Whether it's customer service, order processing or internal communication, digital processes have long been part of everyday business life. However, many small and medium-sized enterprises are struggling to tackle digital transformation systematically. What is often lacking is not so much insight as a clear plan for how to implement change with limited resources.
While large companies have their own teams and budgets for digital transformation, SMEs have to work within different parameters. Every investment must be well thought out, and every measure must deliver tangible added value. At the same time, demands are increasing: customers expect fast response times, reliable processes and digital services across all channels.
The good news is that digital transformation does not have to be a major project. Many changes start small, with clear priorities, the right tools and a step-by-step approach.
This challenge has also been recognised at the political level. Programmes such as ‘Digital Jetzt’ from the Federal Ministry for Economic Affairs and Energy (2020–2023) are designed to support SMEs in investing in digital technologies and IT skills. Thousands of companies have applied for funding, but it is clear that progress often falls short of expectations. According to studies, only about one-third of medium-sized companies in Germany had fully implemented a digitalisation project by 2023.
In this article, we show what digital transformation means for SMEs in concrete terms, why many projects fail and which strategies work even under realistic conditions. The aim is to provide guidance that is pragmatic, practical and focused on what really makes a difference.
What is digital transformation for SMEs?
Many companies talk about digitalisation, but what exactly does the term ‘digital transformation’ mean? And what does it mean in concrete terms for small and medium-sized enterprises?
First, it is worth making a clear distinction:
Digitalisation primarily refers to the conversion of analogue processes to digital solutions. For example, a paper form becomes an online form, or a signature on site becomes a digital signature.
Digital transformation goes much further. It affects not only individual processes, but the entire company. How do people work together internally? How are decisions made? How do we talk to customers and through which channels? All these questions come into focus when a company really wants to position itself for the future.
Essentially, it is about redesigning structures, processes and ways of thinking with the help of digital technologies. And that affects many areas:
- Customer relationships: Those who use their customer data wisely can provide better advice, sell more effectively and build long-term loyalty.
- Business processes: Automation saves time, reduces error rates and creates transparency.
- Product development: Ideas emerge more quickly when teams work together and have access to up-to-date data.
- Decision-making: Those who have the right information at the right time make better decisions, whether in sales, purchasing or management.
The digital dilemma for SMEs
Many SMEs have long been aware that they need to step up their digital game. The necessity is rarely the problem; it is more often the implementation. In practice, high expectations clash with limited resources.
While large corporations work with their own digital teams, smaller companies with scarce resources have to decide: Where is the investment really worthwhile? Which tools bring real added value? And how can the whole thing be achieved while business continues as usual?
It is usually the same obstacles that slow down progress:
- Limited budgets: New software, consulting, training – it all costs money. And if there is no clear benefit, digital transformation quickly becomes a low priority.
- Technical uncertainty: Many companies do not have the internal expertise to plan or implement digital projects on their own. According to a study from 2024, 71% have no detailed digitalisation strategy.
- Resistance within the team: Change often generates scepticism. If employees do not understand why processes are being changed, the introduction of new tools will remain superficial.
- Unclear prospects of success: When will it all pay off? What are the actual benefits of a new system? Without measurable results, it is difficult to gain internal approval.
Those who put off digital transformation for too long are taking a risk:
- Competitors are automating processes, reducing costs and gaining market share.
- Customers expect digital services. Those who do not offer them appear outdated.
- Processes remain error-prone, slow and dependent on individuals.
Time and again, it is clear that the price of inaction is often higher than the cost of getting started. Companies that fail to act in time not only lose market opportunities, they lose touch.
What digital transformation really means
Digital transformation is not a one-off IT project or an update that is complete once it has been implemented. It describes a fundamental change in the way companies work, make decisions and develop. It is not just about new tools, but about new ways of thinking and working.
At the heart of this transformation are four areas that are changing particularly significantly:
1. Business processes are becoming leaner, more transparent and better connected.
2. Customer relationships are evolving from reactive support to data-driven, personalised communication.
3. Information flows that used to be handled via email or manual handoffs are being centralised and automated.
4. Teams are working more collaboratively, regardless of location or department.
Technology alone is not enough to make this change a success. A culture that allows change and actively shapes it is crucial. Those who are open to new ideas, willing to question the status quo and have the courage to experiment step by step will create the conditions necessary for digital measures to be not only introduced but also truly lived.
Digital transformation is therefore not a one-off feat of strength, but a strategic development, and it is achievable. This is especially true when companies do not try to implement everything at once, but instead develop further with clear goals and realistic steps.
Practical tools for getting started
The path to digital transformation does not have to begin with a complete IT overhaul. Often, individual, targeted tools are enough to noticeably improve processes. It is important to start with tools that are easy to implement, relieve the daily workload and, at the same time, help to improve structures.
Three areas have proven particularly effective in practice: business management, customer management and collaboration.
ERP systems – connecting and simplifying processes
What it is:
An ERP (enterprise resource planning) system maps central business processes such as accounting, inventory management, warehousing and purchasing in a single system. The database is uniform and all departments work with the same information.
Why it is relevant:
Many SMEs work with individual tools or Excel files that are poorly linked to each other. This leads to duplication of work, inconsistent data and slow processes. An ERP system creates clarity, saves time and reduces error rates. It also makes it easier to comply with legal requirements, for example in accounting or inventory management.
How SMEs can implement it effectively:
It is important not to try to do everything at once. Many providers offer modular entry options, e.g. only financial accounting and invoicing. This allows the system to be expanded gradually. Cloud-based solutions reduce IT costs and often offer a fair pricing model per user.
Practical tip:
Before implementation, it should be clear which processes will be mapped first and how the data will be transferred from existing tools. Without a clean database, even the best ERP system will not deliver real added value.
Suitable providers for SMEs:
Odoo, lexbizz, sevDesk (for smaller teams with a focus on finance)
CRM systems – strategically manage customer relationships
What it is:
A CRM (customer relationship management) system bundles all information about customers, leads, deals, support requests and interactions and makes it centrally available for sales, marketing and service.
Why it is relevant:
Many companies quickly lose track of things, especially when their customer base grows. Who requested what and when? Where is which offer? When was the last contact made? A CRM creates transparency, helps with sales planning and increases response times in customer service.
How SMEs can use it effectively:
Start with the basics: central contact management, offer tracking, task and email integration. The rest, such as automation, email marketing or reporting, can be added later. Important: The processes in CRM should reflect the reality of sales, not the other way around.
Practical tip:
The introduction will only work if CRM is used in everyday life. This is especially successful if it is not seen as a control measure, but as a way of making work easier, e.g. through automatic reminders, email templates or mobile availability.
Suitable providers for SMEs:
HubSpot (free to start, strong integration), Pipedrive (sales-focused), Zoho (modular, affordable, expandable)
Collaboration & automation – organise collaboration efficiently
What it is:
Digital tools for communication, project work and automation make collaboration more transparent, faster and more scalable, whether in the office, remotely or in a hybrid setting.
Why it is relevant:
Emails with attachments, unclear responsibilities and duplicate tasks are common time wasters. Good collaboration tools create central information spaces, clear task distribution and automated processes, thereby significantly reducing the coordination effort.
How SMEs can get started:
Even simple tools such as Asana, Notion or Trello can be used to structure projects and clarify responsibilities. Slack or Microsoft Teams improve the flow of information within the team. If you want to automate repetitive tasks such as sending quotes, confirming appointments or processing forms, you can start with platforms such as Make or Zapier.
Practical tip:
Not every automation is worthwhile right away. Start with simple processes that occur frequently but are easily forgotten, e.g. follow-up emails after quotes, automatic task allocation or status updates.
Suitable tools for SMEs:
Asana (clear project focus), Notion (flexible, also as a knowledge database), Slack (fast communication), Make or Zapier (visual automation without code)
Implementation: Strategy comes before software
The best place to start your digital transformation is where digital solutions create tangible added value. For many SMEs, this primarily involves three areas: core business processes, customer relationships and teamwork.
Analyse your needs
The first step is always to take an honest inventory: Which processes are particularly time-consuming in your day-to-day work? Where are there inefficiencies? What information is missing to make informed decisions?
Not every company needs ERP or automation tools right away. Often, it is enough to address a specific weak point, such as in quotation processing or interdepartmental collaboration. The goal is to prioritise pragmatically rather than invest on speculation.
Involve employees
Digital transformation changes the way we work, so those who work with the new tools on a daily basis must be involved from the outset.
Those who understand why something is changing are more willing to embrace new approaches.
Clear responsibilities, practical training and an open approach to feedback from the team are important. Internal ‘digital champions’ who act as contact persons can also help to anchor new solutions more quickly in everyday life.
Start with pilot projects
Don't try to do everything at once. SMEs in particular benefit from testing new tools in a clearly defined area first, such as sales, accounting or project coordination.
A pilot project like this shows what works, where adjustments need to be made and what effects can realistically be expected. If the initial launch is successful, the experience can be transferred to other areas with greater certainty and less risk.
Plan time and resources realistically
Even lean tools require training, coordination and maintenance. Those who underestimate the effort involved risk projects getting bogged down in day-to-day business. It is better to set aside specific time slots and make the introduction a fixed part of the planning process.
Make successes measurable
Pilot projects are most effective when they are evaluated against specific goals, such as reduced processing times, lower error rates or higher customer satisfaction. Measurable results help to convince internal stakeholders and plan further steps in a targeted manner.
Digital transformation is a process, not a one-off project
Digital transformation cannot be completed in a single step. It evolves with the company, the requirements of the market and the possibilities of technology. For SMEs, this does not mean constantly introducing new systems, but regularly reviewing what can be done better
Those who set clear priorities, involve employees and implement changes step by step create good conditions. Not everything has to be perfect. The key is to take action with solutions that work in everyday life and strengthen the organisation.
The right time to start is often when the next bottleneck becomes apparent. And that is exactly where change begins.
Digital transformation with experts at your side
Would you like to make processes more efficient, serve customers better or finally bring order to structures that have grown over time? We support you in tackling your digital transformation pragmatically and effectively, with a clear view of what is feasible and sensible.
Whether you need initial guidance, targeted impetus or concrete implementation, talk to us about your next steps. We bring clarity to complex issues and accompany you on the path to a digital way of working that suits your company.
