Digitalization in Small Businesses: Why Process Comes Before the Tool

Why do so many digitalization projects fail in small and mid-sized companies?

A company introduces a CRM, software for managing customers and sales opportunities, because quotes keep getting lost. A year later quotes still get lost, only now they sit in a database. The tool was never the problem. What was unclear was who does what, and by when, after a quote goes out.

The same pattern shows up with project management software, ticketing systems, and every new spreadsheet. Software maps workflows. If the workflow is unclear, it maps the lack of clarity, and the team maintains a system on top of doing the actual work.

The cause is rarely technical. Buying a tool feels like progress and is done in an afternoon. Clarifying a workflow means naming responsibilities and questioning habits. That is less comfortable, which is exactly why it gets skipped. This applies in particular to the Mittelstand, Germany's small and mid-sized, often owner-run companies, where much of the know-how lives in the heads of a few people. The question this article sets out to answer: how do you proceed so that a tool actually improves a workflow? To answer it, we first clarify what process before tool means, then go through the three steps from mapping to simplifying to selecting, and finally show where digitalization pays off first in sales.

Software makes a good workflow faster and a bad workflow more expensive.

What does “process before tool” mean in practice?

A process is nothing complicated. It is the recurring sequence of steps that produces a result in your business: an inquiry becomes a quote, a quote becomes an order, an order becomes an invoice. Each step has a responsible person, a trigger, and a result that is handed to the next person.

“Process before tool” means you settle this sequence before you talk about software. There is a fixed order of three steps for that, the MSS sequence: map, simplify, select. Each step has a tangible result, and none may be skipped.

1. Map

   You write down how a workflow actually runs today. The result is one page with steps, owners, and waiting times.

2. Simplify

   You remove steps nobody would miss and settle every handoff between two people. The result is a shorter workflow with clear ownership.

3. Select

   Only now do you look for a tool, and you look for one that fits the simplified workflow. The result is a short requirements list and a decision.

Step 1: How do you map a workflow as it really runs?

Pick a single workflow that occurs often and noticeably gets stuck. In sales this is frequently the path from inquiry to quote. Trace three to five real cases from recent weeks and ask the people involved what they did. The important distinction is between the workflow as it should be and the workflow as it was. You only care about the second.

Record four things for each step: Who does it? What triggers it? How long does the actual work take? How long does the case sit afterwards before the next step begins? The last question matters most, because most time is usually lost while waiting.

In the example, ten days of lead time contain only about two and a half hours of work. A faster costing program would change almost nothing. The lever sits in the handoffs: why does a costing wait four days for an approval that takes ten minutes?

Step 2: What can you simplify before you automate?

Now you go through the list step by step and ask four questions. They cost nothing, and they often save more time than any software.

• Can the step go? Who would notice if it disappeared tomorrow? If nobody would, remove it.
• Can the handoff go? Every handoff between two people creates waiting time. Check whether one person can do two steps in a row.
• Can a rule replace the decision? An approval for every quote can often be replaced by a threshold, for example: quotes up to a defined amount go out without approval.
• Is it clear when the step is done? Define a result and a deadline for each step, for example: callback on the same or the next business day.

In the example company these questions lead to three changes. The office schedules the appointment for clarifying the need during the first contact. Standard quotes go out without approval. And every quote gets a follow-up date when it is sent. No software has been involved so far.

Step 3: How do you choose the right tool?

The requirements list follows almost automatically from the simplified workflow. It describes what the tool has to do in your workflow. A vendor's feature list, by contrast, describes everything the tool can do. That is a big difference, because every feature you do not need makes the tool harder to use.

• Every step of the workflow can be represented with an owner and a deadline.
• The tool sends reminders for due steps on its own, such as follow-ups.
• One view shows, without filtering, which cases are currently where.
• A new team member can operate the workflow after a short introduction.
• The one number you use to measure success can be read without manual work.
• Data protection and the location of the data are settled.

At this point it often turns out that an existing tool is enough once everyone finally uses it the same way. Sometimes a shared list with reminders will do. And sometimes you really do need a new system. The difference from before: now you know what for.

Where does digitalization pay off first in sales?

The yardstick is simple: does it save time or add revenue? In sales these are mostly routines that currently depend on individual people's memory. As long as somebody has to remember, the step drops out as soon as things get busy. That is exactly when it matters most.

Start with one of these routines. Once it has run for four weeks without anyone having to ask, add the next. This order looks slow, but it is faster than a large project that changes everything at once and fizzles out in day-to-day business after six months.

How do you recognize a good digitalization project?

A good project can be recognized by three features, and you can check all three before you start.

• Its subject is a workflow. The project is called “quotes in three days” and does not name a product.
• It has a number. For example the days from inquiry to quote, or the share of quotes that are followed up. You measure it before and after.
• It ends with a decision about what will no longer be done. The old spreadsheet is switched off, the double approval is dropped.

First steps for this week

You need no budget and no consultant for this. A sheet of paper and an hour with the people involved are enough to begin.

1. Choose a workflow that occurs frequently and where customers or colleagues regularly have to ask for updates.
2. Trace three real cases and note for each step: who, working time, idle time afterwards.
3. Mark the longest idle time and ask the four simplification questions.
4. Agree on a single change and one number you will use to measure it after four weeks.
5. Only then talk about software, with the requirements list from your workflow in hand.

If you work this way, you buy software less often and use what you have better. Digitalization becomes smaller than it looks in brochures, and it pays off sooner.

Taken together: a tool improves a workflow when the workflow has first been mapped, simplified, and given a number against which the improvement can be measured. If you reverse that order, you digitalize the existing lack of clarity. Buying the software is therefore the last step, not the first.