Tech priorities for small business in 2022: Here's what's top of the shopping list
Running a small/medium-sized business (SMB) is challenging at the best of times, but these are not the best of times. From early March 2020, countries around the world entered varying degrees of lockdown as governments sought to suppress the coronavirus pandemic and curtail the spread of COVID-19. Economic activity stalled and stock markets crashed as workforces were disrupted (laid off, furloughed or compelled to work from home), and a deep recession ensued from which the green shoots of recovery are only just beginning to appear.
In March 2021, the OECD noted that the recovery will depend crucially on the interplay between vaccine rollout and the appearance of new SARS-CoV-2 variants.
"The global vaccine rollout remains uneven, with restrictions remaining in some countries and sectors. The outlook for growth would improve (upside scenario) if the production and distribution of doses accelerates, is better co-ordinated around the world and gets ahead of virus mutations. This would allow containment measures to be relaxed more rapidly and global output to approach pre-pandemic projections for activity. But consumer spending and business confidence would be hit (downside scenario) if vaccination programmes are not fast enough to cut infection rates or if new variants become more widespread and require changes to current vaccines."
Even under the OECD's upside scenario, it will take until the beginning of 2022 for global economic activity to return to pre-pandemic forecast levels. The central projection and downside scenario, in particular, show the post-pandemic recovery taking much longer.
SMBs and the economy
Small and medium-sized businesses are mainstays of national economies. In the UK, for example, 99.9% of the country's 6.0 million private sector firms have fewer than 250 employees, accounting for 60.7% of employment (16.8 million) and 52.3% of turnover (£2.3 trillion):
At the start of 2020, employment in small businesses (0-49 employees) was 13.3 million (48%) and turnover £1.6 trillion (36.3%). Employment in medium-sized businesses (50-249 employees) was 3.5 million (12.7%) and turnover £0.7 trillion (16%). Employment in large businesses (250 or more employees) was 10.9 million (39.3%) and turnover £2.1 trillion (47.8%).
The size distribution of businesses in the US follows a similar pattern, although of course there are a great many more of them:
Research by IDC and Cisco (2020 Small Business Digital Transformation: A Snapshot of Eight of the World's Leading Markets) estimated that in 2019 small businesses contributed 48%, or US$17 trillion, to the combined GDP of eight leading markets -- Brazil, Canada, Chile, France, Germany, Mexico, the UK and the US. Further digital transformation of small businesses, the IDC/Cisco report said, could add $2.3 trillion to these countries' GDP by 2024. In particular, leading SMBs (so-called 'Digital Natives') saw much higher (8x) revenue growth than less mature ('Digital Indifferent') businesses. But although nearly three-quarters (72%) of the 2,030 small businesses surveyed said they were accelerating digitalisation to address COVID-19 challenges, there were two major barriers to progress: lack of digital skills and cultural resistance.
COVID-19 challenges for SMBs
The biggest COVID-19 challenge for businesses of all sizes was the rapid pivot in March 2020 from largely office-based to largely home-based working. Before the pandemic, remote working was relatively rare: in 2018, according to Eurostat, 5.2% of the EU workforce aged 15-64 usually worked from home, this arrangement being more prevalent among the self-employed (18.5%) than employees (3%). In the US, according to analyst firm Gartner, around 30% of the workforce worked from home at least some of the time.
When the coronavirus pandemic struck, everyone who could do so worked from home, acquainting themselves with the delights of VPNs, video conferencing, online collaboration tools and more. And of course, they did so without the safety net of on-premises tech support and HR staff, fuelling worries about issues like productivity, security and employee wellbeing.
Now, over a year into the pandemic and with the gradual easing of lockdowns, the focus has shifted to a 'hybrid' model in which workplaces will support a mix of remote and on-site workers, with employees typically spending some time in the office and some time working from home.
In the Harvey Nash/KPMG CIO Survey 2020, which canvassed 4,219 respondents in 83 countries, both pre-COVID (2,791) and during the pandemic (1,428), 86% had moved their workforce to remote working; only 6% expected to have no staff working from home after the pandemic, while nearly a quarter (24%) anticipated that the majority of the workforce will work remotely post-COVID. This is the reality of the 'new normal', and it will have huge implications for how businesses, large and small, organise and service their business processes.
All the more important, then, for SMBs to have the right people procuring, deploying and maintaining the technology that their employees use, both on-site and, increasingly, at home.
However, in the 2019 Harvey Nash/KPMG CIO Survey, tech skills shortages were at an all-time high, with 67% of organisations struggling to find the right talent. This reduced somewhat in the 2020 survey, to 66% pre-COVID and 54% during the pandemic, with cyber security (35%) and organisational change management (26%) skills in most demand. In the UK, the ERC's 2020 State of Small Business Britain report noted that the main obstacle for SMBs adopting digital technologies was the availability of digital skills: 39% of more digitised businesses saw the lack of digital skills as an obstacle, while 19% of less digitised businesses said that better digital skills in the workforce would encourage them to use more digital technologies. Lack of digital skills also emerged as a key challenge for small businesses seeking to accelerate digitalisation in the IDC/Cisco research mentioned earlier.
Surmounting these challenges is important because the adoption of digital technologies can make the difference between surviving and thriving:
More pertinently, perhaps, digital maturity across strategy and organisation, processes and governance, technology, and people and skills leads to measurable bottom-line benefits:
The SMB tech stack
So how should SMBs go about choosing the technology stack on which their businesses will be based in this uncertain, but undoubtedly challenging, future?
Organisations that have already embraced digital transformation and restructured their business practices around cloud services, mobility and analytics should be ahead of the game -- especially if they have robust disaster management and recovery plans in place. However, businesses that need to accelerate from a standing or sluggish start will need all the advice and help they can get.
When it comes to technology purchasing decisions, there are a number of key factors that apply across multiple product categories. Back in 2016, Gartner collated some findings from Peer Insights, the analyst firm's platform for moderated user reviews of technology products. From a sample of over 2000 responses, the top 11 decision-swaying factors were:
It's no surprise to find that functionality, performance and cost head up the list of key factors. The remainder form a secondary 'halo' around a product or service, and will likely vary in importance depending on the product category. SMBs, in particular, may be tempted to put cost front and centre in their technology purchasing decisions. However, it's always wise to remember the adage that 'you get what you pay for', and not to overlook other key factors like the product roadmap, services, customer focus and ease of use.
Rather than buying tech hardware and software and deploying it in-house, outsourcing provides an attractive way to increase efficiency and flexibility, gain access to key expertise, and free up staff time for other tasks. However, it's important for SMBs to consider how contractors are vetted, the confidentiality of information sharing, communication methods, and how quality expectations are set.
A 2020 survey of 500 small business owners in the US from B2B research, ratings and reviews site Clutch highlighted the following benefits of outsourcing: Saving time; Growing the business; Supporting business processes; Accessing flexible resources; Working with experts; and Collaborating with domestic or international partners.
IT services headed up the list of business tasks SMBs planned to outsource in 2021, followed by finances and accounting:
The next logical step from traditional outsourcing is to embrace the 'everything as a service' or XaaS model, in which all manner of business processes are delivered over internet connections as cloud services. The benefits are familiar, including a shift from capital to operational expenditure on IT infrastructure, greater flexibility and scalability, and access for SMBs to enterprise-grade applications such as ERP and CRM that are managed, secured and frequently updated by the service provider.
SEE: The future of Everything as a Service (free PDF)
Given that IT skills are in short supply, XaaS could also play an important role in freeing up tech staff from low-level tasks so they can concentrate on creating new business opportunities, and supporting the new hybrid workforce.
Of course there are potential downsides to 'as-a-service' adoption, including: service outages; security, governance and compliance issues; inadequate performance; hidden costs (including the cost of integrating and managing multiple cloud services); service provider lock-in; and customer support issues.
Most of these potential XaaS issues can be minimised with good planning and a tightly-defined SLA (Service Level Agreement). However, businesses will need to remain vigilant, and also realise that cloud deployment will not be the answer for every IT workload or business process.
Internet resilience
A potential issue that has been tested by the coronavirus pandemic is the resilience of the internet itself. If internet protocols, cloud provider networks and content delivery networks (CDNs) had failed the test, businesses would not have been able to support remote working via SaaS applications and other cloud-based services, while digital distractions such as streaming media and gaming would not have been available to stave off lockdown boredom.
In a nutshell, the internet passed the test, according to internet analysis company ThousandEyes. In its 2020 Internet Performance Report: Covid-19 Impact Edition, based on measurements collected between January and July 2020, ThousandEyes noted that "Despite unprecedented conditions and an increase in network disruptions, Internet-related infrastructures have held up well, suggesting overall healthy capacity, scalability, and operator agility needed to adjust to unforeseen demands. Negative performance indicators, such as traffic delay, loss, and jitter generally remained within tolerable ranges, showing no evidence of systemic network duress."
Network disruptions rose sharply between January and March 2020, for both ISPs and cloud providers.
Internet disruptions did rise as the pandemic took off, particularly among ISPs and cloud providers (see above), rising to +63% in March 2020 compared to January and remaining elevated through June (+45%). However, ThousandEyes noted that "recent increases in disruptions are not due to network duress, but instead the result of operators adjusting their networks to accommodate changes in traffic pattern and load. Further, some of these disruptions may not have meaningfully impacted Internet users, as in particular regions and types of providers, a large proportion of them take place outside of traditional business hours."
SMB priorities for 2021
The defining characteristic of small and medium-sized businesses is limited financial and human resources compared to those available to enterprises, which means that SMBs must apportion those resources with extra care. So what are the most important technology trends for SMBs? The 2021 State of IT survey from Spiceworks Ziff Davis was well timed (July 2020) to take a mid-pandemic reading of the business temperature. Information was collected from 1,073 IT buyers from organisations of all sizes across North America and Europe.
Headline findings (across companies of all sizes) were:
- COVID-19 is a catalyst for change
- Digital transformation plans will drive tech spending
- IT budgets are expected to decline slightly year-over-year in 2021
- Hardware spending will still account for the largest portion of IT budgets in 2021
- Plans to adopt emerging tech have slowed (except when it comes to security)
Notable SMB-specific findings included: the need to upgrade outdated IT infrastructure was the main driver of SMB IT budget increases; a greater percentage of SMB IT budgets will be spent on hardware (especially laptops) and software (especially productivity and industry-specific) compared to enterprises; hosted/cloud-based solutions for SMBs will revolve around online backup/restore/recovery and productivity solutions; small businesses are more likely to purchase new technologies due to end of life events, rather than replacing systems following regular upgrade or refresh cycles.
IT automation technology and Gigabit wi-fi networking remained top of the list of new technologies for adoption for both small (1-99 employees) and mid-size (100-499) companies, but overall the Spiceworks Ziff Davis survey recorded a cooling off of emerging tech adoption plans, year on year. This it put down to many organisations "grappling with optimizing existing operations to support a remote workforce -- instead of trying to take on experimental projects that might not offer immediate return on investment".
More recent insight into businesses' reactions to the pandemic, and plans for the future, are available from an April/May 2021 survey of 750 UK business leaders by Studio Graphene, a London-based digital agency.
Headline findings were:
• 56% of firms have successfully adopted one or more new technologies since March 2020
• 54% say the pandemic has inspired long-term digital transformation projects, with 45% planning to hire new tech staff in the coming 12 months, and 53% planning to invest more heavily in digital skills training
• Conversely, 27% of UK businesses intend to cut down on IT spend as lockdown rules relax, while 30% of decision-makers are worried their business will revert to old practices
Drilling down to smaller businesses (excluding those with more than 500 employees), the biggest responses were around the successful adoption of new technologies since the beginning of the pandemic (58% of companies with 250-500 employees, 64% of those with 50-99) and investment in digital skills training (56% of companies with 250-500 employees, 58% of those with 50-99). When asked about their plans for the next 12 months, smaller businesses showed particular enthusiasm for investment in productivity software and cloud technologies, launching new technology projects, and increasing the amount spent on IT.
In a statement, Ritam Gandhi, founder and director of Studio Graphene, said: "For most businesses, digital transformation projects were initially seen as a means of ensuring business continuity in a time of crisis. However, our research shows that, on the whole, UK businesses have adopted a long-term mindset where technology and innovation are concerned.
"Positively, many of the digital transformation journeys kicked off in 2020 look set to continue for many more months or years. Indeed, organisations large and small are clearly embracing the fact that they must continuously improve the technologies they use. And crucially, many firms are committed to investing in digital skills, either through recruitment or training.
"It is interesting to note, however, just how many business leaders are concerned that their company will revert to old habits. To survive in a competitive, digital-first future, I encourage business leaders to capitalise on the progress made over the past 12 months -- now is the time to double down and ensure digital transformation remains a key priority within their organisation."
Outlook
COVID-19 has been a test for businesses -- and especially for SMBs, which lack the resources that are generally available to enterprises. Those that were pre-adapted for the extreme pressure imposed by the coronavirus pandemic -- with optimised procurement, digitally transformed business processes, good tech support, flexible work culture, disaster management and recovery plans in place -- have proven resilient and should emerge from lockdown to prosper again. For the remainder, hard times will have exposed weaknesses and highlighted opportunities for improvement.
Surveys conducted in the early months of the pandemic suggested that businesses were understandably concerned with adjusting to the demands of newly remote workforces rather than thinking too much about deploying emerging technologies. However, the most recent research we've seen indicates that longer-term digital transformation projects are back on the agenda. But nearly all the studies we looked at cited digital skills shortages as a serious obstacle to digitalisation -- something that clearly needs to be addressed before any similar crisis unfolds in the future.
There have been plenty of warnings about the likelihood of a global pandemic in recent years -- and yet here we are with (at the time of writing, 21 May 2021) an estimated 166 million COVID-19 cases, 3.4 million deaths and (thankfully) 1.6 billion vaccine doses administered, with widespread ongoing disruption to economies and livelihoods.
The driving forces behind zoonotic diseases such as COVID-19 are still in play: widespread consumption of wild meat, and the continuing destruction and conversion of pristine habitats for farming and urbanisation, all of which result in closer proximity of humans and their domesticated animals to previously rarely encountered wild species and pathogens such as SARS-CoV-2. So, from governments to SMBs, there is no excuse for being unprepared the next time a major spillover occurs.