What are the barriers to digital adoption for SMEs?

New research by Be the Business – a joint government and industry body designed to make the UK home to the most ambitious firms in the world – has found Britain’s SMEs underwent three years’ worth of innovation in just three months during the coronavirus lockdown period.

‘The UK’s Technology Moment’ report found two in three SMEs believed technology could improve business performance, and 60% of medium businesses were willing to invest in technology post-coronavirus.

The new report, developed with management consultants McKinsey & Company, identifies some of the barriers to greater tech adoption amongst SMEs and what actions are needed to overcome them.

The barriers SMEs face to adopting technology

  • The market and many of the products are built for large enterprise, not SMEs, making it hard for smaller businesses to use.
  • Adopting technology can look too hard and too costly for many SMEs, particularly during a time of crisis and limited finances.
  • SMEs see switching systems or products as high risk due to fears of downtime, loss of data and extra costs.
  • There is often a lack of leadership skills to identify, scope and manage technology projects.
  • Employees can be resistant in adopting new systems.

Action to be taken

  • Accelerating technology adoption will take action from government, suppliers and the business support ecosystem.
  • SMEs need better and independent resources to guide them through their options. A ‘moneysaving expert’ for business technology adoption.
  • Business owners and leaders need training to build their skills and capabilities in buying and implementing technology for their business.
  • Tech suppliers need to develop products suited to small businesses, working sector by sector to identify and develop the services business are looking for.
  • Switching between systems should be easier through industry self-regulation and agreement around common standards and data portability.
  • Government should incentivise tech adoption, whether through research and development (R&D) credits or another instrument to help with affordability.
  • In its reform of the business ecosystem, the government can put technology adoption and the diffusion of technology through every sector at the heart of its programme.

A recent article in the Financial Times suggests the effective use of digital technologies could spur productivity improvements of up to 25% and create wider economic growth, helping with the COVID-19 recovery effort.

The CEO of techUK, Julian David, said: “Research from techUK has shown that 71% of managers and decision makers believe that businesses will become more dependent on digital technologies because of the pandemic.

“Therefore, enabling SMEs and overcoming the barriers both they and suppliers face to adopting new technology will be vital to ensuring that the UK seizes the opportunity that tech can bring to boost productivity, expand markets, and create innovative new products and services.”