The Top 7 SMB Digital Transformation Trends of 2023

Small and medium businesses (SMBs) have been struck with a flood of challenges in 2023. From supply chain disruptions to a tough labor market and inflation, SMB leaders have their work cut out for them. How can they push past the obstacles? Technology may be the answer. It’s known to help businesses cut costs, improve efficiency, and weather the storms of a rough economy. To take advantage, you need to know what opportunities are available. That’s why we’ve compiled the top seven SMB key digital transformation trends 2023 has to offer. Let’s take a look

1.Increased Adoption of Robust HRMS Solutions

Human Resources is a vital part of any organization. Smart people decisions, effective management, and accurately measuring employee performance can positively impact your growth. So it’s no surprise the HR software market is expected to grow at a compound annual growth rate (CAGR) of 10.68% from 2022-2026 and is an SMB key digital transformation trend. But why now? It likely has to do with the increasingly popular trends of automation and data-driven decision making, which Human Resource Management System (HRMS) software applies. Here’s how these features benefit an organization:

  • Automation: HRMS software can automate time-consuming and repetitive tasks, such as updating employee information, payroll processing, administering employee benefits, and much more. Applying automation in these areas reduces the workload of HR staff and improves overall operational efficiency.
  • Data-driven decision-making: Data can help business leaders make decisions with more accuracy, producing better outcomes for their companies. HRMS software leverages data to optimize the recruitment process and track employee performance metrics. This can help HR staff make informed decisions about their recruitment strategy, employee promotions, and how to improve team performance.
While automation and data-driven decision-making are valuable, HRMS software comes packed with additional advanced features. For example, it can manage the employee lifecycle, enable easy data management, and facilitate employee self-service of their own HR needs. Just like with automation and data-driven decisioning, these benefits can help further free up the time of HR staff and improve the overall efficiency of an organization.

2. Prioritization of the Digital Employee Experience

The COVID-19 pandemic drastically changed the work landscape. From 2019 to 2021, the amount of employees predominantly working from home tripled—increasing from approximately 9 million people to 27.6 million. What’s more, record numbers of employees quit (nearly 100 million in total) in the last two years. Companies are doing all they can to keep staff happy, offering perks like childcare and mental health benefits to improve employee wellbeing. For these reasons, the Digital Employee Experience (DEX) has become one of the top SMB key digital transformation trends 2023 presents. What is DEX?
It’s the experience an employee has with any digital aspect/technology involved at work. DEX is influenced by the quality, ease of use, and reliability of workplace technologies. The better the DEX, the more efficient employees will be because technology is aiding their productivity, not hindering it. A good DEX is a win-win for employers and employees.
How to Create a Positive DEX
Here are five ways businesses can leverage technology to improve DEX:
  • Integrated Audiovisual (AV) solutions: Video conferencing tools like Microsoft Teams, Microsoft Teams Rooms, Zoom, and similar applications help remote staff communicate efficiently and stay connected to other team members and clients.
  • All-laptop initiatives: To go along with integrated AV, many organizations now provide all employees with laptops instead of desktops. This reform can avoid the bring your own device (BYOD) security issues present in remote work environments (more on this soon) and free up staff to be more mobile.
  • Learning Management Systems (LMS): This software can streamline employee training by providing online programs that onboard staff members, teach soft skills, and provide sales training. With a remote workforce, an LMS can systemize the training process across your entire company.
  • HR tech: Tools such as HRMS, described earlier, put employees in the drivers’ seats of their HR needs. Without any help from an HR staff member, employees can request vacation time, track their performance, and view their benefit plans.
  • Robotic Process Automation (RPA): This technology enables businesses to automate repetitive tasks by using bots. RPA can help with both mundane and complex tasks, from report generation and data entry to invoice processing and AI-powered customer support.

If you’re like many business leaders, you may feel overwhelmed by all the tools available. Which solution do you implement first? How will new technology integrate into your existing infrastructure? More and more businesses are using services like Leverage IT’s Navigate – IT Strategy and Consulting to guide them through the process. The benefits can be dramatic. With a long-term technology roadmap, your business can reap a greater ROI, meet your strategic goals, and improve operational efficiency.

3. Protection of Remote Work Environments and Zero Trust Security

The remote work trend has increased the need for SMB cybersecurity. As more employees work from home, business leaders may be tempted to implement BYOD policies to cut costs. But there are downsides. The practice can cause your cybersecurity defenses to become disjointed, as employees’ devices may be unsecured, leaving your company vulnerable. In other words, remote work environments create more endpoints to protect. And that requires a robust cybersecurity solution.
However, many SMBs still believe they’re too small to be targeted and think “It won’t happen to me.” This mindset is dangerous. Especially considering that 61% of SMBs experienced at least one cyberattack in 2021. With the average cost of an SMB data breach approximately $108,000, the damage could cause a business to close its doors permanently.
Cybersecurity: A Deeper Dive into SMB Key Digital Transformation Trends 2023
From antivirus to firewalls, machine learning, encryption, and more, there’s a wide array of cybersecurity solutions available. Zero trust is one that’s becoming popular for both enterprises and SMBs and will continue to be a key digital transformation trend in 2023. The market for this defense tool is expected to grow to $51.6 billion by 2026, up from $19.6 billion in 2020.
If you’re unfamiliar with zero trust security, it offers low cost, enhanced protection—all while providing an excellent user experience and better network detection and response. How does it work?
Security controls are applied at every level of your network’s architecture to monitor and control resource access. These controls include encryption, network segmentation, multi-factor authentication, and continuous monitoring of user and device behavior. No user is trusted. A user’s identity is continuously verified, regardless of whether they are an employee or an outside party. While this may sound tedious for users/employees, these security checks happen behind-the-scenes, with features like behavioral analytics and machine learning algorithms that continuously monitor users, looking for anomalies that may indicate cyberthreats. This creates a seamless experience for the employee while maximizing organization security.

4. Low-Code/No-Code Development Becomes the Norm

From instant oatmeal to food delivery apps and smartphones, consumer products and technologies are geared toward making our lives easier. For this reason and the fact that there’s a shortage of skilled software developers, it’s no surprise that low-code/no-code tools have seen massive gains in popularity and become one of the most intriguing SMB key digital transformation trends 2023 has to offer. By 2025, low-code or no-code technologies are projected to be used in 70% of new applications organizations develop, compared to less than 25% in 2020.
The Democratization of Development
Low-code/no-code technologies have opened the world of software development to a new pool of creatives. Citizen developers, business technologies, and non-tech employees now have the ability to build apps. This is a key business advantage as companies can move forward with application projects, regardless of whether they have resources to hire skilled developers.
That said, even if you employ talented developers, you likely want to maximize the use of their time. This is another benefit of low-code/no-code technologies. It can reduce developers’ workloads, allowing them to focus on more complicated tasks while citizen developers or non-tech employees build apps with the low-code/no-code platforms. These platforms streamline the app development process, allowing companies to create apps faster than traditional coding methods and reducing time to market. How does it work?
You can use pre-built components and visual interfaces to design applications, rather than writing every line of code from scratch. What’s more, as the apps are built on a low-code/no-code platform, you aren’t responsible for maintaining the infrastructure—the service provider does. Without the burden of infrastructure maintenance, you free up even more of your developers’ time.

5. Cloud Service Adoption Accelerates

Most business owners have heard of the cloud and many rely on it. Cloud computing is a core element of digital transformation, as it allows businesses to remove physical infrastructure (or infrastructure entirely) and frees up employees to work from anywhere. The cloud computing trend isn’t slowing down in 2023. According to Gartner, cloud-native platforms are expected to host approximately 95% of new digital workloads by 2025.
Why Cloud Technology Is the Future of Business
The reasons to migrate to the cloud are many and it seems like only a matter of time before all businesses rely on the technology in one way or another. It lowers costs, provides data-driven intelligence, and enables better accessibility to business data, which is especially important as remote work becomes more widespread.
Cloud computing essentially enables businesses to operate light and flexibly. For example, Function-as-a-Service (FaaS) is a cloud solution that allows businesses to leverage serverless computing. This means developers can run code and build applications without managing servers. For business owners, this is huge. You no longer have to invest in costly one-size-fits-all approaches, like a server room, which is still a staple among many organizations. With tools such as FaaS, you only pay for the specific functions you need—like running applications or code—and only the amount of time you use each function. This pay-for-what-you-use model makes scaling easier.
Lastly, speed is another reason businesses are drawn to the cloud. The process of onboarding a new employee can be streamlined with a virtual desktop infrastructure—creating a consistent, standardized, and secure process for all staff, regardless of whether they’re working from home or the office. This streamlined process saves businesses time and money as new employees are more easily integrated into the company.

6. The AI Revolution Lifts Off

Artificial Intelligence (AI) has gained mass attention in 2023 as the wildly popular natural language processing tool ChatGPT has exploded on the scene. However, the industry has been quietly booming in the past decade, with major advancements in machine learning, AI-powered business intelligence, and chatbots. Out of all the digital transformation trends on this list, AI is expected to see the most growth. The AI-as-a-Service (AIaaS) market is expected to reach a value of $43.29 billion and a whopping 25.8% CAGR between 2021-2030.
Even now, AIaaS is rapidly changing the way people do business. It can automate tedious business tasks like data entry, and Machine Learning (ML) can improve service delivery, cybersecurity, and product development. While many people may be unfamiliar with the term “ML”, the technology is being widely used in the marketplace. Personalized product and viewing suggestions on Amazon and NetFlix are a result of ML finding data patterns in user behavior. ML is also known to improve the accuracy of chatbots and voice assistants that businesses use to answer customer inquiries, making them sound more human-like.
Another major trend with AI is in data analytics, like business intelligence. Tools like Intuitive Data Analytics can analyze your business data in seconds, helping you create estimates, project future business roadblocks and opportunities, and review past employee performance. Finding out this information can be done by anyone, regardless of their technical knowhow. It’s as simple as verbally asking the AI Tool what data you’d like analyzed. The result? You can use this or similar tools to make better, faster decisions.

7. More Businesses Will Leverage Managed Services and IT Service Firms

While many economists predict a recession in 2023, spending on IT managed services isn’t slowing down. From 2022 to 2028, the service’s global market is expected to have a CAGR of 11.82%, reaching a value of $393.72 billion. What’s the cause?
SMBs are likely looking to cut costs and leverage technology to accelerate business growth. Many businesses have small IT departments or none at all. IT Service Firms and MSPs can fill that role, managing tedious (but necessary) tasks, like compliance, server maintenance, infrastructure management, disaster recovery, cybersecurity, and more.
3 Reasons Why Managed Service and IT Service Firms Are Becoming Popular
Below are a few benefits of managed services that have led it to become an SMB key digital transformation trend of 2023:
  • Lower operational costs: Managed services optimize technology, which equates to less downtime, improved operational efficiency, and higher staff productivity. The service also eliminates the need for an internal IT department and the technology training that comes along with it.
  • Focused staff: If you decide to keep your IT department, managed services frees up the time of your internal staff, allowing them to focus on higher-value activities and strategy. Also, with less technology disruptions, your entire staff will benefit from an increased focus that allows them to complete their key business tasks more efficiently.
  • Improved scalability: With an IT Service Firm or MSP, businesses no longer have to worry about hiring and firing IT staff as their technology needs fluctuate. Instead, your organization can scale technology easily, adding more services in times of need and reducing them when budgets are tight.

SMB Key Digital Transformation Trends 2023: Grow Your Business This Year and Beyond

Today’s economic environment is undoubtedly challenging. But with the right strategy, you can improve efficiency and grow this year, even if a recession happens. While other businesses cut IT budgets (trying to save money) smart organizations know tech is a key advantage that can increase profits, improve resiliency, and help them beat competitors. And these SMB key digital transformation trends 2023 offers can provide all these benefits and more.
If you need help with managed services, cloud computing, cybersecurity, or building a technology infrastructure for your hybrid-work environment, Leverage IT can help. Contact us today to learn how your business can grow—regardless of what the economy brings.


What are the key pillars of digital transformation?

Digital transformation involves the integration of digital technology throughout an organization, resulting in a dramatic improvement in operational efficiency, agility, and speed. For organizations to succeed, they should adopt the following pillars:

  • Clear strategy
  • Culture of innovation and experimentation
  • Adoption of technology
  • Effective data management
  • Improvement of the customer experience
  • Streamlined internal operations
What are the phases of digital transformation?

While there are many stages of digital transformation, the main phases are planning, implementation, and optimization. In the planning stage, businesses set goals and objectives, assess their needs, and create a roadmap for digital transformation. Implementation follows, which involves the integration of the new technologies. The third and final stage is optimizing these technologies and leveraging them to scale.

What will be the fastest growing industries in 2023?

Industries that were either neglected, overwhelmed, or highly beneficial during the COVID-19 pandemic are set to grow rapidly in 2023. These include travel, ecommerce, shipping and delivery services, and healthcare. The cannabis industry is also expected to grow as more states legalize the drug. Lastly, the popularity of ChatGPT is a prominent signal of the AI industry’s rise, which is further evident by its exploding growth rate of 25.8% CAGR.

Do SMBs need to partner with technology experts to realize success with digital transformation initiatives?

If you don’t have expertise in technology, the chances of succeeding with digital transformation without support are low. Just as hiring HR, marketing, and accounting experts save a business time and money, technology experts can do the same for business owners who need help with digital transformation.

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