According to the U.S. Small Business Administration, there are almost 29 million businesses with less than 500 employees in the US, representing 99.7% of all US businesses and, roughly employing about half of the entire private workforce. A comprehensive study from Deloitte of connected small businesses and found that almost 80% of SMEs are not taking advantage of modern digital tools, which are identified as a major driver in helping SMEs succeed. Deloitte also found 38% of small businesses cited increased sales and revenue as a benefit associated with using digital tools. Not just topline growth, technology helped small businesses increase employee collaboration, lower costs and deliver greater customer engagement overall.
The following includes four key things that SMEs need to do to fundamentally restructure the economics (and by extension, the sustainability) of their business to make the business more future-proof and has a better chance of out-innovating the competition.
1. Friend the cloud
Currently, more and more companies, including SMEs, are migrating away from legacy and/or on-premise systems to the cloud. According the Rightscale State of the Cloud Report by Flexera, 94% of enterprises are using the cloud, and 43% of SMEs are running their workloads in the public cloud.
If you are an SME that is still tied to an on-premise system, now is a great time to consider moving to the cloud. The cloud brings a whole host of benefits, but essentially it allows SMEs to win on three main areas:
- Access to truly elastic computing resources (e.g. your holiday promotion is doing extremely well, can you add more compute capacity now so that customers don’t get turned off by a slow website).
- Taking advantage of the various services that come standard with any cloud platform (e.g. security, authentication, analytics, etc.).
- Doing more critical tasks automatically (e.g. data backup, disaster recovery, compliance).
The cloud opens up a whole new world of efficiency that allows SMEs to focus on what they do best and drive business forward.
2. Think in terms of platforms
Until recently, business software was all about monolithic applications. Every software vendor tried to cram as many features as possible and tried to build solutions that would work for everyone. Unfortunately, that approach wasn’t very useful – simply because every business is different, with a different set of unique challenges.
We are living in an age of software platforms. Now, companies are building the foundation on which others (e.g. developers, ISVs) can build the solutions customers seek. Strong platforms also tend to have the richest partner ecosystems and the most robust marketplaces. This means that customers can easily get the deep domain solutions they need for their industry vertical, geography or compliance need, and all of them work seamlessly with their core finance/ledger system of record.
3. Don’t shy away from artificial intelligence
AI is simply everywhere these days. It is one of those truly transformational technologies that has tremendous potential to change the face of the globe, perhaps forever.
Until recently, AI was thought to be more relevant for larger enterprises as compared to SMEs, however this is no longer true. From efficient route scheduling for a mobile workforce, to identifying which employee travel receipts are non-reimbursable to using chatbots for ad hoc reporting, the SME-centric use cases of AI are hitting our shores like a tsunami.
SME’s can start by identifying the biggest pain points and pilot an AI-driven solution (that a trusted platform partner has developed) to address them. As you get more comfortable, expand the footprint of 3rd party AI solutions in your system landscape.
4. Make your business process software driven
With software defined processes percolating every aspect of business (and robotics process automation (RPA) gaining rapid adoption on top), entire categories of business are being re-defined. For example, review of mortgage applications was once a manual process that took weeks and a small army of people to accomplish. Now with the integration of credit risk assessment tools, CRM and online payment/banking applications, this entire process is executed in near real time.
For growth-driven SMEs, now is the time to re-assess the entire business from a process point of view. Imagine if you were starting a business today, with the plethora of software solutions available – would you still structure your business the way you would under a legacy environment? Likely not, and that is really the opportunity for businesses to level the competitive playing field.
According to the US Small Business Administration, about two-thirds of businesses last two years, half of all businesses will survive five years, and only one-third will survive 10 years or longer. With technology, SMEs finally have the tools to disrupt the status quo for good.
Manju Bansal is Vice President of Ecosystem and Cloud Partnerships at Sage, the market leader in cloud business management solutions, where he creates a modern, cloud-centric ecosystem for Sage that enables its partners to succeed in an all-digital, cloud-driven world. As part of this, he helps Sage to build globally scalable pathways that allow developer partners and ISVs to discover, build and commercialize their applications on the Sage platform. Twitter: BansalManju