Effective IT use to fuel SME growth and jobs by Orlando Ayala, Corporate VP and Chairman of Emerging Markets on 10-Oct-2013

In a recently-published report, Ahead of the Curve: Lessons on Technology and Growth From Small Business Leaders, it was shown that if more SMEs employed the full range of available IT tools, including basic productivity software, Internet connectivity and new Cloud-based services, SME revenue could grow by a combined £479 billion in just the US, Germany, China, India and Brazil, the five primary countries surveyed. These same SMEs could also create some 6.2 million new jobs. What’s more, it is believed that this association between IT adoption and growth would be consistent in countries across the world, including the UK.

The new research, commissioned by Microsoft and independently conducted by The Boston Consulting Group (BCG) found that over the past three years, IT-enabled SMEs, which BCG refers to as 'technology leaders', grew revenues 15 percentage points faster and created twice as many jobs as SMEs that use less technology.

"SMEs are a critical growth engine for jobs and economies today and we wanted to better understand the impact of technology on these small businesses," said Orlando Ayala, Corporate Vice President and Microsoft Chairman of Emerging Markets. "Since the economic crisis, many economies have struggled to return to strong economic growth and to create new jobs and this research suggests strongly that greater use of advanced IT by SMEs can potentially boost both growth and employment."

The BCG report argued that the latest wave of technological advancement, such as cloud services, brings potential for the most far-reaching innovation and business growth ever, creating an opportunity for more SMEs to achieve the growth rates of technology leaders by leveraging technology to fuel productivity and growth. The research revealed that high-performing SMEs stayed ahead of mainstream IT adoption, riding new waves of advancement to improve productivity, connect with new customers and markets, particularly outside their own region or country, and compete with much larger players. These companies employ the full range of available tools — from productivity software to Internet connectivity and cloud-based services.

But, at the same time, the research revealed a risk, because SMEs' adoption of IT is decidedly uneven. Across the world, many SMEs and their customers don’t have access to modern broadband networks and many lack the skills to get the most out of IT. Many SMEs are also still using large amounts of old and less efficient hardware and software. New devices are also sometimes very expensive due to high import duties, and SMEs are concerned about online security and privacy. But the growth prospects described in the study are too important for governments and the IT industry to ignore.

"As a small, yet rapidly growing tea company we have experienced first-hand the benefits that leveraging technology can have on our business," said Adam Soliman, Director and Founder of Charbrew Tea. "We work with customers and suppliers around the world from the US to Sri Lanka. But by leveraging cloud-based technologies such as Office 365 and Skype, we have been able to communicate with these individuals and build trust without the need to have a continual physical presence there. This has helped us reimagine our business model, allowing us to focus more on innovation and delivering the best products to market, in the quickest time possible. Technology has never been more accessible for SMEs and if they are able to embrace it, they can compete on a level playing with large corporations."

According to a recent The Digital Imperative [PDF] study by the Federation of Small Businesses, 85% of small businesses in the UK identify investment in new technologies as a key driver for business growth.

The risk of a growing technology gulf is relevant to governments looking to maximise economic growth, and it is an opportunity for policymakers and the IT industry to implement strategies to remove barriers to IT adoption by addressing small businesses’ top concerns about using more technology.

The results of the BCG survey of more than 4000 SMEs in five of the world’s largest and most diverse economies were consistent across all industry sectors, but there were some surprises from emerging markets and with women-owned firms. Technology leaders in emerging markets grew jobs and revenue faster than in developed markets and are even quicker than their developed market counterparts to embrace new tools and woman-owned firms are among the most technically advanced, innovative and successful firms interviewed.

"What we are seeing is that technology can help level the playing field for groups with historical disadvantages in business and we would like to see more SMEs benefit from being technology leaders," Orlando said. "Microsoft is committed to enabling people from all over the world and bridging the gender gap in computing careers with tools and programs to provide opportunities in the computing field for business growth and innovation."

"By implementing the right technology, entrepreneurs can really punch above their own weight," commented James Highgate, Founder and CEO at Green Fuels. "As a growing dynamic CleanTech business, leveraging technology has really helped us expand our business by making us more collaborative and enabling us to operate internationally without the constraints associated with heavy amounts of investment and, importantly, reduce our overall carbon footprint."

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