Witnessed through the lens of a technology company, Kiwi
SMEs appear to be going through three distinct stages post
the Covid-19 lockdown – the ‘work from home’ stage, the
‘do more with less staff’ stage and the ‘re-invent service
offerings’ stage – but there are fears they may be trying
to change too much, too quickly.

Hamish McLachlan,
Director of technology company OneHQ, says if anything
Covid-19 awakened New Zealand SMEs to the realisation that
they had under-invested in technology for years and many
companies are now playing catch up. However, they are at
risk of over-complicating their digital
transformation.

“Covid-19 is an interesting
transformation point because people suddenly needed to work
remotely. Those that hadn’t invested in technology just
couldn’t do it because their data was in the server at the
office. Part of the problem — and it is a real issue for
New Zealand — is that so many companies are owned by
boomers holding out for retirement. People get used to doing
things in a certain way and earning a certain income, so why
would they add more complexity?

“It isn’t helped by
the fact that there are so many big international vendors
pushing their software solutions, and it’s challenging for
business owners to know if one particular solution is a good
idea or not.”

McLachlan says there is widespread
awareness of the need to transform, but there’s a real risk
of drastic change brought about by a knee jerk
reaction.

“Digital restructuring is best done slowly
and incrementally. Economic turmoil means that finding new
revenue is hard, so focus on streamlining what you’ve got
and making more out of the revenue that you do
have.”

Smaller firms traditionally invest less in
building efficiencies because they have less money.
Sometimes efficiency gain can cost a small business as much
as it does a bigger business. While all businesses should be
on a journey of constant change, the more effective strategy
is to make a small incremental change over the
years.

He offers the following advice to SMEs
considering digital transformation:

1. Identify your
pain points

Rather than radically transforming the
business or charging down new avenues or adopting new
technologies, first understand what the pain points are and
fix those.

“Get the key decision-makers in the
business aligned on what the problems are, and address those
first,” says McLachlan. “Examples may be holding too much
stock, being tied to cumbersome legacy software or holding
on to a site-specific office server.”

2. Break it
down

“The norm for many technology companies has been
to work with clients to address business requirements. We
find it far more effective to address the pain points and
then break them down into bite-sized projects, based on the
benefit to the business.

“For example, rather than
replace an entire Enterprise Resource Planning (ERP)
solution, an answer may be to plug in add-on to fix a
specific issue,” McLachlan says.

3.
Prioritise

During and after lockdown, many companies
were focussed on remote working solutions. This was followed
by working with less staff following layoffs and more
recently the focus is switching to revenue generation with
less, but this is reactive.

“Remote working and
productivity solutions are hygiene. We find the sweet spot
is in helping our clients drive short term change in the
technology space. Nobody has to spend large chunks of money
to keep driving continuous improvement.

“Start with
the pain points that address a business benefit. We usually
find most companies only have four or five pain points. If
we change the metric there is a direct flow on in better
margins, revenues, productivity and cost savings.”

4.
Engage your staff

“Avoid driving change from the top
down. Engaging your workforce at the start gives a better
outcome because everybody is a part of the change,”
McLachlan says.

5. Reduce complexity

“Reduce
the complexity of your business. This will result in a
higher level of engagement from both staff and clients.
Start with quick wins and push forward once you start seeing
the results of the changes you are making.”

The
Covid-19 Lockdown was a huge shock that has seen widespread
cost reductions and decisions around cashflow. However, that
does not mean the business should procrastinate decisions
around their operating model, systems, supply chain,
inventory management and sales channels.

“These are
often areas that can offer significant business performance
changes as you start to ramp up sales and production again,
so it is worth giving it some
attention.”

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