Digital transformation strategic processes for Small and Medium Enterprises in Cape Town, South Africa

Abstract

The rapid emergence of new digital technologies and the acceleration of digital transformation (DT) caused by Covid-19 require that small, medium and micro enterprises (SMMEs) either modify or develop new business models to exploit digital technologies. DT in itself can become a challenging journey, especially for small enterprises (SEs) with limited resources, low digital maturity levels and the inability to digitally transform. The formulation, adoption and implementation of a DT strategy as an approach can potentially provide SEs with a framework that may assist in successful DT. The study aimed to answer two primary research questions with two sub-questions each. The primary research questions were formulated as follows: 1) What are the business processes required for SEs to digitally transform their business? 2) How can SEs efficiently organise, support and enable a DT strategy? The study aimed to explore the factors that affect the adoption of DT strategies by SEs in the City of Cape Town, South Africa. A multiple case study with a qualitative research method was used for this study on 15 conveniently, non-randomly and purposively selected SEs in Cape Town. An inductive research approach was taken to collect data through semi-structured interviews conducted with business owners and managing directors. The data were decoded using keywords and analysed using a descriptive data analysis method to formulate the findings. The study adhered to strong ethics to ensure that the integrity and moral principles were followed throughout as required by CPUT. The contribution of the study is the proposed framework for SEs to assist with the formulation, adoption and implementation of a DT strategy that can assist SEs in overcoming the challenges experienced when undergoing a DT. The research found that some of the challenges for SEs to DT are lack of knowledge about DT, lack of financial support and resources, lack of support by industry experts, regulatory and compliance red tape, lack of strategy, and employee resistance to change. The study identified various factors for consideration of a successful DT with business process management, leadership decision making, digital marketing transformation, business process automation, financial aspects, digital technologies and risk management being the main factors. The research results reveal that SEs have a fair understanding of the characteristics, benefits and challenges of DT, but very little to no understanding on what it entails to formulate, adopt and implement a DT strategy. This could result in SEs being i) reactive oppose to proactive to market disruptors, ii) unable to fully explore and exploit digitally technologies to add value to customers and compete in the market, iii) potential closure of enterprise.