Adobe Digital Dialogue

Small business invests for the digital future

The small and medi­um busi­ness (SMB) sec­tor has gen­er­al­ly tak­en a util­i­tar­i­an or func­tion­al approach to tech­nol­o­gy, seek­ing effi­cien­cy rather than a com­pet­i­tive edge. But the rise of the dig­i­tal econ­o­my and the dra­mat­ic shift in how busi­ness­es engage with dig­i­tal-savvy con­sumers has upped the tech­nol­o­gy ante for SMBs.

As busi­ness focus moves from ‘cus­tomer ser­vice’ to the high­er plane of ‘cus­tomer expe­ri­ence’ – which increas­ing­ly means across mul­ti­ple chan­nels and touch points – SMBs are respond­ing to both the chal­lenge and the oppor­tu­ni­ty to trans­form their busi­ness­es for the new dig­i­tal mar­ket­place.

As Deloitte Con­sult­ing Aus­tralia part­ner Vanes­sa Matthi­jssen not­ed, busi­ness­es need to cre­ate val­ue “beyond the stan­dard prod­uct” for their cus­tomers.

“Used well, dig­i­tal ser­vices and con­nect­ed prod­ucts enabled by IoT have the poten­tial to thor­ough­ly change the rela­tion­ship between con­sumers, the prod­uct and the brand. They can boost con­sumer engage­ment to deliv­er sub­stan­tial val­ue for both con­sumers and busi­ness­es,” she says.

This impe­tus for SMBs to take deci­sive dig­i­tal steps is reflect­ed in the find­ings of IDC’s FutureScape: World­wide SMB 2017 Pre­dic­tions report, which fore­cast a record $US557 bil­lion in SMB IT spend­ing in 2017, a 3.9% increase over last year. Most notably, that spend­ing will con­tin­ue a shift from hard­ware to soft­ware and solu­tions.

Among IDC’s predictions:

• Cloud ser­vice bro­ker­ing (CSB) will be key for mid-mar­ket con­sump­tion of cloud ser­vices, lead­ing almost two-thirds of glob­al SMBs to choose CSB part­ners by 2019–20.

• Mid-mar­ket firms’ mobile invest­ments will rise by up to 50% in 2017.

• Mid-mar­ket firms will spend 30% of their IT bud­gets on mobile projects in 2017.

• By the end of 2019, 70% of mid-mar­ket firms will imple­ment cog­ni­tive/AI-enabled enter­prise soft­ware and intel­li­gent assis­tants.

• 40% of SMBs will be using a big data and ana­lyt­ics solu­tion by 2018.

An analy­sis by KPMG Enter­prise of mid-mar­ket com­pa­nies list­ed on the Aus­tralian Secu­ri­ties Exchange (ASX) found that com­pa­nies invest­ing in intan­gi­ble assets such as dig­i­tal tech­nol­o­gy are grow­ing their rev­enue at a faster rate than those which are not (+4% growth com­pared with -2%). Prof­itabil­i­ty is also high­er in these com­pa­nies.

KPMG con­clud­ed that ‘access­ing new hori­zons through tech­nol­o­gy is a fan­tas­tic oppor­tu­ni­ty for the mid-mar­ket’. This is par­tic­u­lar­ly sig­nif­i­cant, giv­en that the mid-mar­ket sec­tor rep­re­sents more than 65% of the Aus­tralian econ­o­my.

Gen Y impact in Asia

Alan Lau, a for­mer senior part­ner in McKinsey’s Hong Kong office, has not­ed the gen­er­a­tional impact on digi­ti­sa­tion in Asian busi­ness­es.

Lau, who is now based in Shen­zhen, lead­ing the cre­ation of a new fin­tech busi­ness for Chi­nese inter­net giant Ten­cent, says coun­tries such as Chi­na, Indone­sia and India “are real­ly push­ing the bound­aries and inno­vat­ing the most” when it comes to dig­i­tal trans­for­ma­tion.

“Dig­i­tal is not just about hav­ing a web­site… it’s about digi­tis­ing your entire enter­prise. It’s digi­tis­ing the process and the cus­tomer expe­ri­ence, mod­ernising your IT, inject­ing big data ana­lyt­ics and AI into your core oper­a­tions,” Lau says.

“Hav­ing vision­ary lead­ers, as many Asian com­pa­nies have, helps tremen­dous­ly. Many of these are founder-owned com­pa­nies. They’re first-gen­er­a­tion entre­pre­neurs and they have the skills and com­mit­ment to dri­ve through dig­i­tal trans­for­ma­tion.”

The tran­si­tion to a 21st Cen­tu­ry dig­i­tal busi­ness requires vision, com­mit­ment and invest­ment from SMBs. For­tu­nate­ly, the IDC report shows that many busi­ness­es are now embark­ing on this vital dig­i­tal jour­ney.

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