The June 2013 online survey, which was conducted across 2100 small / medium size businesses (each with an annual turnover of US $20 million) in 21 countries, shows that small businesses are gearing up to compete with the big fishes both locally and globally.
SME’s are adopting technologies for driving product innovations, improving operational efficiencies and developing marketing strategies to compete globally. SME’s are also being increasingly impacted by the same market dynamics that have inflicted larger organizations in recent years, such as increased competition, market uncertainties, internal resistance to adoption of technologies, inability to find the right talents and ever more demanding customers.
Global SME Trends
As per Edward Cone, managing editor and senior analyst at Oxford Economics, “The road ahead is well-marked for SMEs. Globalization, transformation and technology will be the hallmarks of successful small and midsize companies.”
International markets beckon - SME’s are focusing not only being more competitive locally, but are also looking to penetrate new geographies. The percentage of revenue contributed by international markets as well as the number of countries that SME’s do business in is likely to grow significantly over the next 3 years.
SME’s are forming international networks – To gain a global competitive edge, SME’s are increasingly seeking out international business partners (suppliers, vendors). The larger and the more profitable SME’s are also utilizing online business networks and platforms for boosting global partnerships. Not surprisingly cloud computing and social media were cited as important enablers in driving international collaborations.
SME’s are in the midst of significant business transformations – 66% of all SME’s surveyed admitted they were in the midst of significant transformations involving their business model, technology and product-mix and marketing strategies.
Technology key to SME global ambitions – 66% of the respondents cited adoption of new technologies as being crucial to sustainable business growth. Significantly, a similar percentage stated that they had the technological capability to compete with the bigger corporations.
Internal resistance to new technologies- Resistance from employees in embracing new technologies such as mobile and social media as well as lack of understanding of the benefits of cloud computing were highlighted as stumbling blocks towards technology adoption.
Key Trends – US SME’s
Going global is the mantra for US SME’s as well, with more than 75% of SME’s estimated to be doing business outside the U.S over the next three years.
To capitalize on opportunities in global markets, 88% of US SME’s have either completed, are currently undertaking or planning to undertake significant transformations in the way they do business ( a figure significantly higher than the global average). 59% of SME’s are actively hiring to support these growth ambitions.
In addition US SME’s are investing in myriad technologies to be able to compete effectively with larger companies. The technologies in descending order of targeted investment value include business management software, business analytics, cloud computing, social media and mobile. Of these, adoption of business analytics and cloud computing is expected to increase the highest. 45% of US firms identified themselves as early adopters of technology.
The survey confirms that global ambitions requires businesses to be cost competitive which may necessitate global outsourcing. It is also interesting to note the resistance from internal stakeholders to adopting new technologies like cloud computing and mobile. Companies that invest in these technologies would do well to make a hard-sell on the benefits to employees of using these technologies.