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Why digital transformation should be a family (business) affair
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The COVID-19 pandemic forced many organisations to shore up their digital capabilities in order to respond to changing consumer preferences.
Only 15% of Australia’s family businesses say they have strong digital capabilities in place, but almost half are focused on future improvements.
Family businesses are most likely to succeed when they have a clear understanding of the scale and scope of the transformation required.
If family business owners had lingering doubts about the impact of digital disruption, those were surely swept away last year. The pandemic prompted many businesses to try new digital tactics to reach and serve customers. Many valuable lessons were learned along the way and those with strong digital capabilities and access to good data performed better than their less equipped peers.1
PwC’s 10th Global Family Business Survey 2021 (Australian findings), examines how, and why, family businesses need to capitalise on the lessons of the past 18 months — and act now to preserve their legacy tomorrow. With further market disruption and change inevitable, it is clear they must make deeper digital transformation a strategic priority. In doing so, they will set their businesses up for lasting success.
Why transformation can’t wait
The Family Business survey found that while only 15 percent of Australia’s family businesses have strong digital capabilities, almost half (48 percent) are now focusing on major improvements. These companies are recognising the powerful combination of factors that mean deep and systemic digital transformation cannot wait:
The success of any business depends upon its ability to meet demand. Now more than ever, the external market is demanding that businesses engage digitally. Consumer buying patterns are shifting, forcing family businesses to adjust. For example, those that supply goods to large supermarkets now require specific digital systems as a bare minimum. Those that can respond to demand will not only retain their existing customers, but also open themselves up to new and larger markets locally and overseas. They’re also less likely to be disrupted by new market entrants.
Digital transformation allows family businesses to refine back-office operations. In the process, this allows businesses to achieve efficiencies and save money, for example, by implementing solutions for processing orders or closing the books at month-end. All such measures help keep a business lean and competitive.
Talent is an increasingly important area of focus. A growing body of evidence shows that people are increasingly making career choices based on the opportunities to upskill and keep pace with emerging technology. But Australian employers remain particularly slow at addressing this. A global study by MIT CISR found that 58 percent of Australian firms fail to provide their people with both the technologies and capabilities to work effectively in the digital world (more than double the global figure of 27 percent).2
Digital transformation sets family businesses up to remain agile in the future. Business models that have survived for decades may not remain fit for purpose in the years to come. The right technology and processes allow owners to obtain real-time insights into the business, identify trends, and make informed decisions to propel their organisation forward.
Investors expect that you have, or will, go digital. Increasingly, investors are seeking businesses that have sophisticated and rigorous KPI reporting, analysis and insights. Digital transformation enables family businesses to generate accurate, quality reports that investors can rely upon to understand what KPIs are being measured, how frequently, and how management is responding.
The threat of cyber-attack. Family businesses that have not lifted their digital capabilities can be a soft and lucrative target for cyber criminals and other threat actors. Such incidents can cause significant (potentially catastrophic) operational, financial and reputational damage. On the flipside, robust cybersecurity can reduce cyber risks and send a message to the market that a business is safe and trustworthy to deal with.
Safeguarding the future
The pandemic forced Australian businesses to adopt new digital tactics to address short-term issues. About a third of family businesses (31 percent) have already developed and documented a long-term roadmap for digital transformation, and many more will soon follow suit.
Family businesses are most likely to succeed when they have a clear understanding of the scale and scope of the transformation required.
Owners are increasingly aware that digital transformation requires more than one individual or department to take the initiative. It requires more than a patchwork of apps that solve specific problems. And it requires more than just back-office solutions for admin.
Digital transformation requires everyone and everything to adapt, so that the business can keep up with the exponential evolution of technology. Proactive owners are challenging their own mindsets and starting to see IT or ICT as more than a sunk cost that makes the business work more efficiently.
Genuine digital transformation will change the working life of everybody from the boardroom to the mailroom. Often, it reinvents a business’s entire IT systems, to provide insights that give owners the confidence to change the way things have always been done and unearth new ways to generate more value and revenue.
Time and cost barriers can be overcome
Of course, digital transformation requires financial investment – but the good news is that the costs have dropped dramatically in recent years. Some of the analytics tools that multinationals were spending millions of dollars developing a decade ago are now available as standard software-as-a-service (SaaS) tools with equivalent capability for a fraction of the cost.
Cloud and server technology also costs a fraction of what it once did. So it’s relatively inexpensive to implement Enterprise Resource Planning (ERP) systems that connect every part of a family business. The results can be a ‘win’ for everyone:
Owners gain a more comprehensive view of how their business is operating.
Staff encounter fewer obstacles and require less workarounds, which boosts morale and productivity.
Suppliers get a clearer idea of future demand and lead times.
Customers enjoy a much more seamless and satisfying experience.
Digital transformation also requires an investment of time but that’s not a commodity that most family business owners are blessed with. Understandably, their focus is often on ensuring the business continues to grow. So, it’s important to generate capacity within the business (either internally or through consultants) who will dedicate themselves to delivering the transformation at speed – with minimal disruption to day-to-day operations.
The time to act is now
The challenges of the last year have required significant resilience to survive. The rapidly changing state of the world has served as a wake-up call for all business leaders looking towards the future, and family businesses are no exception.
It’s no longer enough to rely on values and legacy to propel the business forward. Tomorrow’s family business requires a new approach for lasting success — one firmly supported by a robust digital transformation.
Explore the data from PwC’s 10th Global Family Business Survey 2021 or download the key Australian findings.
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References
- PwC client work.
- https://cisr.mit.edu/publication/2020_0601a_AUSPathways_WeillDeryWoerner
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