In the face of uncertainty, the natural reaction is always to become risk-averse – and this is particularly true for smaller businesses and SMEs. While there is logic behind this, SMEs will only be able to thrive and expand in today’s world by being more reactive than they are defensive. However, many organisations are held back by rigid and conservative business models, hindering their scalability and stunting their potential growth. Niclas Sanfridsson, CEO at Colt DCS, tells us how SMEs can change tack and use technology to enhance their scalability.
What challenges are SMEs facing right now due to the ongoing uncertainty?
When the pandemic and its consequent disruptions started to take hold, it’s fair to say most businesses simply weren’t prepared for the types of challenges that they would have to face, especially SMEs. The sad truth, as we are seeing now, is that some businesses have not and will not survive this period. In June alone, an estimated 76,300 small and medium-sized London businesses were forced to shut their doors for good.
As time goes on and the future remains unclear, it will be difficult for any organisation to commit to a long-term business plan. The unpredictability of the opportunities and threats on the horizon will leave many reluctant to invest, and growth may seem an impossibility. A lifeline for SMEs going forward will be flexibility and the ability to scale.
On top of this, the ongoing uncertainty has created an economic crisis, to which SMEs are most vulnerable. Many business owners will have been grappling with the various ways they can streamline outgoings. The suggestion of investing in cloud might seem counter intuitive as businesses look to cut unnecessary operational costs. However, the truth is that the benefits and cost-savings cloud infrastructure can bring far outweigh the initial investment in the long-term.
Why do SMEs need to be more reactive than defensive in order to thrive and expand?
Even before the pandemic, the ability of larger companies to invest in digitisation and meet consumer demand for online services had left many SMEs unable to keep up. This has only been further cemented with increased remote working and mass exodus from major cities. It’s clear the future is digital and for SMEs to effectively compete in today’s volatile market, they need to be proactive and invest in the value of data and Digital Transformation.
One area SMEs must be proactive in is their IT infrastructure, specifically in cloud adoption. Moving to the cloud gives everyone access to enterprise-class technology, allowing smaller businesses to act faster than big, established competitors.
Pay-as-you-go services and cloud business applications mean companies can remain lean and nimble, allowing them to thrive amidst any fluctuations. The ability to react and meet demand when it arrives will be crucial for SMEs, as it will offer well-needed buoyancy when demand suddenly dips due to restrictions.
Businesses that maintain a defensive approach will miss out on these opportunities, ultimately stifling their viability through the tough times.
How are SMEs being held back by rigid and conservative business models?
An advantage of being an SME is that you can adapt to changes more easily. Previously, this has resulted in these businesses being at the forefront of innovations in the market. But with 58% of SMEs having not yet adopted cloud, it seems this important part of our economy may be falling behind.
The alternatives to innovative solutions are rigid, conservative infrastructures. While these alternatives can seem like the most risk adverse option, they in fact pose a whole other risk of their own – stifled growth. SMEs simply cannot afford to miss out on potential opportunities, just because they were committed to rigid solutions and infrastructures that can’t scale and support business growth – they need to be agile and open to opportunities as and when they arrive.
SMEs need to prepare themselves for unexpected disruptions or opportunities. Not having the right capabilities available could mean having to go through the costly and time-consuming process of modifying infrastructures as and when changes happen – an inefficient and costly process that SMEs cannot afford to go through in this climate.
The cautious approach taken by many SMEs towards cloud adoption will only impede business growth and limit agility, which will be a vital trait in any business if they are to survive in a post-COVID economy.
How important is scalability for SMEs and how can they create corporate growth strategies that support this?
Scalability is particularly essential to SMEs. While larger companies are often able to weather a storm, smaller businesses can be rocked if unable to quickly scale up or down in response to market changes.
Often, when people talk about scalability, they focus on growth and expansion. The opportunity to scale down when possible is often overlooked. For businesses that are forced to close or limit activity as a result of the new lockdown measures, the option to scale down can be invaluable in helping them keep afloat.
When scalability is effectively achieved, SMEs can operate like an elastic band, expanding or retracting when necessary and at a moment’s notice. For example, take a retailer over a peak sale season such as Christmas, where demand will spike hugely. Retailers will have to scale up their operations in order to cope with the demand and fulfil orders. Meanwhile, when demand comes down in January, it will be beneficial for retailers to scale down and reduce costs until demand rises again.
A large part of flexibility depends on the organisation’s back end operations – is your IT infrastructure built to support your business as it scales up and down? In an age where some applications that are here today could be gone tomorrow, while others will proliferate and require room to grow in the data centre and across geographies, flexibility is increasingly important.
As well as scalability, streamlining outgoings and operational costs are also a top priority for SMEs when creating corporate growth strategies. Cloud data centres offer a combined solution, helping to achieve cost-effective scalability. Costs are predictable and outgoings will never be more than necessary because customers only pay for what they need, as they need it. This eliminates the common operational dilemma of trading scalability for cost effectiveness, which SMEs may face if they invest in more rigid growth strategies.
Why is cloud considered a gamechanger for SMEs and how can they build this into their strategies?
In many ways, SMEs stand to gain the most from cloud solutions. Cloud is the only data storage option that gives businesses the flexibility and agility necessary to grow. Scalable infrastructure and capabilities mean computing resources are available when required and businesses only pay for their use as and when they need it. In this way, SMEs can streamline their outgoings without stifling their growth.
The access to top-quality business applications and solutions the cloud provides is currently setting the standard for business capabilities. Those who fail to adopt cloud will soon begin to see themselves becoming less and less competitive. Having your data stored in a cloud facility also supports internal efficiency, by improving the accessibility of data across the entire business, enabling wide-spread innovation as well as limitless growth.
The resistance to leave behind legacy infrastructures and embrace the cloud can be a tricky hurdle to overcome for many SMEs. The trick here is to determine the best approach for your corporate priorities and goals – ensuring you consider growth plans and potential disruptions. Cloud adoption provides opportunities to realise ambitious growth strategies, by improving efficiency and capability in all lines of operation – from email to data storage and both customer and device management.
What advice would you offer SMEs creating long-term, future-proof strategies using technology to scale?
The main priority of all SMEs right now should be embarking on their Digital Transformation, if they haven’t already. Take advantage of the technologies available and use them to bring longevity and staying power to your business. While investing in IT infrastructure may seem counterintuitive in the current business landscape, cloud is a cost-effective and reliable solution – offering high potential return for relatively low investment.
SMEs need to be open to opportunity. As demand continues to fluctuate under unpredictable conditions, SMEs must be ready to take advantage of the peaks in order to survive the troughs.
It is essential that their operational strategies support this. As part of corporate growth plans, SMEs must set out how they expect to scale their operational platform to ensure they have adequate resources to be able to deliver on their futureproof strategies. And most importantly, to ensure that cloud is at the core of any business strategy.