This article was first published in the May 2020 Africa edition of
Accounting and Business magazine.

Technology has disrupted organisations of all sizes, but there is continued concern that many SMEs are not making the most of digital technology. According to a 2018 Deloitte report, this applied to 80% of US SMEs.

ACCA’s 2019 report Scale-up success says 40% of SMEs are likely to embrace new technology in the next year, while Deloitte reports that 23% are planning to adopt in the next five to 10 years.

So why have SMEs been slow to act? The evidence is that efficiencies brought by technology create significant value for companies. Deloitte’s 2019 report The Performance of Small and Medium Sized Businesses in a Digital World found that 40% of SMEs surveyed reported customer growth and 70% reported revenue growth on adoption of new technology.

However, the report found that 75% of SMEs face at least one barrier to the increasing use of digital tools: 45% cited skills/knowledge as the major challenge. The OECD reports that SME staff are 50% less likely to be trained in digital technology. Another obstacle is funding, highlighted by 38% of the SMEs surveyed by Deloitte – not just high investment and maintenance costs but also costs of upskilling employees, monitoring cyber-risk, etc. Security fears are also a barrier (31%), with SMEs reporting they lack the resources to tackle the threat from cybercrime.

SME owners are often unaware of how adopting new technology can help their business. Some are just happy with the status quo. Others fear change, seeing technologies as irrelevant or ineffective, without having evaluated the benefits.

The disruption of Covid-19 may prove a catalyst for change. As trusted advisers, professional accountants are well placed to guide the business through digital transformation. Here are some actions to consider.

  • Evaluate current performance, looking at critical success factors, key performance indicators, balanced scorecard, etc, and note areas for improvement.
  • Define or remind others of the organisation’s purpose and vision, and think strategically when identifying the objective of the proposed investment in technology.
  • Develop a business case for the investment, identifying the various benefits for different users. The benefits should be measurable (financially and non-financially) and progress monitored. Outline the investment costs (including recurring costs) and the risks. After implementation, review continuously.
  • Communicate the plan to all – getting commitment and engagement is vital.

Some centralised digital support is important; for example, networking and mentoring initiatives can help SMEs embrace change. Given the significant contribution SMEs make to the economy, the competitive advantage gained will be for the benefit of all.

Warda Hassan Ahmed FCCA is a finance professional.