Digitalization explained simply: Digitalization is the conversion of analog or manual processes into digital, traceable, and measurable processes. For SMEs, digitalization doesn't primarily mean new software, but rather clarity: Which work steps are repeated, where does the biggest bottleneck occur, and what information needs to be accurately captured, shared, and analyzed?
In over 20 years of working with small businesses, I have rarely seen digitalization fail due to a lack of tools. Far more often, digitalization fails because of unclear business processes: offers are copied from old files, customer inquiries are scattered across multiple mailboxes, invoice approvals are handled verbally, and crucial knowledge resides in the minds of individual employees.
The sensible order for SMEs is: first identify the bottleneck, then standardize the process, then digitally record it, and only then automate it.
Digitalization explained simply: Definition for SMEs
Digitization means structuring analog processes, manual work steps, and scattered information in such a way that digital processes emerge. A paper form becomes a web form. A verbal task becomes a documented workflow. A local file storage system becomes a central, searchable, and versioned document structure.
It's important to understand that digitization is not automatically a complete digital transformation . Digitization initially improves specific processes. Digital Transformation : Definition of Digital Transformation. Digital transformation, also known as digital change or digital transformation, refers to the ongoing process of integrating digital technologies into... Click to learn more. It also changes strategy, leadership, and business models. A "business model" essentially describes how a company plans to make money. It's the blueprint for success, showing which products or... Click to learn more . Market approach and corporate culture . Corporate culture, simply put, is the lived corporate culture of a company. Corporate culture is reflected in behavior, decisions, leadership, and... Click to learn more.
This distinction is important for SMEs because small teams don't need large, theoretical projects. Small teams primarily need less search time, fewer questions, fewer errors, and clear responsibilities.
How to recognize digitalization in a company
You can't tell if a company is working digitally by the number of programs it uses. You can recognize digitalization by the fact that a process becomes clearer, more measurable, and less dependent on individuals.
- Documentation: The process doesn't just exist in the minds of individual employees, but is documented.
- Digital recording: Data is not transferred manually multiple times, but rather recorded cleanly at one point.
- Traceability: Status, responsibilities, approvals and next steps are visible.
- Repeatability: The quality depends less on daily stress or on individuals.
- Measurability: Processing time, error rate, queries or waiting times become apparent.
This is precisely where process digitization begins : Analog processes are not blindly replaced, but translated into stable digital workflows.
Examples of digitalization in SMEs
Offer Preparation:
An analog proposal process often consists of old Word documents, emails, handwritten notes, and inquiries to multiple people. A digitized proposal process uses templates, core service modules, clear responsibilities, and a visible status.
The benefits: fewer copying errors, faster quotes, and less dependence on the person who knows where the appropriate template is located.
customer requests
When customer inquiries come in via email, phone, contact form, social media (definition of social media: social media refers to a group of internet-based platforms and applications that allow users to create content, click and learn more ) , and messengers, a small team can quickly lose track. Digitization here means: inquiries are recorded in a structured manner, categorized, assigned to responsible individuals, and tracked until resolved.
The benefit: fewer forgotten requests and better response times.
Document filing
A digital filing system is more than just a shared folder. Good document management requires clear file names, versioning, access rights, and searchability.
The benefits: less search time, fewer duplicate files, and less risk of working with outdated information.
Invoice approval
In many SMEs, invoices still circulate through the company via email, printouts, or verbal communication. A digital approval process shows who needs to check, what information is missing, and when an invoice has been approved.
The benefits: faster approvals, fewer queries and better control.
Termination logic
Scheduling appointments often takes more time than it should. A digital appointment system can map availability, responsibilities, confirmations, and reminders.
The benefit: fewer email loops and less coordination effort.
Knowledge retention
In small businesses, knowledge is often tied to a specific person. If someone is absent or leaves the company, processes, contacts, templates, and experience are suddenly missing.
Digitization helps to secure recurring knowledge in checklists, templates, internal notes, or process descriptions.
Digitization, automation, digital transformation and digital maturity
These terms are often used interchangeably. For practical purposes in SMEs, a clear distinction is worthwhile.
Digitalization
Digitization makes analog or manual processes digitally recordable, traceable, and measurable. The focus is on concrete work steps and business processes.
Process digitalization
Process digitization focuses on recurring workflows such as quote creation, approvals, document storage, customer communication, and internal handovers. The goal is not technology for its own sake, but rather to reduce friction in day-to-day operations.
Automation
Automation means that a defined process is partially or completely executed by systems. Automation is the execution of recurring tasks and rule-based processes by software, systems, or machines, ensuring that a process continues reliably without constant manual intervention. Clicking to learn more makes sense when the process is clearly defined beforehand. If the process is unstructured, automation only amplifies the ambiguities more quickly.
Digital Transformation
Digital transformation goes beyond individual processes. It changes how a company makes decisions, develops offerings, reaches customers, and collaborates internally. Digitization is often one component of this transformation, but not automatically the entire process.
Digital Maturity
Digital maturity describes how well a company has already digitally organized its processes, data, skills, systems, and leadership. If you want to better assess your current level, our article on how to measure digital maturity within your company will help you.
Why digitalization is economically relevant for SMEs
Thinking about digitalization in a way that is suitable for SMEs means that every measure must solve a real problem. Digitalization makes economic sense if it reduces time loss, avoids errors, creates transparency, or decreases dependence on individuals.
The state of digitalization continues to vary significantly across Europe. According to Eurofound and Cedefop, in 2024, an average of 73% of SMEs in the EU had achieved at least a basic level of digital intensity; however, these figures differ considerably from country to country. This shows that digitalization is no longer a marginal issue, but the degree of practical implementation remains highly variable.
For small businesses, this leads to a simple priority: You don't have to digitize everything at once. You should start where the greatest business benefit will be generated.
- Less search time: Information is centrally located and easily accessible.
- Fewer queries: Responsibilities and status are visible.
- Lower error rate: Data is not transferred manually multiple times.
- Faster approvals: Decisions don't get stuck in email chains.
- Less dependence on individuals: Knowledge is documented and shared.
Digitization in 5 steps
If you want to start digitalization in your company without a large IT department, a pragmatic approach is helpful. This approach is deliberately kept simple because small teams rarely have time for months-long concept phases.
- 1. Find the bottleneck: Find the process that is currently causing the most time, effort, or questions.
- 2. Make the process visible: Write down the individual steps: Who does what, when, and with what information?
- 3. Simplify the process: Eliminate unnecessary steps, duplicate entries, and unclear approvals.
- 4. Digitally map: Only now should you choose a suitable system, form, filing concept or workflow tool.
- 5. Measure and improve: After a few weeks, check whether search times, queries, errors, or waiting times have actually decreased.
When AI ( Artificial Intelligence, the umbrella term for digital systems that recognize patterns in data and take over tasks that would otherwise require human perception, assessment, or decision-making... Click to learn more) or advanced automation comes into play, the process should already be stable. In our work with AI and digitalization, this is precisely the most important point: AI is not a replacement for process clarity, but rather an enhancer of well-designed workflows.
Practical risks: What you should check before digitization
Digitalization brings not only efficiency, but also responsibility. You must work carefully, especially with personal data, customer data, internal documents, and access rights.
- Privacy Policy: Check which personal data is being processed and why this data is necessary.
- GDPR: According to Article 83, paragraphs 5 and 6 GDPRGDPR stands for General Data Protection Regulation and refers to the same EU regulation, which in German is called Datenschutz-Grundverordnung or GDPR for short. There is a difference between GDPR and GDPR... Click to learn more Certain violations can be punished with fines of up to 20 million euros or, in the case of companies, up to 4% of the worldwide annual turnover of the previous financial year, whichever is higher.
- Access rights: Not every person in the company needs access to all data.
- Responsibilities: Every digital workflow needs clear roles: Who checks, who decides, who maintains data.
- IT security: Passwords, two-factor authentication, backups, and device management are basic requirements.
- Data quality: Poor, duplicate, or outdated data leads to bad decisions.
- Training: Employees need time and explanation so that new processes are actually used.
- Tool proliferation: Too many unconnected programs create new islands instead of clarity.
Skills are also a key factor. The OECD Skills Outlook 2023 emphasizes that investments in skills, further education, and retraining are crucial for enabling a resilient green and digital transformation. For SMEs, this means in practical terms: digitalization only works if people understand and support the new processes.
What digitalization is not
- Not: Simply buy more software.
- Not: Save paper forms only as PDFs.
- Not: To make a disordered system faster.
- Not: Overwhelm employees with tools without explaining their use and order.
- Not: Outsourcing responsibility to technology.
Good digitalization reduces complexity. Bad digitalization merely distributes complexity across more surfaces.
When external support is useful
External support is useful if you cannot clearly identify the biggest bottleneck, if several systems do not fit together, or if digitization, website, marketing and internal processes need to be considered together.
At Berger+Team, we, as a collective of freelancers from Bolzano, work with small businesses precisely at this intersection: strategy, processes, digital implementation and clear priorities.
If you don't know where to start, structured consulting on digitalization and strategy is often more valuable than hastily buying a new tool. The first step is almost always the question: What bottleneck is currently costing you the most time, quality, or trust?
FAQ: Questions and answers about digitalization
What is digitalization explained simply?
Digitization means that analog or manual processes are transformed into digital, traceable, and measurable processes. For your company, this means fewer media breaks, better overview, and clearer daily workflows.
What does digitalization mean specifically for SMEs?
For SMEs, digitalization primarily means organizing and digitally mapping recurring work processes. Typical examples include quote creation, customer inquiries, document storage, invoice approvals, and internal tasks.
Where should a small business start with digitalization?
Start with the biggest bottleneck, not the most interesting tool. If you digitize a recurring, time-consuming process first, your team will see the benefits faster.
What does it cost to get started with digitalization?
Getting started doesn't have to be expensive if you begin with a clearly defined process. Digitalization usually becomes expensive when unclear processes are implemented too hastily or when multiple systems run in parallel without a plan.
How long does digitalization take in a company?
A single process can often be clarified, digitally mapped, and tested within a few weeks. A comprehensive digital transformation takes significantly longer because it also involves changes to structure, skills, and decision-making processes.
What tools do I need for digitization?
The tool selection comes only after the process has been clarified. You need a system that supports your workflow, accurately captures data, and doesn't unnecessarily burden your employees.
What is the difference between digitization and automation?
Digitization makes a process digitally recordable and traceable. Automation executes individual steps of this process based on rules or supported by a system.
When does automation make sense?
Automation makes sense if the process is clear, repeatable, and digitally documented. If responsibilities or data quality are unclear, you should first stabilize the process.
What is the difference between digitalization and digital transformation?
Digitization affects concrete processes and information. Digital transformation also changes strategy, business model, leadership, culture, and the way a company creates value.
What role does the GDPR play in digitalization?
The GDPR is important as soon as personal data is processed digitally. You need clear purposes, appropriate access rights, documented processes, and an adequate level of security.
How do I bring employees along on the digitalization journey?
First, explain the benefits: less search time, fewer questions, and less stress in daily work. Involve employees early on, because they know the actual processes and can quickly see where a workflow is practical.
What is digital maturity?
Digital maturity describes how well your company has already digitally organized its processes, data, systems, skills, and responsibilities. This maturity level helps you plan realistic next steps instead of isolated individual measures.
Key point
For companies, digitalization isn't about a collection of tools, but rather the systematic translation of analog processes into digital, traceable business processes. If you take this distinction seriously, digitalization becomes simpler, more economical, and more human for SMEs.
