Digital disruption is a force that will affect all businesses eventually, but some industries will face change sooner than others. Industries like retail and financial services are feeling the impact already, while others like the energy sector are next in line. Already, a staggering forty percent of the companies that were listed in the S&P 500 Index back in 2000 have been transformed and now exist in a different form. With continuous advances in technologies like automation, robotics, machine learning, and the cloud, we’re likely to see change at an increasingly faster pace.
While it might seem like digital disruption is being driven entirely by advances in new technologies, Gartner, in their report “Leading Through Digital Disruption", identifies four essential elements that are needed to create digital disruption: business, technology, industry, and society. Basically, when there’s a combination of new and existing technologies, along with a shift in a business model that focuses on a specific industry, society is impacted and disruption happens.
So how can businesses stay competitive and lead the way through digital disruption?
Invest in digital
Many businesses find it difficult to adapt to the changes brought about by technological innovation because the changes are happening in virtual spaces. In the past, technological disruptions were triggered by physical innovations like the proliferation of television, personal computers, and ATMs. However, with digital innovations, it’s harder to see what the impact will actually be, as the disruption plays out in virtual spaces. For businesses that want to stay ahead, investing in digital technology is the next step. To do that, they must have a clear idea of what kinds of technology are available and what tech stack will most benefit the business in the long-term.
One of the most valuable assets a business possesses is its own data. How they leverage that data is key to staying competitive. By investing in digital technology like cloud-based applications, businesses can get a wider-angle view on their data and gain new insights which, in turn, can be used by business leaders to make data-driven decisions.
Integrating different technologies can also play a big part in how a company embraces digital. A big benefit of cloud accounting software, for example, is the flexibility provided by third-party application integrations. Businesses can completely customize their accounting tech stack by adding various apps into their accounting workflow that specifically address functions like cash flow management and document storage. These apps will integrate seamlessly with the business’s accounting software, creating a single source of truth for all accounting data.
Adapt your processes
With the right tech stack in place, businesses should then take a look at their current processes to find opportunities to create more efficiencies, reduce costs and improve the experience for their customers. In particular, administrative processes can be improved significantly by taking advantage of new technological innovations.
Cloud accounting software, like QuickBooks and Xero, have made it simple to integrate previously separate systems and aggregate financial data. Automating repetitive tasks can streamline processes like generating invoices, syncing bank, and credit card accounts and tracking expenses. Not only will automation save time by cutting down on the need for staff to engage in repetitive tasks, but it also reduces the chances of human error, improving quality control overall.
With more efficient processes in place, the business can scale without having to take on additional staff, while their current staff can spend time on higher value tasks.
Look to the experts
It’s no longer necessary for businesses to have in-house experts for every facet of their operations. With digital disruption, we’ve seen a marked shift in how new businesses gain success. The old end-to-end model favored businesses that took care of the entire value chain, from raw material to finished product, but the new model is all about specialization, where successful businesses find their niche and then rely on external services and partnerships to handle the rest. Think of companies like Airbnb, which has become one of the world’s largest hospitality providers, but owns no hotels and instead provides a platform while its users provide the product.
Similarly, small businesses don’t have to be experts in everything but should focus on their true purpose and rely on external partners and services for the rest. Outsourcing back office operations like bookkeeping and financial reporting, in particular, can reduce costs and also mitigate the potential for errors. Digital technologies make this type of outsourcing easy, as financial data and documents can be shared with service providers securely through the cloud.
At Enkel, we help small business owners adapt to streamline their bookkeeping and other back office processes through cloud-based technology and our professional team of accountants and bookkeepers. Regardless of where you are located, we’ve got your bookkeeping needs covered! Contact us today to learn more.