Digital transformation: 7 steps to digitise your business

Published Tuesday 4 November 2025

Table of contents

• What is digital transformation?
• Benefits of digital transformation for small business
• Common digital transformation challenges
• A 7-step digital transformation strategy
• Start your digital transformation today
• FAQs on digital transformation

Key takeaways

• Start with clear objectives by identifying specific business problems you want technology to solve, then set measurable goals for improvement such as reducing time spent on manual tasks or eliminating errors.

• Create a comprehensive budget that includes software subscriptions, hardware upgrades, training costs, and support during transition, while conducting a cost-benefit analysis to ensure the investment is worthwhile.

• Secure buy-in from your entire team by clearly communicating how new tools will make their work easier and addressing any concerns about disruptions or learning curves before implementation.

• Build a detailed roadmap with proper sequencing that allows adequate time for training, pilot testing, and troubleshooting, ensuring each step prepares your business for the next phase of digital transformation.

What is digital transformation?

Digital transformation is about using technology to improve how your business runs. It means swapping manual ways of working for digital ones. For example, you might automate your invoicing or manage projects online. This helps you save time and deliver more value to your customers.

Benefits of digital transformation for small business

Digital transformation is the process of using technology to replace manual business processes and improve how your team works together. It involves adopting digital tools for tasks like invoicing, project management, and customer communication.

When you have a clear strategy, digital transformation saves time and reduces errors. Without a clear plan, you may not see the benefits you expect.

Start with a clear strategy to get the most from digital transformation.

Common digital transformation challenges

Switching to new digital tools can feel like a big step. You may face challenges like choosing the right software, helping your team learn new processes, and managing upfront costs. Many small businesses are still working out how to earn revenue online, with research showing nearly 45% of Australian small businesses earned no revenue from online sales in 2021.

A 7-step digital transformation strategy

A digital transformation strategy ensures you implement technology that actually improves your business operations, which is a crucial step given that one 2021 survey found over a third of Australian small businesses made no investment in technology.

1. Set objectives

Setting objectives means identifying specific business problems you want technology to solve, then setting measurable goals for improvement.

Start by looking for areas where you spend too much time on manual tasks, make errors, or repeat work.

Research digital solutions for common business functions:

• Estimating and quoting: Automated proposal tools
• Project management: Task tracking and collaboration software
• Financial management: Accounting and payment processing
• Inventory control: Stock tracking systems

Get input from others: Speak to similar businesses or consult a tech-savvy accountant for recommendations. Research shows this is a key trait of successful companies, with one survey finding that 96.1% of high-growth businesses sought professional advice in 2021.

Set concrete goals for what you want to achieve. Here are some examples:

Example 1: Last year, you spent 4 hours paying bills every week and missed 20 deadlines. With an automated accounts-payable process, you want to spend just 1 hour per week – with no mistakes.

Example 2: Last year, teammates Susan and Jeff both worked on the same tasks for about 100 hours. This year, you want to avoid double handling and help them work together more smoothly.

Learn more in the guide Increasing productivity in small business.

2. Budget the changes

Budgeting for digital transformation means calculating all costs upfront so you can plan your investment properly, which can include looking into government programs like the Digital Solutions program that provides low-cost, high-quality digital advisory services.

Key costs to include:

• Software subscriptions: Monthly fees for new tools (treated as operating expenses, not large upfront costs)
• Hardware upgrades: New devices or improved internet plans to support online tools
• Training costs: Overtime pay for staff learning or temporary outsourcing while team gets up to speed
• Support and transition: Technical help during changeover and temporary productivity dips

You may also need to pay to build a website if you're establishing an online presence for the first time.

3. Do a cost–benefit analysis

It is usually straightforward to budget the costs of workplace digitisation because most items have a clear price. To do a proper cost–benefit analysis, you also need to estimate the benefits, which can be more challenging.

This will tie back to your objectives and what you hope to achieve, so work out how much those objectives will be worth to you. For example, how much money will you save on wasted meetings or materials, unnecessary do-overs, time-intensive manual tasks, and so on?

Not all benefits will be financial. Workplace harmony, more family time or fewer environmental impacts are all worthwhile outcomes. List the benefits and costs to check that the benefits outweigh the costs.

It may take months to see the full benefits of business digitisation, but you will notice the costs sooner. Consider how you will finance the investment in the meantime. If you need to borrow money, an accountant or bookkeeper can help you build a business case.

4. Get buy-in from everyone

Getting buy-in means ensuring everyone understands and supports the changes before you implement new technology.

Why this matters: If people don't use the new tools, you won't see any benefits from your investment.

How to get everyone on board:

• Communicate the benefits: Explain specifically how new tools will make their work easier
• Address concerns: Be upfront about any disruptions or learning curves
• Acknowledge skill differences: Some team members may need more support than others with new technology

5. Build a roadmap

Building a roadmap means creating a timeline that shows what you'll implement and when, ensuring each step prepares you for the next.

Why sequencing matters: Your business needs to be properly equipped before taking each new step.

Include time in your schedule for:

• train your team on the new technology
• set roles and responsibilities for the change, such as designating a champion user for each tool and creating an internal support team
• run pilot projects to test the changes
• update your connections and hardware, use a password manager, and move your documents to cloud servers so your team can access and share them online
• communicate changes to customers and external stakeholders
• switch to the new systems, allowing time for troubleshooting and fixing any issues

6. Train your team before implementation

Explain to your support team that there will be upfront training on the new technology. Set a realistic training schedule so your team has enough time to learn.

Allow time for your team to learn by doing, and schedule time for troubleshooting and fixing errors.

Set dates for the first practical use of the tech. Be sure to tell customers if any of the changes will affect them.

7. Take feedback and refine

Digitising your workplace involves more than just installing new tools and training your team.

Check in with your team, encourage questions, and be ready to make changes as needed.

Ask your consultants or customer service team to help you optimise your system settings and processes. Be flexible and adjust your strategy as you go.

8. Say goodbye to the old ways

Finally, there needs to be an end date for old systems. To complete the transition, set a date to fully switch over to the new tech.

Update any formal documentation for workflows and processes, and remove any mention of old systems. Save your old processes and data in case you need them later.

Start your digital transformation today

Your digital transformation is complete – but the work doesn't stop here. Technology keeps evolving, and so should your business processes.

Make continuous improvement part of your culture:

• Stay open to new features and updates
• Regularly review what's working and what isn't
• Help your team embrace ongoing changes

Ready to start your digital transformation?Cloud-based accounting software is often the foundation of successful business digitisation. Try Xero for free and see how automated financial management can streamline your operations from day one.

FAQs on digital transformation

Here are answers to some common questions about digital transformation.

What are the four main types of digital transformation?

Digital transformation usually falls into four areas: improving business processes (like automating invoicing), changing the business model (like moving from in-store to online sales), expanding into new business domains, and shifting technology to the cloud for better access and security.

What is a simple example of digital transformation?

A great example for a small business is switching from paper receipts and spreadsheets to accounting software like Xero. This automates record-keeping, simplifies expense tracking, and gives you real-time visibility of your finances from anywhere.

What are the pillars of digital transformation?

Successful transformation rests on four pillars: technology (the tools you use), process (the workflows you improve), people (your team who uses the tools), and skills (the training needed to make it all work).