According to a new Cisco report small businesses could add $2.3 Trillion to these market’s overall GDP by 2024. Small business could contribute to the economic recovery of the world’s major economies during and post pandemic. The 2020 Small Business Digital Maturity Study conducted by IDC, and commissioned by Cisco, examines eight countries throughout June 2020. (The US, Canada, Mexico, Brazil, Chile, UK, Germany and France). The research sought to understand the opportunities and challenges small businesses face and the correlation between digital maturity and faster recovery.
Together these eight economies could also increase by 5.5% and enjoy 42% faster growth rate through increased small business digitalisation.
To understand the maturity level of small business digitalisation, IDC developed a framework that helps small businesses clearly assess their current capabilities. The framework should help them understand where they are on a four-stage digital index. This ranges from the earliest stage of Digital Indifferent to the most advanced group of Digital Natives. This study is an extension of the APJC SMB study released in July.
“The COVID-19 pandemic has exacerbated the digital divide that was already present in the small business market. It is forcing companies to accelerate their digitalisation,” said Daniel-Zoe Jimenez, AVP, Head Digital Transformation & SMB research, at IDC.
“Small businesses are realising that digitalisation is no longer an option, but a matter of survival. The research shows many small businesses are making progress. They should increase focus on digitalising processes and operations through the use of technologies to ensure business continuity and resiliency.”
Digital maturity index
When it comes to the four-stage digital maturity index, small businesses range widely. Only 25% surveyed in the most advanced stage (stage four) with four percent still in stage one/digital native stage.
- On average, small businesses in North America and Western Europe are more digitally mature than those in Latin America. More than 33% of companies in stages 3 and 4 in both regions.
- Small businesses in the UK, USA and Germany have made the most progress in their digitalisation journeys. France and Canada follow, while small businesses in Latin America lag behind.
When it comes to recovery during and after the pandemic, small businesses that are in the more mature stage three and four have the highest ratio of recovery. These businesses are able to respond faster to changing market conditions, and are growing their revenue at higher rates.
- 16% of those surveyed say they are thriving and feel their businesses are agile and resilient.
- Conversely, 36% of small businesses surveyed are still in survival mode. Fifty percent are focused on growing or rebuilding their business.
- If 50 percent of these small businesses surveyed could advance to the third stage of the maturity index by 2024, $2.3T could be added to the GDP.
Technology is Key to Recovery
COVID-19 has only heightened the fact that digitalisation is no longer a choice for small businesses, it’s a necessity.
- Of those surveyed, 70% of worldwide small businesses are accelerating the digitalization of their businesses due to the pandemic.
Digital technologies are more widely available today and help level the playing field, small businesses face constraints on many fronts.
- Working styles, employee safety, cashflow and sales are the most impacted business areas for worldwide small businesses due to the pandemic.
- Additionally, the shortage of digital skills and talent, cultural resistance to change and lack of budget/commitment are key challenges for small businesses even outside of a pandemic.
SME’s investing in key areas
This crisis has made small businesses more dependent on technology and aware of the importance of digitalisation.
- About 45% of small businesses surveyed expect that over 30% of their business will be digital by 2021.
- 36% of small businesses are planning to invest in solutions that can help their employees work remotely. In addition, 33% will invest in digital technologies to improve online sales.
- 32% of small businesses are also planning to develop a digital strategy with clear business goals. Furthermore 32% are investing in talent and the right skills.
When it comes to technology investment during the next 18 months, small businesses are planning to invest in cloud solutions. They are also planning to build on-premises infrastructure, both software and hardware. Security is critical for small businesses considering security solutions are part of their top three priorities.
Customer experience and collaboration solutions are within the top five investment areas. The most mature small businesses are also prioritising AI/Analytics to drive further competitiveness and reduce human intervention.
Enterprise Times: What this means for business
Small Businesses around the world are learning how to adapt to the current COVID-19 climate. It’s about understanding the ever-changing needs of their customers. They also need to overcome a wide range of business challenges. Social distancing and implementing COVID-19 best practices has thrown up new situations for small businesses to face. The adoption of emerging technology can help them not only survive this crisis, but thrive long after it ends. However, the first question for many is, “where do I start?” Cisco and IDC recommend a number of sensible steps to build resiliency. Developing a technology road map, prioritising the critical business processes to automate and evaluating the right technologies to invest in. All of these activities entails finding the right technology partner for the journey. Keeping up with industry trends and best practice by following editorial on Enterprise Times is also a sensible way of staying on top.