SMEs divided over digital disruption

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SMEs divided over digital disruption

It is a threat or an opportunity? We talk to businesses on both sides of the digital divide and offer some advice on how to benefit from new technologies.

Australia’s small and medium enterprises (SMEs) are divided over whether digital disruption is a threat or an opportunity to their business, according to a new survey.

The results come from the biannual Voice of Australian Business survey, published by accounting and business advisory firm Bentleys, based on a poll of SMEs across Australia in a range of industries.

According to the survey, 25 percent of Australian SMEs see digital disruption as offering new opportunities for their business, while 29 percent see technological change as a threat.

When it comes to how businesses see the risks and opportunities, the survey found that size does appear to matter.

Small businesses were the most positive about technological change, with 18 per cent seeing it as a significant opportunity, compared to only 8 percent of medium businesses. Likewise, 16 per cent of medium businesses foresee difficulties in adapting, compared to only 6 percent of small businesses.

The survey also found the most common use of technology in businesses is to cut administrative red tape (60 per cent), with marketing (53 per cent), remote access (50 per cent) and managing cash flow (43 per cent) also big reasons for adopting new systems.

The upside of digital disruption

Not surprisingly, how businesses feel about digital disruption varies significantly from sector to sector, with businesses in emerging industries more likely to embrace new technology. We spoke to two business leaders on different sides of the digital divide.

Among the businesses riding the wave of digital innovation is grocery delivery startup YourGrocer, which offers online ordering and same day delivery for local supermarkets and grocery stores, and recently expanded into Sydney.

“We do deliveries from local shops, including butchers, bakers, green grocers and delis. We make it easy for consumers to buy from the awesome local fresh food retailers in their area.” ‎YourGrocer co-founder Morgan Ranieri told BIT.

“The online grocery space is really taking off in the US and the UK, and it’s on the verge of becoming a lot bigger than it is – it’s currently 2 percent of the grocery market but that’s expected to double over the next couple of years. So it’s a really exciting spot.

“We now have 150 shops selling through our website and we’re across Melbourne and Sydney. Most of our customers buy from multiple shops and get everything delivered at the same time on the same day.”

Given the rapid growth of his business, Ranieri is bullish about the opportunity presented by digital innovation.

“In terms of our growth trajectory, we’ve tripled the number of shops that are on our platform in the last six months. We’re growing at around 20 percent month-on-month in terms of our customer base,” Ranieri said.

“A lot of that is driven by the fact that people can grab their iPhone or iPad when they put their kids to sleep and spend five minutes ordering groceries for the week. A two hour trip to the shops can now be done in minutes, and a lot of that is down to people having a computer in their pocket.

“On the shop side, getting those butchers and green grocers selling online is only possible because they have this technology as well. We get shop owners to use iPads to send orders, receive them and control their inventory. Five or 10 years ago that wouldn’t be possible.”

And the downside …

However, the picture has been less rosy in other industries, where digital disruption has undermined long-standing business models. A good example is in the taxi industry, which has been disrupted by ridesharing services such as Uber.

Victorian Taxi Association chief executive officer David Samuel told BIT the impact of digital disruption on his sector is “a very complex question” and the impact on smaller operators as “varying and profound”.

“I would suggest to you that the digital side of it is a profoundly important step for consumers. It’s great to embrace and to extend the existing business model and industry. But I would suggest that the disruption side – from a digital perspective – is really a lot of hype in the sense that the existing industry has always invested in innovative measures, had apps in place long before Uber came along,” Samuel said.

Samuel said that the most disruptive changes have come from Uber’s approach rather than its technology, and that its venture capital financing has allowed it to act outside existing regulatory structures.

“Combined with that, there’s been a slow regulatory response to change in the overwhelming context of consumer desire for change,” he said.

“A lot of our existing regulatory structures are no longer desired by consumers, and as a result, our industry – the incumbent industry – is really held back by those regulations. It’s constrained our ability to compete with new market entrants who have a lot more money and a much more simple business model.”

Make new technology work for you, not against you

Bentleys SA managing partner Michael Ruggiero said a lack of understanding of how to embrace new technologies in a practical way can also lead to some businesses to be wary of new digital tools.

“Modernising your current business operations and processes by integrating digital technologies will help SMEs gain an advantage when it comes to speed, cost and the ease of doing business,” he said.

Ruggiero suggested that businesses concerned about digital technologies should:

  1. Seek professional advice from external consultants such as accountants  on how new technologies can help your business and the practicalities of implementing those technologies
  2. Tap into professional networks to find out what other businesses are doing and how they’ve overcome technology challenges
  3. Identify where new technologies can help speed up time consuming tasks
  4. Research the various options available, by reading reviews, asking for product demos and identifying all the costs involved in deploying the technology.

“But ultimately, it’s about ensuring your business is operating as effectively and efficiently as possible, keeping it competitive, while also positioning it for future growth,” he said.

What impact is digital disruption having on your business, and what steps are you taking to address it? Let us know in the comments section below.

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