Digital transformation of businesses in East Africa

Reduce manual processes and paper administration
The present age is an age of information and no business can grow or thrive in this age without digitally transforming their business. Digital transformation refers to digitizing processes within a business, think of using accounting software, adding e-commerce as a sales channel or automating salary and supplier payments. Digital transformation increases the availability of information within organizations and plays a vital role in this information age. The level of digitalization of a business and the amount of information that is available goes hand in hand. Not digitally transforming your business becomes a bigger risk every day, information is already the most important asset of a business. The instructions for businesses are straightforward “go for transformation or pass away”.

East Africa’s small or medium-sized enterprises (SMEs) often still work with manual systems. Digital transformation of businesses in East Africa is as relevant as it is in any other part of the world. Businesses need to embrace change and come out of the comfort zone for growth. Often digitalization of a company is not fully understood or misunderstood (digitalization is not only for internet businesses), in this article we break down what positive impacts digitalization can have on a business. Secondly tips are given on how to implement digital transformation for businesses in East Africa.

What positive impacts does digital transformation have on a business
Digital transformation can be done on different levels, from just a couple of aspects of the business like sales and administration, to company wide. Below is a breakdown of the impact digital transformation can have company wide.

• • An increased accuracy of sales information
    Digitalization gives a better overview of sales which increases the opportunity to create more sales. Accurate figures for sales will help with doing better planning and move in the right direction of the target market with desirable and controlled speed. It gives possibilities to break down the data to discover sales indicators and offer the best analysis of products, services and customers.Related: Handle your invoices and sales digitally as a business

 

• • Better customer service
    Not only will digital transformation increase opportunities for future sales, it also gives opportunities to provide better customer service. The whole world is obsessed with new technology like apps, web pages and social media networks, people want their problem’s solution not only in an effective way but fast too. Only digitally transformed companies can provide this type of customer service. Instant access to crucial information requested by customers improves customer service. According to Accenture, 75% of customers admit being more likely to buy from a company that:
    • Recognizes them by their name,
    • Knows their purchase history, and
    • Recommends products based on their past purchases.

    Having a digital system makes sure this information is always reachable. Digital transformation also establishes a better mechanism for the feedback from customers. This feedback can be directly accessed by the higher management and necessary actions or changes can be taken immediately.

 

• • Improvement in debtors management
    Operations of a business highly depend upon cash liquidity. Often goods or services are sold on credit, creating accounts receivables. Digitalizing offers opportunities for effective and better cash management of debtors as well as reducing outstanding accounts receivables, which increases the level of liquidity available.Related: How to reduce outstanding invoices in three steps via digital invoicing

 

• • Improvement in company transparency
    Digitalization allows a business to keep track of the company’s finances and administration on a real time basis. Management has access and overview of what happens within the company within seconds, reducing the opportunity for theft within companies.Supports coordinated effort across divisions: Digital transformation of businesses can help different departments of the same organization better coordinate with each other and grow together. It ultimately improves communication between departments. The idea of the whole association, causing a substantial advanced change, can create an overwhelming possibility for a workforce from administration to section level representatives by sharing their experience and observations. With consolation, employees can remove generation gaps and take part in healthy discussions and work together in a better way. The business, with the help of this digitalization, can improve the knowledge and skills of its workers.

 

• • Better coordination with external stakeholders
    In addition to internal stakeholders, there are external stakeholders, these include the suppliers, lending institutions, creditors, government and regulatory bodies. Most of the external stakeholders are parties that the business owes money on a regular basis, like payments for goods / services and tax, categorizing them under accounts payables. Having a good overview of accounts payable is critical for cash management as well as relationship management.An additional advantage towards creditors is that businesses are able to communicate the necessary information easier, improving the chances to get access to loans for example. Digitalization can also take the burden of complex tax calculations and their transmission to the concerned government authority away.

    Related: A Guide for Mobile Money Bulk Payments

 

• • Attract highly skilled employees and talent
    Some people like the manual systems, but there is a new generation growing up in an age of digitalization. The average age in East Africa is around 17 years. If you miss the chance to transform digitally as business, you will lose a part of the workforce, a workforce that could be potential talent for your company.

    Related: Free Income Tax PAYE Calculator

 

• • Possibilities to work remotely
    Manual systems can not provide the ease of doing business from anywhere. On the other hand, through digital transformation, maximum operations can be performed and monitored remotely. Remote meetings can be arranged, and necessary instruction can be transmitted quickly.

 

• • Effective decision-making
    Digital reports about past performances regarding revenues and expenses can be generated instantly and transmitted to the management and employees for effective decision.

 

• • Time and cost reduction
    Time is money; the use of digitalization reduces the administrative burden and therefore operating cost of business by saving your precious time from lengthy processes. It allows for better and more attention to core business activities.

 

• • Increase overall efficiency
    If you are engaged in the manufacturing business, you can centralize your operations from raw material storeroom to finished goods warehouse. Demands of raw material can be sent directly to suppliers with a digital system. The system will save the order, which can be used later for analysis. Everything can be better analyzed from production to distribution, and problems can be solved effectively. In case of any wrongdoing, the problem can be pointed out in time for a better solution. in time identification and resolution of issues will ultimately enhance your businesses overall efficiency.

 

• • Competitive Advantage
    Digitalization not only helps in effectively managing the internal issues related to business but can make your business stand out in the market. If your competitors are using manual systems, they have an administrative burden, which will require more time and human resource. You can complete your tasks in half time and half administrative burden compared to your competitor. Every customer expects disciplined and efficient business processes. Competitive advantage can be gained by giving your customer interruption free environment.

Africa in general, and East Africa in particular is one of the fastest growing regions worldwide. SMEs operating in this region already face challenges through lack of infrastructure and access to good resources. Problems such as unavailability of a systematic overview of sales and expenses are problematic and slow down growth. SMEs can’t afford the wastage of time and resources in manual processes, and the time to act is yesterday. The solution for these issues is digital transformation of businesses in East Africa, through which business processes can be made efficient.

After reading above, digital transformation as a business in East Africa should no longer be a dot on the horizon, the importance of digitalization should be clear and evident. However the question arises next is how to bring digital transformation in practice. The dilemma for SMEs is that although they can’t afford the wastage of time and resources in manual processes, often SMEs also can’t afford high capital expenditures for digital systems streamlining and digitizing their processes. SMEs in general have limited resources and limited in-house digital knowledge available. Digital transformation of business in East Africa does not mean huge resources and knowledge are required. Below practical tips are given on how to bring digital transformation in practice with limited resources.

• • How to bring digitalization of a business in practice with limited resources
    Key is that the right approach towards digital transformation is made and the right systems are chosen accordingly. Remember that change is not done overnight, but usually goes in executable practical steps at a suitable speed suited to the business.

 

• • Start with one branch
    Instead of digitizing your full business at once start with digitizing one branch of your business. This approach allows you to execute quicker, and also it allows for clear measurement. Do A (branch not digitized) and B (branch digitized) testing and measure results between them. This gives a good understanding of the impact. It also provides good learning for improvement. Doing it in small steps reduces risk of things going wrong in the full organization and gives knowledge for improvement of digital transformation of the second branch.

 

• • Start with one department / aspect
    Start with one department or aspect before going company wide, recommended is to select one with the lowest level of complexity. For example digitizing accounting as a department or function might be more straightforward than digitizing customer service. After one department is transformed, move to another department until the full company is digitally transformed.

 

• • Make sure ideas work in practice
    Sometimes digital systems designed work well on paper but not in the field. It is key that not only management is involved in creating the roadmap for digital transformation. Recommended is to appoint a low level and higher level person in the business. The last thing wanted is pushing digital transformation that does not work in practice, it needs to work for the full organization to really benefit from it.

 

• • Cut down manual processes and force digital processes
    Digital processes that do work and are introduced within a business might not be picked up by employees. One of the reasons could be that manual processes do work and already familiar to employees. Change can be scary for employees and sometimes the only way to digitize is to shut down manual processes and force employees to use the digital processes.

 

• • Provide manuals guidance and follow up
    Forcing digital processes does not mean leaving employees in the dark. Make sure there is good coordination and communication about digitization between management, employees and departments. The least thing you want is having new processes that no employee can use. Provide manuals of new systems.

Compared to the rest of the world digital transformation of businesses in East Africa is behind. It is not too late but waiting is no longer an option. To assure future relevancy as a business, the time to act on digital transformation is now. Every day that passes without acting, is an increased risk for a business of becoming redundant in the future.

If you have any comments, questions or suggestions about on this article, feel free to reach out to info@clickpesa.com