What’s stopping SMEs from going digital?

6 Aug 2020

Working for a software company, it’s no surprise that we’re regularly trying out new systems and widgets to see if they could help us be more productive.

But many businesses aren’t doing this…and are missing out on some great digital tools (like CRM).

So our MD started looking into why businesses, especially SMEs as it turns out, aren’t taking advantage of some of the great tools that are out there.

This article has also been picked up in the latest issues of Business Direction, Business Intelligence, and Business Comment.

According to a recent report by The Enterprise Research Centre (ERC) and Xero, not enough UK small and medium-sized enterprises (SME) are adopting digital tools.

By rejecting these newer business management systems, SMEs are missing an opportunity to increase their productivity. Because there are so many of them, this missed opportunity is having a negative impact across the whole of the UK economy.

And in this new post-Covid19 world, any benefit to the economy, no matter how small, must be encouraged.

Does software make that much of a difference?

As the Managing Director of a software company, my answer is of course going to be a resounding YES!

But you won’t want to just take my word for it.

The Office of National Statistics (ONS) have found a strong correlation between productivity and use of digital technologies. Specifically, they found that companies that used digital tools had more sales per employee than those who didn’t.

A clear indicator that properly implemented software can really boost a business’ productivity.

How does software boost productivity?

Each system or piece of software is different, but in general, using digital tools makes people more productive by taking over repetitive tasks, streamlining where information is found, reducing the need to re-enter information or formatting, etc.

The ERC found, for example, that using a CRM system boosted sales per employee by 18.4%….wow!

But businesses in the UK are just not taking advantage of these productivity boosting tools.

In the UK only about 12% of business were using more than 6 of the key digital technologies outlined by the EU Digital Density Index…the EU average is around 26%.

This means that 88% of businesses are just plain missing out on these productivity boosting systems. 

How do we fix this?

There isn’t a simple solution to this digital divide.

The way I see it, there are three things that have to be done if the UK is going to become a world leader in the adoption of all things digital in their businesses.

1. Improvements to infrastructure

If businesses are going to rely on digital tools to get their day-to-day tasks done, they need to be able to access them. It’s as simple as that.

Too many rural businesses are being left behind because of a lack of high speed internet.

This means there is a huge need for real, tangible investment from government and internet service providers in improving the UK’s infrastructure.

And it is happening…slowly…meaning a slower increase in productivity.

2. Skill Building

We need to improve the digital skills of the people who will be using these tools. I speak to so many businesses every day who worry about implementing a CRM system because of the levels of tech literacy in their business.

Schools are doing their part. More young people are coming out of school with a solid grasp of how computers work and how to use them (and code for them!).

But for those people already in employment, it’s the responsibility of the business and the software provider to help educate them.

The training sessions we run with new system users is just the first step. We’ve also got a library of how to articles and regularly post videos to help get our users feeling confident in using the system.

Because if they don’t feel confident, they won’t use it. And if they don’t use it, they’ll never get that 18% boost in productivity.

3. A Change in Outlook

Too often conversations about technology and software revolve around the idea that they will only be relevant to the younger members of the team. This is in part because of the need for education, but also because of the way people view technology.

This idea that only young people can use digital tools is completely untrue. More than that, it’s damaging to businesses, stopping their adoption of tools that will benefit them.

When it comes to adopting new software, there needs to be buy in from SME business owners. They need to be willing to (or better yet enthusiastic to) change the way they do things.

I don’t mean completely changing business processes to fit new software, that’s not how business systems should work in my opinion.

But having a clear understand of where a business isn’t being as productive as it could be and going out in search of software that can help. And then having an open mind about what other areas of the business could benefit from it.

We have to end this trend of avoiding new technologies because a business has “always done things this way”. It’s time to explore new ideas and technologies.

Read more about the research behind this article here: https://www.tenentrepreneurs.org/s/Upgrade.pdf

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