Back in 2012, Dunkin Donuts made a bold move: They launched a mobile app that allowed customers to pay from their devices and connect to the company’s rewards program. Technically this was not a huge innovation, it was a simple app to improve customer’s experience with the company with the objective of driving sales. Results were impressive. The app generated more than 500 million in sales from mobile devices by 2016, with a 22.9% net profit margin for the year, twice the industry standard. This worked for Dunkin Donuts, but the model is applicable for companies of all sizes.
Small and medium sized companies are the backbone of every economy. SMEs employed 47% (over 60 million people) of the workforce and received over 98.2 billion in loans in the US in 2020. Technological advances have changed the ways in which companies compete in the marketplace since the early 1800s. To compete in a global business environment, executives at all kinds of companies must recognize the value of modern software solutions and deploy them to improve their competitiveness.
‘Even if there were a trustworthy way to send money over the internet - which there isn’t - the network is missing a most essential ingredient of capitalism: salespeople’ - Clifford Stoll “The Internet? Bah!” Newsweek 1995.
With the help of technology, companies can generate efficiencies that drive revenue and improve the bottom line. In the 2020s technology can be used to improve any process of any area of a business. CRM software solutions help companies know their customers and create products targeted to their specific needs. Accounting software has automated bookkeeping and accounting processes so entrepreneurs and owners can focus on what matters most: sales and operations. Analytics and artificial intelligence can help companies understand their data and make informed decisions.
However, not many companies have the capabilities required to develop custom technology solutions that will positively impact their business. Why does this happen?
It starts at the top. A study by the MIT Sloan Management School found that companies with ‘tech savvy’ members in their board of directors outpaced their peers on key metrics like revenue growth, higher profit margin, higher market cap growth and higher return on assets.
According to MIT, tech savvy directors:
All these insights are applicable to management teams of SMEs in any industry. Moreover, companies can turn to trusted tech partners to provide consulting for innovating their business with technology.
The competitive landscape of every industry is shifting. SMEs are caught up in their ways of doing business, while startups from all over the world are disrupting industries with no capital, just based around their knowledge of technology.
There isn’t any industry untouched by the startup tsunami that has hit the world for the past decade. Every business must work hard to improve their processes to maintain a competitive position in the marketplace.
However, unlike Silicon Valley Startups, not every company should be a software company. Legacy companies are great at their core business models, they can surely improve them with technology, but they are not and should not become technology companies.
So how can a small company become competitive with the use of technology? They can do so in one of three ways:
The first option is the most expensive in terms of capital and also time and management overhead. Managing an in-house team of engineers and product people is hard work and requires skills that most companies lack.
The second option is tempting, low cost for offshore teams of quality engineers being managed by an experienced product team. However, with this option comes a sense of uncertainty. Will the outsourced team understand my business and care about our customers and processes as much as we do?
Then comes the third option - the hybrid approach. Have an in-house tech team to ensure alignment between the core value proposition and the offshore teams. This usually works best and provides the best results for companies that can afford the in-house team.
We have much more information about the types of engagements a company can have with their outsourced software development company. Some of the models are described in this blog post.