You are currently viewing WHY the key towards modernization of SMEs lies in their capacity within HR and not their IT department

WHY the key towards modernization of SMEs lies in their capacity within HR and not their IT department

Modernization in an SME (Small and Medium Enterprise) can happen at various points in its lifecycle, depending on the specific circumstances and needs of the business. When we talk about technological advancements we mean that SMEs often undergo modernization when there are significant technological advancements that can improve their operations or competitive advantage. This can include upgrading hardware and software systems, adopting cloud-based solutions, implementing automation or artificial intelligence tools, or integrating digital marketing strategies.

When and why modernization is essential for an SME to become competitive?

If we aim for growth and scaling ,modernization becomes crucial to accommodate increased demands and enhance efficiency. This may involve streamlining processes, investing in new equipment or machinery, implementing enterprise resource planning (ERP) systems, or integrating customer relationship management (CRM) software.

If the market changes and competition imply to modernize, than SMEs may need to modernize to stay relevant and competitive in their industry. This could involve embracing new business models, diversifying product or service offerings, adopting e-commerce platforms, or leveraging data analytics for better decision-making and customer insights.

On another hand, as customer preferences evolve, SMEs may need to modernize their operations to meet new demands. This could include improving the customer experience through online self-service options, implementing mobile applications, providing personalized recommendations, or enhancing data security and privacy measures.

Rarely but relevant, changes in regulations or industry standards may require SMEs to modernize their practices to ensure compliance. For example, data protection regulations like the General Data Protection Regulation (GDPR) or adopting sustainable and environmentally friendly practices.

Modernization is an ongoing process, and SMEs should regularly assess their operations and consider adopting new technologies or practices to stay competitive and meet evolving market needs. The timing and extent of modernization will vary depending on the specific circumstances and objectives of each SME.Needless to say,  availability of funds, access to loans, or financial incentives may prompt SMEs to embark on modernization initiatives. For instance, grants or government programs aimed at promoting innovation or digital transformation may encourage SMEs to invest in modernizing their operations.

Key drivers of growth and their sequencing

The normal stages of company growth can vary depending on the industry, business model, and other factors. However, the following stages are commonly observed in many companies:StartUp, Growth, Expansion, Maturity and Decline / Renewal.It’s important to note that these stages are not always linear, and a company may experience setbacks or challenges that require it to revisit earlier stages. Additionally, the time taken to progress through each stage can vary significantly depending on the company’s industry, market conditions, and management strategies.

If we spend time analyzing the key drivers of SMEs growth and productivity we will see somewhere halfway on the endless circle path to be Adoption of technology . Also Management Practices. Seems both are part of the same wheel, however in reality we need to start from somewhere and answer the question: which comes first and why?

Source: ACCA global

When do companies miss the timing for modernization and why call the HR manager for an SOS?

It is not unusual companies to resist or postpone the modernization process due to uncertainty about the technology’s value, organizational inertia, risk aversion or limited understanding of technology trends. None of these is directly related to the IT department of the company rather directly to people, their engagement, organizational culture and vision. Management of people , in three words. Then you call the HR SOS.

To overcome these barriers, HR managers jointly with line managers of departments can use several tools such as:

  • Conducting a cost-benefit analysis to evaluate the potential ROI and benefits of adopting new technologies.
  • Investing in training and upskilling employees to build the necessary expertise to implement and manage new technologies.
  • Creating a culture that promotes innovation and experimentation, encouraging employees to explore and propose new technologies.
  • Seeking external expertise through partnerships, consultants, or collaboration with technology providers.
  • Staying informed about industry trends and engaging in continuous learning to understand the potential impact of emerging technologies on their business.

Inside HR department, despite the talent acquisition and training and development, which are essential and simply a MUST, other crucial functions can be used to foster modernization.

Most important is to steer change management towards modernization.

Modernization often involves significant changes to processes, systems, and ways of working. HR can lead change management initiatives, including communicating the benefits of modernization, addressing employee concerns, and facilitating a smooth transition to new technologies. It is bold to say, but far from illogical, that HR can:

  • align performance management systems and metrics with the company’s modernization goals. This includes setting performance expectations related to the adoption of new technologies, providing feedback on digital skills development, and recognizing and rewarding employees who actively contribute to modernization efforts.
  • leverage modern HR technologies to streamline processes, enhance data-driven decision-making, and improve employee experience. Implementing HR systems such as talent management, performance management, and learning management platforms can support the modernization agenda.
  • utilize data analytics to identify trends, measure the impact of modernization efforts, and provide insights to drive informed decision-making. By leveraging data, HR can optimize talent strategies and align them with the company’s modernization goals.
  • collaborate closely with other departments, such as IT, operations, and leadership, to ensure a cohesive approach to modernization. By working together, HR can align talent strategies, technology implementation, and change management efforts to drive successful modernization.

In this modernization process  HR  has the opportunity to be a strategic partner in driving the modernization of a company. By aligning HR practices with the company’s goals, fostering a culture of innovation, and equipping employees with the necessary skills, HR can empower the entire organization to embrace and thrive in the modern business landscape. If not, we have no spare department that can do this for the company instead.

Author: Elena Ivanova

Elena Ivanova

Management consultant with strong business empathy and empirical knowledge in sustainable development. Creates business models that strengthen inclusive markets and deliver a positive impact. . Dynamic and analytical opportunity seeker, driven by the customer's needs and the company's growth potential. Consider me to collaborate as a certified professional with a focus on resource planning, organizational restructuring, and change management.