Digital Transformation in SMEs: Unlocking Competitive Advantage through Business Intelligence and Data Analytics Adoption

Abstract

In an era where data-driven decision-making is becoming central to organizational success, understanding how emerging technologies influence business operations is critical. This study analyzed the application and impact of Business Intelligence and Data Analytics on digital transformation inside Small and Medium-sized Enterprises (SMEs), highlighting its role in enhancing competitive advantage. Our analysis highlighted the sector-specific disparity in BI/DA adoption, with the industrial leading at 60% and retail behind at 38%, underscoring differences in digital readiness among sectors. The principal barriers to adoption included inadequate skills (78%), financial concerns (62%), and data silos (43%), underscoring the need for digital training, affordable technology, and change management strategies. SMEs indicated substantial benefits from business intelligence and data analytics, including improved operational efficiency (68%), greater customer service (59%), and critical market insights (55%), highlighting their strategic significance. A significant correlation was observed between adoption levels and performance outcomes, with high adopters achieving 23% larger revenue growth, a 30% decreased in costs, and a 35% enhancement in client retention compared to low adopters. The crucial role of leadership, demonstrated by strong support from top management, was associated with higher BI/DA performance indicators (8.2 compared to 5.4). A strong positive correlation (0.64–0.75) was established between BI adoption, DA utilization, revenue growth, and customer retention, confirming that digital maturity enhances business performance. These findings emphasized that Business Intelligence and Data Analytics are not only technological improvements but strategic tools for transformation. For SMEs aiming to thrive in the digital era, the implementation of integrated BI/DA, supported by leadership and a data-driven culture, is essential for sustained growth and competitiveness.