Last week’s article on findings from the “SMEs Equipped to Compete” study by Oxford Economics showed how small and midsize enterprises (SMEs) face many of the same challenges as multinational corporations. More than 2,100 SMEs in 21 countries were surveyed, and the results show that they are also grappling with globalization, competitive threats, more empowered customers, and fast-changing technologies. The second installment of this article series shows how aggressive technology investments in business management software, analytics, mobile, social media, and cloud computing are behind the high-growth strategies of these SMEs.
Almost 60 percent of the surveyed SMEs agreed that technology is a key differentiator for their company. They expect technology to support their ability to help extract actionable insights across their business so they can better address their most important issues: driving innovation, reducing costs, improving efficiencies, expanding product and service development, and strengthening customer relationships. Technology is also crucial for SMEs as they increasingly connect across borders. For example, over half are collaborating with other firms via online business networks and platforms to drive innovation and growth.
Business Management Software (BMS) forms the foundation for growth
Fifty percent of SMEs have made BMS their top focus, believing it offers numerous benefits, led by cost efficiencies and improved product and service development (both at 25 percent). Supply chain optimization and better customer services (20 percent each) closely follow. Larger SMEs (31 percent) are more likely than smaller companies (23 percent) to cite cost efficiencies as a top benefit. The leading challenge for companies interested in BMS is the cost of new platforms, cited by more than 33 percent of respondents.
Next page: Analytics and mobile technologies
Analytics get SMEs closer to customers
SMEs value analytics to drive cost efficiencies (27 percent) and improve product and service development (26 percent). Larger companies and those in developed economies are more likely to view business analytics as a tool for improving customer service. Given their focus on shifting customer expectations, it is not surprising that consumer products, retail, and wholesale companies predict the fastest growth in the use of analytics to help improve customer insights and meet real-time customer demands. However, as much as they value analytics, SMEs across all industries cited ensuring information accuracy and reliability as a top concern.
Mobile is transformational, driving innovation and improving development
Seventy percent of the most profitable SMEs see mobile technologies as transformational. Respondents believe that mobility drives innovation, paying off in terms of better customer service (25 percent) and improved product and service development (23 percent). Even so, security and privacy issues, along with the proliferation of platforms and devices, are the biggest challenges (both at 34 percent). This is especially true for smaller businesses (39 percent). What’s more, almost 33 percent of SMEs have difficulties getting employees to use mobile technology and solutions despite the rapid growth of a worldwide mobile culture.
Social media means customer service
SMEs see social media as a way to provide better customer service (31 percent), improved product and service development (25 percent), cost efficiencies (20 percent), and supply chain optimization (15 percent). However, given the low ranking innovation received on the benefits of social media (12 percent), SMEs may be missing an opportunity to use it for collaboration and communication. Not surprisingly given its newness in the workplace, 43 percent of respondents say encouraging employees to embrace social media is a challenge, followed by the amount of effort needed to commit to a viable social media strategy (40 percent) and calculating return-on-investment (35 percent). When they do adopt, SMEs prefer to lease or pay for use of social media (40 percent) rather than buy it (20 percent).
Next page: Cloud computing and confidence in technology
Cloud computing has potential
SME cloud adoption will jump from 35 percent to 47 percent in three years. But growth rates for larger and smaller SMEs diverge significantly (64 percent vs. 40 percent, respectively). SMEs think that cloud-based technology promises cost efficiencies (30 percent) and improved product and service development (25 percent). Retailers (34 percent) and wholesalers (36 percent) especially emphasize the importance of cloud computing to driving down costs. However, large-scale SME adoption of the cloud is stymied by concerns about security (38 percent), lack of understanding of cloud’s benefits (35 percent), lack of skills (34 percent), and determining return-on-investment (31 percent).
Confidence in technology like analytics, mobile, social, and cloud
Despite having fewer resources, SMEs are largely confident that they have the technological resources and understanding to compete with bigger companies. Less than one-third say their firm lacks the technology capabilities of larger competitors, and just over one-quarter say they struggle to understand how technology can create measurable benefits for their firm. If transformation is the new business imperative for SMEs, technology is a strategic tool to make it happen. Regardless of size, every company needs a stronger understanding of innovations like analytics, mobile, social, and cloud to play with the big guys and win.