BTN News: Can a small or medium-sized enterprise (SME) thrive without embracing technology? Ignoring technological advancements and sticking to the “if it ain’t broke, don’t fix it” mentality might seem appealing to some business owners, but this approach could significantly hinder growth and competitive edge. According to MartÃn Piqueras, a professor at OBS Business School and a digital strategy expert at Gartner, this question is akin to asking if we can function without mobile phones, hospital robots, power steering, or credit cards: “These are advances that have become part of our daily lives, making our existence more complicated without them.” In the business world, neglecting technological investment can stunt growth and leave businesses lagging behind their competitors.
Although the balance between technological options and obligations is increasingly tipping towards the latter, it’s crucial to understand why and where to invest. “SMEs need to increase their appetite for technology, both in understanding the diversity of solutions available and the intensity with which they are applied,” Piqueras emphasizes. Today’s technology is accessible, affordable, and user-friendly, tailored to various needs and budgets.
Key Considerations for SMEs
Oriol Truque, a professor at the online-based Universitat Carlemany in Andorra and director of the tech consultancy Abalit Technologies, warns against starting from the top down: “First, organize and define your business processes. Make sure everything is clear and delineated. Then, see which technological tools can optimize these processes. Following this path guarantees benefits.”
Once this groundwork is laid, Stella Fernández, commercial director at Aczeda, a firm specializing in technology leasing, recommends seeking advice: “It’s important to get guidance on which technological domains and organizational areas will yield the best return, analyzing where to invest and understanding what digital initiatives similar companies are undertaking.”
Sources of Expert Advice
Such advice can be found in banks, business hubs, webinars, and public entities such as professional associations, ministries, or municipalities, Piqueras notes. “There are many digitalization support packages available, along with free expert advice. The goal is to prioritize: what to tackle first and what to address later.”
Priority Investments for SMEs
While the sea of technological options can be overwhelming, several key technologies can be considered priorities for their immediate and broad impact on a company’s operations. These include:
Cybersecurity
Protecting digital assets is essential. “Cybersecurity cannot be ignored,” Piqueras asserts. “It protects customer accounts and prevents hackers from taking down our systems, which should never happen.” Many small business owners mistakenly believe they aren’t attractive targets for digital criminals. “This is a misconception: most hackers use automated systems that don’t discriminate,” he explains.
Adrian López, a digital advisor at Penteo, an independent technology analyst, believes cybersecurity will see the most significant budget increases in coming years: “It’s crucial for safeguarding today’s critical assets: data and business continuity. A cyberattack on an SME can threaten the company’s survival.” This investment also builds market trust by demonstrating cyber resilience.
Artificial Intelligence (AI)
Contrary to popular belief, basic AI use “doesn’t require significant investments or technical knowledge,” says Piqueras. “AI can help design storefronts and logos, detect customer focus areas in stores, draft promotional content, personalize online customer service, and select background music.”
However, many SMEs are still learning about AI, Fernández notes. “It’s essential to understand where AI can be most beneficial.” Truque advises caution: “Currently, AI for small businesses involves high costs and often doesn’t provide a good return on investment. Solutions offered are generic, and tailored packages are not yet available.” Basic training is recommended for using tools like ChatGPT, OpenAI’s generative text AI program, “the only way to fully leverage its potential.”
Despite these challenges, AI is fostering new entrepreneurial models, such as “solopreneurs” who use AI and other technologies to cover all business areas independently. This trend represents 6% of startups in Spain, according to the 2022 Entrepreneurship Map by South Summit and IE University.
Enterprise Resource Planning (ERP) Software
ERPs integrate all management aspects, from transactions to human resources, to streamline and speed up business operations. “Many companies are currently renewing or migrating their ERPs, the cornerstone for ensuring smooth business operations and future growth,” Fernández states.
Today’s ERPs are more intuitive, resembling everyday mobile apps with user-friendly structures, reducing the need for specialized personnel or lengthy installation times.
Cloud Computing
The cloud offers secure, unlimited storage and access to advanced digital transformation tools. “Many cutting-edge digital transformation solutions are cloud-based,” Fernández highlights.
Digital Workplaces
Digital workplaces ensure that working from home is as efficient as being on-site. “They have become essential post-pandemic, enhancing workforce capabilities and flexibility,” Fernández explains. These tools facilitate live meetings, cloud-based document sharing, and coordinated project management.
Investment Guidelines
Experts warn against generalized investment recommendations, as they vary based on company size, sector, and maturity. However, Piqueras suggests essential guidelines based on “common sense”: “Investment should be gradual, scaled, and proportional, without compromising margins or business operations. You can’t cook a turkey at 3,000 degrees in a minute.”
Fortunately, a wide range of digital products is available for SMEs, with comprehensive packages and subscription-based pricing. For example, professional cybersecurity systems can cost as much as an annual Netflix subscription, corporate email might be five euros per employee, and a ChatGPT subscription around 15 euros per month.
A practical benchmark is to compare these digital expenses with traditional ones. “For instance, compare what we pay for fire and property insurance with the cost of professional cybersecurity software. Always reasonable expenses that support organic technological growth,” Piqueras advises.
Monitoring Return on Investment
Tracking the return on investment (ROI) is crucial, even at a basic level. “If I invest 100 euros in a tool to improve my website’s positioning, I need to measure how many additional sales result from it and then scale up accordingly. Without control, there’s no direction,” Piqueras concludes.
The Flexibility of Renting
Technology leasing, or renting, can offer significant benefits for businesses, both fiscally and in terms of maximizing ROI, says Juan Pedro Martorell, director of Leasing and Renting of Goods at Banco Sabadell.
Renting is a “comprehensive, flexible, and specialized solution that keeps companies up-to-date with technology, allowing for equipment upgrades as needed and financial advantages without initial outlay,” adds Fernández from Aczeda. It also helps manage technological obsolescence, integrates various technologies from different suppliers under one contract, and provides independent technical advice and specialized support for technological investments.
In conclusion, embracing technology is not just an option but a necessity for SMEs aiming to grow and stay competitive. By prioritizing investments in key areas like cybersecurity, AI, ERP software, cloud computing, and digital workplaces, and by following expert advice, businesses can navigate the technological landscape effectively. Monitoring ROI and considering flexible solutions like renting can further enhance their technological advancement, ensuring sustained growth and resilience in an increasingly digital world.
