Small businesses, big gains: Why digital culture matters 

Digital investment is reshaping the UK’s economic landscape. Ross Pearson at Virgin Media O2 Business argues that a strong focus on digital culture will be necessary if SMEs are to make the most of these changes

 

SMEs have just missed out on a potential £61.4 billion. And no, I’m not getting my billions and millions mixed up. New research on the impact of digital culture from Virgin Media O2 Business and Cebr highlights an untapped opportunity. The findings reveal that if all UK firms had maximised their usage of digital technologies between 2021 and 2023, they could have contributed an additional £111 billion to the UK economy. Not only that, SMEs could have contributed £5 billion more to the economy than large firms. 

 

SMEs make up 99% of businesses in the UK. Although they are sometimes overshadowed by larger businesses in economic discussions, SMEs can leverage technology to significantly boost jobs and UK productivity. By adopting tech, they can attract and retain top talent, enhance productivity, and improve efficiency - all of which are essential for driving economic growth.

 

The UK government Autumn Budget’s focus on boosting productivity and supporting economic growth reinforces the importance of SMEs embracing technology. By doing so, they can align with these national goals and also highlight their critical role in the economy’s future success.

 

Why a strong digital culture matters

SMEs have a unique advantage over larger corporations. Tech savvy SMEs can adapt quickly to changes as smaller hierarchies mean that decisions can be made faster. This agility enables SMEs to be early adopters of new technologies and keeps them a step ahead of other businesses. 

 

Additionally, SMEs play a huge role in our economy. For example, increased tech adoption between 2021 and 2023 could have created 676,000 new jobs, including over 313,000 new roles in small and medium-sized companies.

 

Despite their crucial role, SMEs are less likely to report having a strong digital culture compared to bigger firms. Only 59.3% of small digital followers report a strong digital culture, compared to 70.3% of medium-sized digital followers and 84.7% of large digital followers. Businesses that have a strong digital culture are more productive and grow faster than those that don’t, with higher revenue and happier employees and customers.

 

A lack of faith in how to effectively adopt digital technologies is hindering business growth, customer experience and employee satisfaction. 

 

The importance of a strong digital culture should not be underestimated. Digital culture, more obviously, allows businesses to achieve higher productivity and efficiency. But it should encompass more than just the adoption of advanced technology or digital tools. It should also involve a proactive approach measuring success across various non-financial areas such as employee engagement, customer satisfaction, innovation and operational efficiency. These factors are also likely to improve.

 

Invest in digital expertise

For smaller businesses, making the right choice on tech solutions can feel daunting without proper guidance. With technology investment comes both high risk and high reward. While implementing tech can be expensive, the outcomes often justify the investment. For example, by creating jobs, boosting productivity, and contributing significantly to the economy.

 

Additionally, 80% of organisations agree that inadequate or outdated technology is holding back organisational progress and innovation efforts. 

 

Consulting an external partner can help bridge this gap. They can offer both advice and solutions, and ongoing help past the point of implementation. The right partner will also be able to guide you to a personalised digital approach, one that meets the specific needs of your business. SMEs can be more responsive to individual levels of digital literacy in the workforce which can also have a positive impact on talent attraction and retention.

 

Equipped with digital expertise and agility, SMEs can gain a competitive edge over larger corporations, where change is often slower due to complex systems and larger teams. Taking a consultative approach can help SMEs to find the right path forward, inspire confidence and offer a fresh perspective.

 

Rethink how you measure ROI

Compared to large businesses, SMEs tend to have more limited access to finances. Determining the best way to invest in technology effectively can be challenging, especially with often high upfront costs and uncertainty surrounding return on investment (ROI). But it is important for SMEs to consider how old tech might be holding them back: 70% of young people report that they have left or would consider leaving their company due to inadequate technology.

 

It is well understood that outdated tech can slow teams down. Older systems often require more frequent maintenance and repairs, increasing operational costs. Outdated user interfaces can also be difficult to navigate and use, resulting in a lack of productivity and efficiency. 

 

When funding for legacy systems is reduced, it can free up resources to invest in and implement the right new technology solutions. Done well, these investments can streamline processes, improve employee communication and enhance customer experience. But getting the right tech is only the first step. Empowering your people to use it is also crucial in this transition to a stronger digital culture. 

 

Transform your team  

Sometimes the tech is in place but employees can be bottlenecks for progress, as they struggle to adapt to new systems and processes. A mindset shift is needed to get the full benefit of new technologies.

 

This not only helps SMEs unlock their full potential but also increases the likelihood of achieving a strong ROI and boosting productivity. This is highlighted by the Barclays Business Barometer, which reveals that the UK’s most innovative SMEs allocate 48% of their annual revenue to technology, with 45% doing so to boost productivity and 44% to future-proof their business.

 

It can be hard to change your people’s ways of working especially if they are resistant to change. However, they can be encouraged to change when the benefits of technology are clearly evidenced. Within smaller teams it can be easier to make these changes and identify which users need the most support. SMEs have a greater ability to foster a culture where employees feel valued and empowered, making them more receptive to change and development.

 

Improving digital skills is key for those who do not feel confident when using new technologies. Training can boost confidence, making staff more likely to embrace and effectively use the technology implemented. Both digital leaders and followers preferred regular digital training programmes for upskilling their employees to other methods, but digital leaders were 15% more likely to use them. 

 

By capitalising on these changes, SMEs can put themselves on the front foot for the future of work and show that tech-savvy SMEs are the backbone of the UK economy.

 

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Ross Pearson is Head of Small Enterprise Sales at Virgin Media O2 Business 

 

Main image courtesy of iStockPhoto.com and metamorworks