Graeme Philipson
July 12, 2016

SMEs still not in love with digital

SMEs

SMEs still not in love with digital

Michael Ruggiero: A split between SMEs that see digital as a threat, and those that see opportunities

Accounting firm Bentleys has published its biannual Voice of Australian Business report, based on an online survey of 350 Australian small to medium enterprises (SMEs). A key finding is that more of them regard digital disruption as a threat (29 per cent) than as an opportunity (25 per cent).

The survey made a distinction between micro businesses (1-4 employees), small businesses (5-19 employees, and medium businesses (20-200 employees). Most industry sectors were surveyed, all around Australia. Only decision makers were surveyed.

Small businesses were most positive about digital disruption, with 34 per cent seeing it as an opportunity, compared to only 25 per cent of medium businesses and 18 per cent of micro businesses. And 16 per cent of medium businesses foresee greater difficulty in adapting to technological change due to the larger size of the systems that would need to change, followed by 6 per cent of small businesses and 10 per cent of micro businesses.

Over half (60 per cent) of the businesses surveyed said they use technology to cut time spent on administration, followed by marketing (53 per cent,) remote access (50 per cent) and improving cashflow (43 per cent). The survey also found that medium business is more enthusiastic about potential benefits in automated invoicing (56 per cent,) recruitment (55 per cent,) and reducing staff costs (49 per cent).

“While many people have easily adapted and incorporated technology in their everyday lives, Australia’s SME sector is still testing the waters when it comes to digital technologies,” said Bentleys Managing Partner Michael Ruggiero.

“The split between those who see it as a threat compared to an opportunity could point to a lack of understanding around how to embrace these technologies in a practical way, which is causing a reluctance to engage.

“We are seeing that SMEs that are proactively embracing digital technologies, particularly in the manufacturing and agribusiness sectors, are reaping the opportunities in how it can effectively improve or even change their business model and operations completely, Mr Ruggiero said.

"But that is only one quarter of the businesses we surveyed. Given the rate of development of digital technologies, it's somewhat surprising this figure isn't higher."

“The ones who are seeing it as threat are worried it will disrupt their traditional way of approaching their business. They see it as upsetting the applecart.

"But when integrated properly into the business, digital technologies should create efficiencies that not only improve the bottom line, but free up time for business owners to spend on more important activities," said Mr Ruggiero.

The survey also found that nearly a quarter (21 per cent) of businesses say they are extremely worried or somewhat worried about their business prospects in the next 12-months. But medium businesses exhibited significantly greater confidence (75 per cent are ‘somewhat’ or ‘extremely’ confident) than small (49 per cent) or micro (46 per cent) businesses.

Mr Ruggiero said SME owners should review their current situation and consider how digital technologies can provide improvement. For those looking to refresh and refine current practices, and who might be a little hesitant, he recommends:

  • Seek advice from a professional. “Only 26 per cent of SME owners are currently using external consultants to make business decisions. Accountants and external advisors are an extremely valuable source of information when it comes to new technologies and how to practically implement them. Engaging with them and asking for help can offer peace of mind.”
  • Tap into their professional network. “Find out first hand from other SME owners the types of technologies they are using and what they like or don't like, what challenges they encountered when implementing and how they overcame them. Peer-to-peer learning can be one of the best sources of information.”
  • Undertake due diligence. “Every business is different and has different needs. Think about the areas of your business operations where you spend most of your time and how digital technologies may be able to help you.

“There are several options available so make sure find the best option for your business. Take the time to do proper research. There is an abundance of useful information available online," Mr Ruggiero said.

Mr Ruggiero said that modernising business operations and processes by integrating digital technologies will help SMEs gain an advantage when it comes to speed, cost and the ease of doing business.

“Ultimately, it’s about ensuring your business is operating as effectively and efficiently as possible, keeping it competitive, while also positioning it for future growth.

“Embracing digital disruption isn’t about up hauling your entire business model or operations. Rather it’s about using technologies in a smart way to complement and boost your current practices," he said.

"In a constantly shifting digital landscape, SMEs who choose to embrace digital technologies are provided unique opportunity to evolve their business model and operations.”

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