Research uncovers barriers to SMBs tech adoption
Small business owners have been slow to react to tech adoption, citing lack of time or resources as a reason for staying behind the curve.
A recently commissioned One Step study revealed that small businesses are holding back on technology investment as they face a range of barriers. It also revealed that some avoid adoption due to concerns over data security and the additional fees it would cost them.
The study revealed that small business owners most commonly cite the cost of technology, with almost half (48%) saying it is too expensive for them to invest in new software or hardware.
The second most common barrier to technology adoption is the perception that there is no need for change. The third barrier is the hassle factor, as it is easier to stick with what is available, while the fourth is choice paralysis. There are just too many options, and it is overwhelming – therefore much easier to leave for another day.
However, small businesses are concerned about being left behind in a digital world and are struggling to keep up with their larger competitors.
Singapore SMEs leading the way
In the Xero survey, 4,200 small business owners and decision-makers in six markets found that Singaporean SMEs are digitization leaders on international ground, being:
- Most confident embracing new technology in their business
- Most excited about the idea of embracing the latest technology
- Most likely to have upgraded technology as a result of grants and subsidies
- Most likely to have adopted a new technology in the last 12 months
The report titled Behavioural barriers to technology adoption amongst small businesses – and how to overcome them reported that the US and the UK are trailing behind Singapore’s SMEs, with only five in ten being most confident in embracing new technology in their business and six in ten being excited about the idea of embracing the latest technology.
Digital technologies can offer ASEAN small-medium enterprises (SMEs) new opportunities to participate, innovate, expand and improve productivity in the global economy.
The use of digital technologies can also make it easier for SMEs to access skills and talent, for example, through better recruitment sites and outsourcing critical business functions, such as through cloud computing, all of which can help improve performance.
The study also found that small businesses worldwide that adopt new technologies quickly have an average of 120% more sales and 106% more productivity. Technology advocates or business owners are 27% more likely to wake up enthusiastic about their work, and 16% are more proud of their business.
Tech adoption woes in small businesses
A document titled Promoting the Productivity of SMEs in ASEAN Countries highlighted that SMEs tend to lag behind larger companies despite the potential advantages of tech adoption. This is because of limited financial resources, making it challenging to adopt new technologies, including typically expensive ICT tools.
Another critical barrier is human capital (including management expertise) and organizational capital, as investments in new technologies often require investments in complementary knowledge-based assets—workers or management who can help them get the most out of the new technology.
Even SMEs face particular challenges when dealing with data protection and digital security risks, mainly due to a lack of sensitivity, resources and experience to effectively assess and manage the risks.