How important is ongoing investment in technology for SMEs?

Micro — Desirable

Small Business — Important

Medium Size Business — Essential

Investment in technology depends on sector and scale. Therefore for a technology industry or sector that goes without saying technology investment in your business is expected.

For Micro businesses it is desirable to invest in technology, but often limited by available funds. Here the obvious technology investment is to move away from spreadsheets and onto accounting/bookkeeping software, basic CRM (Customer Relationship Management) and Enterprise software for retail business. Most entry level software is low cost and often free versions are available for 1–2 users. This can be the difference between drowning in admin and being able to spend time on the business growth. As the business grows so investment in more capable systems will help automate repetitive tasks and help the company develop.

Small business technology investment is important. It’s the path to growth, sustainability and success. As well as the robust CRM, accountancy, stock management and business software etc, here investment in software that covers functions such as HR/Safety compliance can be essential as the team grows, without taking on a dedicated individual.

Investment in automated business processes will improve the quality of service or product to the customer, massively improve efficiency, repeatability, quality and keep headcount to a minimum. Embracing technology solutions will also start to improve the competitive edge of the business, reduced response times, better engagement with customers, communications and data management. Small businesses often develop automated code for their specific business within their standard business software, significantly reducing paperwork and repetitive tasks, but more importantly maintaining the correct business processes.

For Medium size businesses technology investment is essential. The need to be efficient, competitive, organised to sustain growth and follow best practice becomes paramount. A dedicated EAS (Enterprise Software Application) ensures that different activities/departments in the business link together correctly. Therefore resulting in data management, more complex reporting and management systems being established. SAP and Oracle are larger scale off the shelf software solutions and can be entirely customised to suit the business. However much smaller less expensive systems that provide much of the same capability are available. Technology investment in manufacturing processes, R&D for better products, social media platforms, IT and data management are essential. Both new capabilities and new ways of engaging with customers and their demands change constantly. Disruptive industries are appearing regularly, competitors with lower overheads and technology led solutions are impacting on traditional business sectors. It is therefore safe to say without investment it’s easy to be left behind.

What is the barrier to adoption?

Cost, Complexity, reliability, ease of use and flexibility.

Technology is a comparatively expensive investment to a business and the return on investment a significant factor in the decision-making process. For small businesses a mentality of making do and not spending capital is prevalent and often necessary. Medium sized business, its still a big investment but finding the right technology to adopt can be time consuming, complicated to deliver and then requires training, development and periods of getting used to new ways of working. All of which must be factored into taking the plunge.

For larger business the impact of new technology can be much harder to implement, more people involved, more existing systems to interact with, more bespoke coding and external technical expertise required on an ongoing basis. Every business is different and so off the shelf at this scale is rare and so the time taken to establish the demand, spec, evaluation and implementation can be a significant time and resource requirement.

In what sectors is technology investment particularly important?

Technology investment is important in most sectors to some level. Not only to help automate those basic admin processes, but essential in Engineering/Science/Manufacturing/R&D and IT. As well as related businesses such as digital advertising, finance, property, construction, marketing, recruitment and social media. An area where technology is a significant factor is retail. Capturing data, trends and providing innovative ways for customers to interact, see products and to both buy and receive goods efficiently and seamlessly.

Almost no sector can afford not to invest in technology. All it takes is for one business to find a new cool way of doing something, that provides a better customer experience or service and they will steal significant market share, especially in traditional industries. Therefore its follow suit or be left behind!

How easy is it to find the ‘right’ level of technology spending?

Finding the right level of spend will be different for every business and sector. In technology orientated industries not spending enough will limit the chance of success in the market. Most SME businesses will decide on spending and investing probably after making do for a period of time with their current set up beyond what is ideal. Available finance will dictate how much can be acquired, which features and ease of use. As businesses develop, it becomes increasingly important to set aside development capital to reinvest in the business for growth and future technologies, but this will depend on the business aims, strength of the market opportunity and how entrepreneurial owners feel.

What mistakes can SMEs make?

In terms of technology investment there are lots of mistakes. Not investing at all can seriously limit a business’s potential, investing without doing the due diligence on the options available can lock you into a system and software or process that will limit your business as you develop. Investing in risky new technology can bring exciting rewards but can also bring teething troubles, operational challenges and the risk of becoming obsolete very quickly.

Under investing can limit a company’s ability to compete in the marketplace, require higher headcounts and overheads. Overinvesting can distract from the day to day operations and customer interactions, tie up resources, implementing new solutions and not focusing on the most important aspect of keeping the customer happy!