Small and medium UK businesses are being held back by a reluctance to adopt new technologies, experts have warned.
Experts from TelephoneSystems.Cloud have warned that the future of many SMEs is at risk after recent technological changes across the wider business sector.
They warn that thousands of small- and medium-sized UK businesses are struggling to adapt to these changes with many finding their businesses are struggling as a result.
Now the experts are encouraging SMEs to come to terms with their technophobia and to adopt new innovations such as cloud and VOIP technologies.
Those failing to evolve with the digital landscape are losing out on valuable business because of their fear of change and reliance on outdated systems.
They believe that fear of new technology is still deeply rooted in many leaders who are deterred by a lack of in-house tech knowledge and resistance to intimidating change.
Juliet Moran, from TelephoneSystems.Cloud, said: “Technology may seem scary, but decisions should never be based on what leaders are comfortable with.
“Rather, the decision to change should be based on what will most benefit a company, aka the effectiveness of a system for operations, efficiency and profitability.
“The business owners that have seen earlier technological opportunities have had the advantage of accessible and streamlined systems and are now taking huge strides.
“It can be used for many benefits, including expanding customer base, improving internal and external services, minimising admin, optimising markets and streamlining communication threads.
“There was once a time when people only shopped on the high street and watched films on video cassettes, but with time these industries have transformed, and the companies that didn’t adapt and embrace the change were left behind.
“This will be the case for SMEs failing to keep up because new technology has been proven to revolutionise business operations.
“Being on the wrong side of the digital divide will only continue to have negative implications for businesses as success continues to balance on their ability to modernise.”
Whilst over 50% of SMEs have accelerated their Digital Transformation in recent years, those failing to adapt are now falling behind. Research has revealed that 48% of SME leaders still lack a clear tech investment strategy.
The success of markets like cloud computing in recent years has demonstrated that technology can be used within businesses to reduce costs while improving overall efficiency and productivity.
The public cloud computing market is estimated to reach over £533 billion in 2024, as more businesses realise these technologies make work easier and more cost-effective, not harder and more expensive.
Without innovating with technology, UK businesses will fall behind. Finding technology partners that can help assist with the continual change can be really helpful for the SME business.
It is important to understand that today, nothing is static with technology. Businesses need to embrace the idea of continual change and innovation, overcome fear and build it into their way of working.
Heath Huxtable, Executive Head, Braintree:
As technology keeps advancing, small and medium enterprises (SMEs) face a big task – using new ideas to grow and stay strong. But there is a big problem they often face – technophobia.
The evolution of technology brings numerous benefits for companies, including increased competitiveness, streamlined operations and improved efficiency. Despite these advantages, SMEs often seem to be relatively slower adopters of evolving technology, a trend that might be attributed to technophobia.
This slow uptake can be attributed to a variety of factors.
Pricing is dollar-based
The dollar-based pricing can impact the uptake of new technology. As an illustration, just this year in South Africa, there has been a noticeable ‘tightening of the IT belt’, as companies wait to see what might happen with the exchange rate.
The consumptive nature of technological tools and cloud computing platforms is also a factor, as many businesses end up paying more than they were initially quoted, because of increased consumption. Ironically, the more a business is consuming innovative technology is also an indication that the business is growing. The important factor here is to plan for it and budget for it correctly.
Business readiness
Many companies also want to implement the newest cutting-edge technology when they might not be ready, and when their budgets, infrastructure and expertise do not align. A forward-thinking IT solutions provider will rarely recommend that a company immediately move its entire infrastructure onto one platform. Before recommending any size or type of digital migration, they will look at the pain points and high risks associated with the current tech infrastructure, and advise accordingly, keeping the customer’s needs and budgets top of mind.
Perceived risk
SMEs are also hesitant about putting all their eggs into one vendor basket. Fortunately, the tendency to be one product or platform focused is changing. With hybrid- and multi-cloud solutions now at play, businesses can utilise a host of options. As an example, a company might decide to migrate or deploy all their software applications onto a specific cloud platform, while using a different provider for data recovery and a different solution as their billing platform.
Tech team hesitancy
Organisations within the SME space have their own inhouse IT teams.
All too often, while the business itself might see the opportunities of implementing new technology, the IT department might be hesitant, because of fears of automation or job displacement.
Far from replacing jobs, when an IT solutions provider partners with organisations, specifically the IT departments, they need to illustrate how the latest digital solutions can enable them to work differently, more productively and alleviate the ‘heavy lifting’, enabling them to become a lot more strategically involved in the business. Furthermore, IT teams can upskill themselves by investing in the relevant certifications.
There are so many benefits to adopting the latest software solutions and cloud services instead of maintaining on-premises infrastructure. Fear of change and a reliance on outdated systems can be overcome by SMEs equipping themselves with the right knowledge, partnering with the right solutions provider and if need be, adopting a gradual transition to align with budgets and business-readiness.
Rodolphe Malaguti, Product Strategy and Transformation, Conga:
It’s understandable that SMEs are cautious or sceptical when it comes to adopting new technology. Business leaders are often set in their ways and have their own idea of how the job should be done. They are often working with smaller teams and on far tighter budgets, so they simply cannot afford for new technology solutions to go wrong. Naturally, there are temporary setbacks or constraints, but those SMEs that fail to evolve with the times and explore new ways of working will miss out in the long run.
In today’s business world, change is a near constant, but technology can help businesses adapt more quickly. Those SMEs that still rely upon paper trails, legacy systems or even a blend of new and old technologies will find it almost impossible to manage their legal risk effectively. Older systems do not communicate well with others and data is often poorly managed or misplaced throughout its lifecycle, which leads to operational inefficiency and possible revenue leakage. From a compliance point of view, this presents a huge risk to the organisation and the potential loss of future business.
Legacy systems are also far more susceptible to cybersecurity threats, system errors and crashes. Equally, the lack of updates or patches will mean that current software will likely no longer be kept up to date with the latest legislation and data regulations. Customers will also be reluctant to work with any business that is opposed to change or new ways of working. Therefore, it’s in business leaders’ best interests to adopt new technology or at least review their current operational model and identify areas where it can be improved. Ultimately, it will drive new business leads and accelerate growth.
SMEs should first establish their digital maturity, that is, where they currently stand with regards to their Digital Transformation journey. By reviewing their operational model, they will be able to identify the processes that work well as well as areas of improvement, which will in turn, help them to better understand the technology and change that is needed. Most importantly, Digital Transformation is all about baby steps. All projects need to be communicated with teams in advance and rolled out in a phased manner, across one department at a time, to maximise uptake and minimise disruption.
Craig Cook, Principal Engineer, Catapult:
It’s easy to see why small- and medium-sized enterprises (SMEs) with limited budgets are nervous about wasting resources, damaging their reputation or losing their competitive edge by switching up their IT infrastructure. Even so, being risk-averse and continuing to rely on legacy systems isn’t the answer – it can even be damaging. Inefficient, outdated systems may struggle to integrate with modern technology, causing operational issues, increasing costs and preventing SMEs from evolving with the digital landscape.
Customer needs are shifting all the time. A 2022 Accenture survey of 25,000 global consumers found that 60% of respondents said their priorities are changing based on global events, like the pandemic. So, modernisation and adaptability are key to good customer experience (CX). Yes, legacy migrations can be complex with integration issues and extensive data migrations, but these are risks worth taking to be able to respond to customer demands faster – and stave off the competition.
I sometimes see SMEs hesitant to replace legacy systems because of misconceptions – many fear a loss of service to their existing customers or worry that the migration will be incredibly costly. However, with careful planning, SMEs can minimise any loss of service during migration and, in many cases, migration is far more cost-effective than sticking with outdated infrastructure, which can be very expensive. According to Gartner, by 2025 companies will be spending 40% of their IT budgets on maintaining technical debt, which includes the cost of maintaining legacy systems.
We find SMEs have the best chance of success by becoming agile, deploying regularly and moving away from legacy architecture. Just look at Microsoft – the company has launched 16 versions of its operating system since 1985, and this doesn’t include the security updates that it releases on the second Tuesday of every month on ‘Patch Tuesday’.
Successful migration means investing in a comprehensive, well-executed migration plan. There are several key steps. First, organisations should understand what business objectives they are trying to achieve. Also, what opportunities does moving away from their legacy stack unlock, and what can they now offer their customers? Then, IT can set realistic objectives of what the business expects to achieve, such as enhanced security and scalability – both crucial for the company’s Digital Transformation. We typically suggest that SMEs start with a high-level plan and then deliver it in increments.
For many companies, finding the best way to upgrade their systems can be challenging. So, it helps to work with a hands-on software partner that can guide them through the migration process. At Catapult, we’ll work alongside our clients’ IT teams, ensuring updates align directly with business goals and meet the needs of internal users and customers. Also, our expert consultants and software testing engineers can help keep plans on schedule and upskill teams, preparing our customers for future migrations and future-proofing operations.