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Tech-Savvy Small and Medium Sized Enterprises: Leveraging Technology for a Competitive Edge

Now this is a topic that is very close to my heart for 2 main reasons.  Firstly, I’ve always had a fascination with IT and how it can be leveraged for innovation and competitive advantages.  Over the last 25 years, I’ve always worked in the IT/Accountancy domain and seen first-hand the impacts of good and poor leverage of technology on competitiveness.  Secondly, and more importantly, is the fact we are now in a digital era; those that fail to embrace digitisation face anaemic growth prospects, stagnation or collapse.  

This digital era is characterized by the widespread adoption of digital technologies and the internet.  It is crucial for SMEs as it enables them to enhance efficiency, reach broader markets, and make data-driven decisions, thereby levelling the playing field with larger competitors.   This also implies, SME’s who adopt technology will have significant advantages over their peers who are laggards.

Over the last 25 years I’ve seen poor understanding and sub-optimal usage of IT system functionality in too many organisations of all sizes.  The consequence of which are increased costs, reduced efficiency, missed opportunities for innovation and growth, data silos and data quality issues.  All this, in effect, is self-inflicted and therefore can be fixed!  SME’s that do not invest in, or properly leverage, the right technologies are missing out on benefits and opportunities for competitive advantages.

recent development in technology impacting the SME sector

Unlike the recent past, SME’s can no longer get away with underutilising IT systems, or not even utilising IT to any great extent.  This is primarily due to the recent advent of cloud computing and to a lesser extent AI and my references to technology in this blog is about, you guessed – cloud computing applications. 

Why? Because IT functionality and capabilities that were once only available to very large international organisations are now at the fingertips of SME’s – thanks to cloud computing. 

At its core, cloud computing is the on-demand availability of computer system resources over the internet.  Think of it as renting the computing resources your business requires rather than owning and maintaining the computer resources yourself. 

This recent advent of cloud computing and AI offers unprecedented advantages at relatively affordable prices.  They enable organisations to streamline operations, enhance decision-making, and deliver personalised customer experiences; for SME’s these advancements mean unlocking efficiencies, reducing costs and gaining a competitive edge. 

Therefore, I reiterate, in today’s technological landscape, it is crucial that SME’s and/or their business advisors/accountants have a deep understanding of IT systems to reap the benefits.   Those that fail to embrace IT and AI (in the right way!) risk falling behind their competitors, facing inefficiencies and missing out on growth opportunities. 

Benefits of cloud computing to SME's

Listed below are some of the advantages of cloud-computing to SME’s: 

  • Enhanced scalability: cloud computing is flexible, its cost is based on usage and therefore can be aligned to activity levels of your business. SME’s can easily scale up or down.  You can start small and add more applications, storage space, processing power etc as you grow or can scale-down in periods of downturn.
  • Cost-efficiency: As earlier alluded to, SME’s avoid the upfront hefty costs of owning and implementing IT systems. Furthermore, cloud services operate on a “pay-as-you-go” model.  There are no oversized server rooms, or unused computer resources with cloud computing!
  • IT management: Cloud providers manage the IT operations. There is no need to be worried about hardware maintenance, upgrades or security patches – it’s all done by the cloud provider.
  • Data security: Reputable cloud providers invest in robust security systems; it is part of what they specialise in. All things being equal, they are able to protect data better than an individual organisation managing only its own infrastructure.  Data is encrypted, backed-up and protected against breaches.
  • Access to advanced functionality: SME’s through the use cloud computing can leverage sophisticated tools like Artificial Intelligence (AI), machine learning and big data analytics.
  • Collaboration and mobility: Cloud-based applications foster collaboration with remote teams. SME’s are not restricted by geographic location to hire the talent they need as their geographical dispersed teams can collaborate on documents, hold virtual meetings and stay productive from virtually anywhere in the world.
  • Customisation: many applications allow configuration to meet the specific functionality requirements a business has. SME’s can therefore choose features that are relevant to their operations.
  • Automation: Many applications, including finance applications, streamline repetitive tasks such as invoicing, payroll and expense tracking. This leads to efficiencies and reduces manual errors.
  • Data Insights: many cloud-based systems have applications that can provide real-time data analytics that help SME’s in making informed decisions. These include some very powerful insights such as cash flow projections and profitability analysis which can be used in making informed decisions to improve profitability or to ensure business survival.
 

As you can see from the above, cloud computing isn’t just a technological shift.  It’s a business enabler; SME’s can compete, innovate and thrive without the burden of managing complex IT infrastructure using cloud-computing.  Cloud computing should be embraced.   It’s a passport to agility, efficiency and growth!

The technology Laggards

Those without the IT technologies and skills required to survive and thrive in this digital era risk missed opportunities, steering their enterprises to mediocrity and stagnation all whilst their tech-savvy peers thrive and gain advantages. 

In this digital era, business decisions founded upon incorrect, untimely or incomplete data can hinder or harm an enterprises’ survival prospects.  All because, the technological skills to thrive in today’s digital era are not available to SME’s and/or their accountants.

SME’s, accountants and business advisors who grasp the intricacies of IT systems can guide SME’s towards effective IT strategies, cost-efficient solutions and improved decision making.  They can also use these benefits for the delivery of competitive advantages. 

Selecting and implementing a cloud application

Be very aware!  Too often SME’S treat cloud-computing applications as interchangeable commodities.  They rush to implement the first solution they encounter, assuming it fits their business needs.  This approach is akin to grabbing the first tool from a toolbox without considering the task at hand.   To derive its benefits and avoid disappointment, you must ensure you choose the right cloud solution for your business!

Selecting and implementing a new cloud application (or any IT change) requires a holistic approach, technology change cannot be viewed in isolation. It is crucial to consider technology alongside business processes, people, and data required to run the business optimally. Failing to consider the four elements together (ie, technology, processes, people and data) can lead to fragmented systems, employee resistance, data quality/availability issues and ultimately sub-optimal business performance and/or decisions.  This is clearly not getting the benefits intended from cloud-system; it can even turn out to be very detrimental to SME’s.

Effective implementation must address how new technology integrates with existing infrastructure, the readiness and adaptability of the workforce, and the quality and structure of data being utilized. They numerous benefits of getting it right include competitive advantages, increased efficiency, automation and lower costs, better business decisions supported by data analytic capabilities, innovation (in processes or products) and many others.

Other factors to consider when selecting a cloud application

Earlier I mentioned that technology, processes, people and data are all intertwined, and therefore a holistic approach should be adopted in choosing your cloud-application. 

Below are some other key factors to consider when making your choice. 

  • Requirements and features. Ensure the system meets your current and future needs.  A good way to do this is to firstly identify your needs (completely removed from functionality you believe a system has or does not have – ie, blue-sky thinking).  Then you select and evaluate various cloud systems against your business needs to identify very good matches to your needs.  Note the best match to your needs is not always the best system for you as there are other factors to consider.
  • User Friendliness: How easy is the system to understand and use? Think about this from the perspectives of those in your business who will be using the application.  There is no point choosing a cloud system that users will struggle to leverage its functionality and the associated business advantages these confer.  Its better to go for a system, say with 90% of your required functionality that all your users can work with effectively rather than a system with 98% of the required functionality that say 40% of your users will struggle to use.
  • Cost and return on investment: Consider the implementation and ongoing support costs against the benefits (ie, the financial and non-financial benefits of the cloud application). This is typically achieved through completion of a business case.  Note it must make “business sense” to implement the cloud solution.  If the analysis shows it is not cost-beneficial then you most likely do not want to implement the system – but just remember to consider both the financial and non-financial benefits in your analysis.
  • Scalability and Flexibility: The system should be able to grow (ie, you can add easily add additional modules/functionality, new users, increase data usage etc) as your business grows.
  • Security: You should review the systems security features to ensure your sensitive data is protected. Most reputable cloud-application providers will have robust security.
  • Integration: If your cloud system will complement existing systems you have, then you need to factor in how easily the cloud system can seamlessly integrate with your existing system. The same principle applies if you intend to firstly adopt the cloud application but later on implement other systems.  Integration has to be a factor to consider – both in terms of technical feasibility but also costs of integration.  These costs can vary significantly as some systems can more or less automatically connect with others (with very little cost associated) whilst others may require significant technical work to deploy and cost a significant amount.
  • Vendor support and reputation: Research the vendors reputation and the levels of support they provide. Some vendors may offer different levels of support, each with a different fee.  If so, ensure you consider what your requirements are and factor the support you factor in the associated costs when comparing the different cloud applications for selection.
  • Compliance with legal requirements and regulations: Double-check the system complies with relevant legal requirements and regulations of your country. Again, here in the UK, most reputable cloud-applications will comply with legal requirements and regulations.

Concluding remarks

We’ve explored the transformative potential of cloud-based computing for SME’s.  Selecting the right cloud application is crucial for maximizing these benefits. It involves understanding the specific needs of the business, evaluating the features and scalability of different cloud-application solutions, ensuring seamless integration with existing systems and the organisation is ready ready for any new processes resulting from the adoption of new technologies.  When selecting and implementing new technologies, don’t just focus on the technology: think technology, processes, people and data.  They all need to be fully integrated.

SMEs can leverage cloud technology to drive innovation, reduce costs, and achieve sustainable growth, but these are all dependent upon correctly selecting and implementing the right technologies. Embracing cloud-based applications is not just a technological upgrade; it’s a strategic move that positions SMEs for success in an increasingly digital and competitive landscape.

As you may have noticed, I haven’t delved too deeply into the change process involved in implementing cloud-applications.  The reason for this is that the change process (ie, the holistic approach required to implement the new cloud-system) is not one-size-fits-all; it must be tailored to the unique characteristics and needs of each entity.  This is to ensure the solution being implemented meets  the specific needs and context of each organisation. 

Examples of the unique characteristics that need to be taken into account include compatibility with any IT infrastructure that will be retained (if applicable), the organisation culture of the organisation in respect of the effort required to adopt change, the planned processes which may impact the degree of configuration or customisation required of the application, the people impacted and the training required to get them proficient, the location(s) where the system will be used, data regulations etc etc.  The list of things to consider is simply too long and is also influenced by the sector(s) and country or counties in which the implementation is occurring. 

As you can probably begin to appreciate, the implementation steps are unique to each business and therefore any generic guide in this area can potentially be misleading and costly to SME’s hence my reluctance to dive into this area in any detail.  However, an experienced project or programme manager will be able to navigate this area for you.

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