization refers to when companies implement their current business processes using digital tools, such as moving from a printed customer magazine to an online newsletter, setting up an online shop that manages customer data in a CRM system or controlling production processes via computer. The aim here is to meet current customer expectations or to improve efficiency. In this sense, digitization is an evolutionary development to keep pace with technology. It is also a prerequisite to allow the company’s digital transformation to take place at all.

In contrast, the company’s digital transformation is revolutionary. To undertake it, the small business must focus on a long-term horizon and generally also be willing to make more substantial investments. It must consider how its own core products or services will be used in future and how current technology can modify or enhance them to meet new customer requirements. The following two examples show how this works in practice:

From garage owner to carsharing provider

Here is an example: a garage, which digitized its business with an online booking tool and workshop appointments via tablet, explored the future of mobility. The company considered whether customers would continue to own their own vehicles in the age of electric and self-driving cars or whether they would increasingly use carsharing. The garage owner came to the conclusion that carsharing had potential. He therefore sought and found a solution to quickly convert his second-hand cars into rental cars available from the site. Now he is not only a carsharing provider but also supplies conversion technology to other garages.

From delivery service to platform operator

Another example of digital transformation at SMEs is a drinks supplier operating locally which digitized its processes for event deliveries to develop a new business model. Event customers previously contacted the drinks supplier by telephone to place their orders. Drawing on many years of experience, the drinks supplier determined requirements based on factors such as the number of visitors and the duration of the event. To simplify this process and to standardize it within the company, the managing director now uses an online configurator. Customers enter the required information themselves and the configurator automatically calculates the order quantity. The aim is now to set up a national platform which other drinks retailers can also use.