Can you future-proof a small business?

Are Australia's SMEs ready for the future?

Not every small business is ready to bound into the cloud, but the lack of digital take-up among SMEs in Australia and New Zealand is alarming.

There are two contradictory sides to the technology story for small businesses in Australia – those trying fervently to sell hi-tech solutions to the sector and those in the sector fervently set on ignoring them.

Despite its many claims, cloud computing is not so advanced that it can do everything. Yet with Australia’s National Broadband Network (NBN) now spreading its fibre-to-the-node-tentacles, new ideas are streaming in, allowing businesses to work faster and more accurately.

But the cloud is no cure-all. Many specialised industries must still use “old school” legacy software systems. There are few medical practices or gyms in Australia that can fully use the cloud. They will continue to need proprietary software run by servers until cloud applications are developed.

Yet the talk from tech proponents is that small business can have the technology once used by the big boys at a fraction of the cost. New enterprise resources platforms, running everything from human resources management to stock-tracking and invoicing, are now cheaply available to all, they proclaim. Size does not matter.

Who is adapting best?

If it’s the way of the future, few Australian small to medium enterprises (SMEs) are listening.

CPA Australia’s 2014 Asia-Pacific Small Business Survey compares SME technology uptake in the entire Asian region. In Australia and New Zealand, most small businesses still can’t sell a product online, let alone work miracles with cloud-based software. Indeed, Australia appears as the digital refusenik of the region.

The CPA Australia survey found that 54 per cent of Australian businesses do NOT use social media, compared with just 4 per cent who don’t in mainland China, 6 per cent who don’t in Malaysia and 16 per cent who don’t in Singapore. Sixty per cent of Aussie businesses do NOT sell products or services online. Proportionately, that’s 20 times fewer than in Indonesia.

Gavan Ord, CPA Australia’s business policy adviser, says Australia’s small businesses are hamstrung through a combination of commercial and demographic reasons. Emerging economies, he says, aren’t saddled with widespread legacy systems, so have been quicker on the new technology uptake than Australia.

“SMEs in Vietnam, Indonesia and mainland China are easily adaptive to the new digital economy,” Ord says.

“Our own survey show this. And there’s another distorting factor in Australia – a high proportion of businesses are 20-plus years old and a high proportion of business owners are 60-plus years of age.”

The future of small business technology

Yet despite a lack of take-up in Australia, the new-fangled technology keeps rolling in. There is the growth of mobile payments, the use of mobile broadcasting apps such as Periscope and Meerkat, and the cross-breeding of consumer apps with business apps.

Technology commentator Sholto Macpherson mentions Chaser, a new debtor management system that sends customer invoices automatically over critical periods without using “robotic” emails.

There is also a proliferation of business intelligence dashboards which can be appended to cloud accounting systems to collate financial, CRM (customer relationship management) and analytical data and keep a business performing at an optimal level.

“These dashboards display everything you need to know and offer KPIs on integral parts of a business,” Macpherson says.

It’s not just the cloud. New apps are there to improve your business connections. One example is Referron, a networking app which has a reward system for business referrers who refer others on, ad infinitum.

“It’s a way of tracking and measuring the breadth and width of your referrals,” says its co-founder Ivan Kaye.

Australia appears as the digital refusenik of the region. 

Systems such as Fleetmatics Work and GeoOP are revolutionising workflow processes and job management for tradespeople. There are point-of-sale restaurant management systems such as Lavu, which can drill right down to the types of food ordered, invoices issued and payments made. There are project collaboration tools such as Basecamp, which let people tick off aspects of a project in real time.

Tony Chadwick, chairman of cloud software consultancy the Rype Group, says few people realise the extent to which new innovations are feeding off each other, in particular the number being developed to work with Xero.

“People don’t realise that Xero is becoming the Apple of small business,” Chadwick says. “It’s creating its own ecosystem of workflows.”

“You just have to look at what can be added to it. There are invoicing systems like GeoOP, or point of sales systems like Kounta, Vend or Cin7 – the latter a point of sale, inventory management and online e-commerce store all rolled into one. All of them flow seamlessly into the Xero cloud accounting system.”

While the current upload speeds for broadband in Australia remain slow [6.8Mbps in Australia against a global average of 11.2Mbps], and download speeds [17.7Mbps average in Australia] are only par for the course, it’s unlikely that SMEs will be jumping over themselves to adapt or perish. But will the NBN turn things around?

Andrew Twaits, who runs digital strategy consultancy The Strategy Canvas, says many less tech-savvy businesses have no support structure in place to help them exploit the opportunities and guard against the risks of being exposed to increased competition. While some businesses will thrive and conquer in a new super-fast digital universe, others may fall by the wayside.

“It’s the concept of creative destruction,” Twaits says.

“The take-up rates and exploitation rates are never equal and smooth. Bigger businesses will leave smaller ones behind and some will be able to feed off the customer bases of small businesses who don’t adapt. There could be damage.”

Read more: 9 workplace trends of the future

December 2021
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