Zero One: Can Small Businesses Get in the Digital Transformation Game?

When business leaders come across the words “digital transformation” – and, really, how can you avoid it these days? – images of behemoth companies, from General Electric to The Home Depot, pouring billions of dollars into a herculean task, fill their heads. Small businesses that line ordinary streets and fill industrial districts across America might feel helpless in the shadow of this great movement.

But they would be wrong to think so.

Many small businesses want to drive revenue growth this year, and new technology can fuel their efforts. Enterprise software review site G2 Crowd surveyed 301 small businesses – 250 or fewer employees – last spring and found aggressive investment in tech among companies with ambitious growth plans. Nearly half of growth-oriented respondents said they’ll increase IT spending this year.

Related: Zero One: Digital Transformation Leaders vs. Laggards

G2 Crowd’s study highlights cloud computing, artificial intelligence, analytics, and Internet of Things as valuable technologies for small businesses. Cloud services, as well as managed IT outsourcing, indirectly help grow the business by freeing up resources. These resources can be redirected to technologies and initiatives that impact a small business’s ability to capture customer data, make better data-driven decisions, and achieve real business outcomes.

“These responses seem to support the concept that smaller businesses are using new technologies to offset some of their resource constraints and are leveraging IT for growth,” says Michael Fauscette, chief research officer of G2 Crowd, in a blog post.

Gallery: Zero One: Best Software for Small Business

Given the critical role technology plays in the new digital reality, small businesses plan to rip out and replace underperforming systems. Truth is, these systems can no longer be just good enough. The G2 Crowd study cites the top eight IT systems being replaced in the next 12 to 18 months:

Small businesses are also deploying IT systems to solve work-related challenges, G2 Crowd says. These systems add incremental value that can be felt on the balance sheet of a small business. Here are the top eight IT systems being deployed in the next 12 to 18 months:

“This focus on IT systems that help with work coordination and execution is probably related to the need to maximize the effectiveness of limited resources,” Fauscette says.

Many of these technologies will come from a cloud services provider. It’s not just software services, either. Small businesses have begun outsourcing business processes to cloud service providers. The speed, flexibility and affordability of the cloud carries tremendous appeal for small businesses with limited resources and CAPEX budgets.

Related: Zero One: Digital Transformation’s Ah-Ha, Oh-No Moments

Managing IT assets can take its toll on small businesses, too. That’s why 47 percent of small businesses with 26 to 50 employees rely on outsourcing IT management. The figure jumps to 58 percent for small businesses with 100 to 250 employees.

The big idea is to free up resources to focus on the growth of the business. This is true for big and small companies trying to digitally transform their businesses.

“The strategies that I see emerging are companies trying to revitalize the core,” Pat Bakey, president of industries at SAP, told Zero One in a recent interview. “They’re driving costs through efficiencies in their core to create the investment profile to fund the new.”

Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at [email protected].