Digital transformation done right can change every business for the better. But how do you know what systems or services to buy if you’re part of a small business that doesn’t have a seasoned IT professional on your payroll?
While big enterprises will benefit from the experience of an IT director with a dedicated technology team, smaller organisations might not have the financial resources to hire an IT manager, never mind a CIO.
In these situations, it can be tough to know which tools to buy.
Rather than tapping into the knowledge of an in-house IT executive who understands the market, many SMB management teams have to make their own technology spending decisions.
The results can be mixed at best, suggests Laurie McCabe, co-founder and partner at tech analyst SMB Group.
“In our surveys, the one thing we always find out is that small businesses say just figuring out which solutions are going to best help their business is their top technology challenge.”
With limited access to IT market expertise, many SMBs resort to searching the web. In an age of ever-increasing technology options, that hit-and-hope technique is unlikely to produce great results, says McCabe.
Her firm’s research shows companies with fewer than 100 employees struggle to enact successful digital transformation strategies: “And the reason for that comes down to bandwidth.”
Here’s the big problem: when small businesses should be using technology to exploit their inherent agility and beat slow-moving enterprise rivals, too many SMBs lack the dedicated technical know-how to make timely and effective IT spending decisions.
So, how can these smaller companies boost their technology standing? Here’s five suggestions from the experts.
1. Consider a temporary fix
With many SMBs are feeling the heat right now due to inflation, recessionary pressures and rising bills, McCabe says appointing a permanent tech chief is way down the priority list.
“The first gut check for small business is ‘keep the lights on’ – they want to keep the people they already have, never mind appoint someone senior,” she says.
One way to fill the gap is by appointing an IT leader on a consultancy basis. Demand for interim CIO expertise grew 83% between 2020 and 2021, according to Business Talent Group.
Some smaller firms might choose to think about appointing a virtual CIO (vCIO), where a contractor serves as an organisation’s IT leader in a remote or virtual capacity.
Recruiter Nash Squared suggests working with a vCIO allows companies to bring in a knowledgeable executive without the recruitment processes and costs that accompany a permanent hire.
2. Join industry associations
While some small firms might to look to hire an IT director on a temporary basis, McCabe says most will want to avoid bringing in a costly consultant.
“There’s a sliver of venture capital-backed tech companies with a CIO or someone with an equivalent title, but not the vast majority of small firms,” she says.
For SMB owners and managers who want technology expertise without high fees, McCabe suggests a different route.
“I’m a big fan of industry associations and regional technology councils. They can be really great because people in these organisations are in businesses like yours,” she says.
“Do the networking, so you have people to call on and say, ‘Hey, I’m trying to solve this. Have you done this? What did you do?’ And sometimes what you’re going to learn is that someone else tried something and it really didn’t work. That’s invaluable in itself.”
3. Look for specialist schemes
Tina McKenzie, policy and advocacy chair at the Federation of Small Businesses (FSB), says adopting technology successfully within a workforce is more important for businesses than simply purchasing technology.
“Leadership and management skills as well as digital skills are crucial, these skills should come paired with digitalisation,” she says.
McKenzie says there’s a range of schemes small firms can use to build their expertise: “There are partnerships with organisations like Google that work with SMBs to develop the skills they need in this space.”
The FSB also encourages UK small businesses to try the Help to Grow: Digital scheme, which is a government-backed initiative to help SMBs choose, buy and integrate software.
Finally, McKenzie points to skills bootcamps that have been established by the UK government as a fast and effective way to improve digital skills. “This is an initiative that many SMBs have found useful. We would like to see these maintained and enhanced in the long run,” she says.
4. Get yourself out and about
It’s easy to get bogged down by the day-to-day concerns of running a small business, especially at a time of growing macro-economic pressure.
However, it’s also important your team gets out into the wider community and speaks with different people and organisations to improve both market awareness and the market’s awareness of your business.
“The challenge for smaller organisations is developing brand and trust,” says Bev White, CEO of Nash Squared. “Where there are so many players, how can you stand out from the crowd when few people might know who you are?”
Her firm’s research suggests twice as many SMBs (23%) as larger corporates (10%) are extremely or very effective at scaling good ideas and stopping poor ideas quickly.
SMBs should be on the lookout for novel ways to source technological solutions to business challenges, so go to conferences, attend meetups and take part in specialist events.
5. Be prepared to approach big businesses
Looking beyond the enterprise firewall shouldn’t mean staying with the confines of the small business sector.
Increasing numbers of blue-chip businesses recognise that smart ideas can bubble up from all kinds of organisations, including smaller firms – and your business could be next.
David Schwartz, VP of PepsiCo Labs, says his company is always searching the market for smart solutions to its business challenges – and his company likes to think about how both parties can benefit from a closer relationship.
“Startups have said to us, ‘We would love it if we could have an expert from your team spend a few months to share how things work, so we can further perfect what you want’,” he says.
“And then you see the PepsiCo people think ‘that’s what we want’. It’s all about learning and focusing on where you could both have mutual success.”