The Challenge of New Technology Adoption by SMEs

The European Commission’s (EC’s) Information and Communication Technology (ICT) Taskforce reported in November 2006 that SMEs across Europe are failing to invest sufficiently in technology. “A wider integration of ICT by businesses throughout Europe would significantly contribute to improving effectiveness and productivity and could potentially revolutionize and maximize processes and organizations in a number of key sectors,” say the report’s authors. However, research by Ofcom indicates that many small businesses are either unaware or confused by the raft of new technologies hitting the workplace.

Peter Scargill, the National IT Chairman for the Federation of Small Businesses, comments: “The major barrier for small businesses is finding the time to keep themselves informed in an age where advances are coming faster and faster and, in many cases, are being driven by the bigger companies. BT and others are moving over to voice over Internet protocol (VoIP) and no doubt will make the technology as simple to use as possible – meanwhile WiFi is becoming almost universal, with potentially frightening security implications. Those who don’t make use of these technologies will be putting themselves at a disadvantage; yet for those who do make the move, it’s important that they have at least an overview of advancing technologies to ensure they are able to use the technology to improve their businesses. If they choose not to embrace change they should be aware that they will have competitors who will.”

Telecoms and IT analyst Teresa Cottam adds that it is easy to oversimplify the picture in the SME market. “This is one of the hardest sectors to analyse, because there are such wide variations in business type. We should remember that there are significant numbers of highly IT-literate SMEs – in fact, SMEs are often at the cutting edge of technology development and adoption – but we also need to recognize that for a variety of reasons some SMEs are either unwilling to adopt or are less adept at adopting new technologies. Yet these technologies have huge potential to help them become more competitive. Technology can level the playing field between bigger companies and the SMEs.”

The Pitfalls of Technology Investment

Whether we like it or not, technology is becoming more and more embedded in the way we live and the way we do business. Many types of business now use a range of technologies that underpin their business processes and no matter what size the business is, it is prudent for business managers to periodically assess what’s available and how it can help their business perform better. However, in the case of SMEs, all too frequently they do not derive optimal benefit from their technology investment.

For example, Brunel University conducted research on how long it took staff to conduct various business tasks and the sad conclusion to its research was that there was little evidence that broadband was revolutionising SMEs. To exemplify the problem, the researchers highlighted the case of a rural marketing company, where getting broadband actually made staff less productive. The reason for this was that while staff had begun to send information electronically to customers, they were also still sending a hard copy in the post.

There are lots of reasons why many SMEs fail to take advantage of new technology, but lack of training and failure to take a strategic approach to technology are the two most common. Another key problem is that many SMEs start with the attitude that they wish to spend as little as possible on technology, disregarding the cumulative cost savings that can be generated if they get it right. And, as Peter Scargill highlighted, small business managers often have time pressures that mean that evaluating new technologies is low on a long list of priorities. While this is understandable, making time to evaluate new technologies should be viewed as an investment in the business that will pay dividends in terms of increased competitiveness. Investing a little time now could save a lot of time in the future. And, bluntly speaking, because of the increases in efficiency that new technologies can bring, failure to keep abreast of new technologies will reduce a company’s ability to remain competitive. Investing in a solid network foundation, for instance, creates a range of benefits for an SME:

• Improved efficiency – an effective network allows workers to become more productive and decreases unproductive ‘downtime’. It also enhances collaboration and communication, allowing faster decision-making and improved customer service.
• Increased mobility – the ability to access the company network, e-mail etc, while outside the office allows companies to support distributed working and increase efficiency and effectiveness.
• Greater security – security threats have both operational and financial consequences for business. Optimizing the infrastructure makes securing it much easier.
• Greater flexibility – as the company grows or changes, technology needs will change. Investing wisely means the infrastructure will allow you to add more users as needed and new applications as they become relevant (such as VoIP, teleconferencing, etc.). You can therefore ensure that technology you invest in today not only demonstrates a return on investment but also supports your needs tomorrow.

New technologies such as WiFi and VoIP also offer a range of benefits to the small business, as shown in Figure 1.

Figure 1: Examples of benefits of WiFi and VoIP to small businesses

Conclusion

The SME sector is a vibrant and vital part of the UK economy. Figures from the Federation of Small Businesses state that the 4.3 million small businesses in the UK employ more than 12 million people, or around 58% of the private sector workforce. By enabling the UK’s SMEs to take full advantage of new technologies not only is their competitiveness improved, but also the competitiveness of the UK economy as a whole is also.