Economic Evaluation of Phased Digital Transformation Investments in SMEs: A Cost–Benefit Analysis in the Turkish Metal Processing Sector

This study examines how manufacturing SMEs can structure digital transformation as a strategic, risk-managed process under demand uncertainty and resource constraints. Integrating digital maturity assessment with cost–benefit analysis (D3A–CBA framework), the study evaluates a phased investment strategy at a Turkish metal processing SME, grounding the analysis in real production order data and firm-level financial records. The phased structure—informed by real options reasoning—conditions capacity expansion on measurable Phase-1 performance thresholds, thereby limiting downside risk while preserving strategic flexibility. Under the base scenario (10% real discount rate), Phase-1 yields an NPV of TRY 3,830,738 and an IRR of 12.4%; the combined portfolio reaches TRY 17,365,066. However, a 10,000-iteration Monte Carlo simulation reveals a 29.8–33.0% probability of negative NPV, and sensitivity analysis exposes an asymmetric risk profile in which moderate demand shocks—rather than cost shocks—drive non-viability. The findings demonstrate that digital transformation in resource-constrained SMEs requires not only positive financial returns but also strategic mechanisms to manage demand uncertainty, exchange rate volatility, and organizational adaptation. The proposed framework offers SME managers a reproducible, evidence-based approach to aligning investment decisions with strategic objectives while containing capital risk.