Small and mid-sized businesses make up around 45% of American GDP and provide jobs for almost half of the American [workforce] people. Existing in a dynamic and rapidly transforming economy, SMBs need to adjust to modern realities and integrate into the digital world to protect their places in their respective markets.
SMBs are on their way to full digital transformation — 99% of them use at least one such tool on a permanent basis. The most popular solutions are quite simple, e.g. emails, websites, and social media use. However, as the domain of business intelligence software rises, more sophisticated tools appear on the market.
Communication, management, supply chain, financial forecasting, manufacturing become subjects of digitalization and automation through smart solutions and tools. They are aimed to minimize human involvement where that’s possible and increase the efficiency of the business with data-based approaches.
COVID-19 pushed SMBs to embrace digital tools quicker. Global pandemics increase the importance of virtual presence and mobility, and businesses react accordingly.
Considering the aforesaid, SMBs are changing from within to stay relevant, competitive, and in demand by their customers. In this article, we gathered the main milestones in SMBs’ digital implementation and usage. Our overview will guide you through the latest trends and tendencies that small and mid-size businesses experience in 2021.
The state of business is highly affected by the objective indicators that become a basis for arising changes. Technological innovations don’t appear in a vacuum: global events, challenges, and shifts in public opinions impact consumers’ behavior. In turn, consumers develop new needs and may even forego their previous patterns. Companies that aim for growth adjust to the new demand from customers and transform their approaches and processes, and thus require tech upgrades.
Rising trends are the building blocks potentially driving the future. They also indicate the activities we need to start to be prepared for. Although nobody precisely knows the impact of the current crisis, most of us will agree that there will be strong effects on our society as a whole, consumer behavior, business models and other important dimensions. An early and continuous trend analysis is a powerful tool to appropriately react to upcoming change.
Deloitte, “Covid-19 Induced Business Trends: Preparing for the new normal”
Here is a visualization of this process in the form of tech radar, created by Deloitte for their report on COVID-19 influence.
It’s a simple description of how new technology appears and takes over the market. SMBs go through the same change. Internet spread, acceleration of lifestyle and life pace, globalization, and high competition push businesses to make their services more client-centric and personalized, move to online and constantly modernize. And a pandemic like the Covid-19 one, as we all know, of course, amplified these business trends today, adding significant changes to the whole ecosystem.
Covid-19 Induced Trends
It wouldn’t be an exaggeration to say that pandemics and almost year-long lockdowns change our perceptions of things that seemed to be mundane. Shopping, traveling, and simply communicating with coworkers gained new forms. Businesses, accordingly, had no other option but to adjust.
But it doesn’t mean that only negatives came out of this: the reality of COVID-19 accelerated the digital transformation of SMBs as they needed it to survive. However, the chances that after lockdown restrictions are lifted, businesses would go back on and forego implemented existing improvements and innovations are minuscule.
“The COVID-19 crisis has created an imperative for companies to reconfigure their operations—and an opportunity to transform them. To the extent that they do so, greater productivity will follow.”
McKinsey & Company, “The next normal arrives: Trends that will define 2021—and beyond”
So, the importance of digital tools increases along with the global transformation of how businesses operate and interact with their stakeholders. Moreover, this transformation wouldn’t be possible without the implementation of digital solutions, as they transfer companies’ operations online, where life happens nowadays.
So, the influence of technology has been increasing strongly, helping SMBs overcome the harm of pandemics and opening the road for further growth.
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Latest Technology Trends
As you can see, every trend is a marker of some massive change, adapted to the specificity of the domain. Tech trends aren’t an exception, as each of them represents the reaction of the tech market to the new reality.
Technology trends represent the underlying shift, but also the emergence of new technological opportunities which are likely to be used in a future business context. The Covid-19 crisis emphasized how important technology is to keep the economy, but also society, running. An early understanding of which technology trends are relevant for a post-Covid-19 context are not only beneficial if one is attempting to invest time and money into such companies, but also if they would like to focus on setting up such technologies for their companies. Integration of correct software will result in a competitive edge for your company, as the effective application of technology across businesses is deeply connected with business success. Business without technology is no longer conceivable.
Deloitte, “Covid-19 Induced Business Trends: Preparing for the new normal”
So, what tech trends are currently on the ride and thriving among small and mid-sized businesses?
Cloud usage opened up a lot of opportunities and simplified access to smart solutions and business tools for SMBs. They don’t need to spend huge sums on server maintenance, the fee structure is such that they only pay for the storage that they actually use. Thus, it becomes financially more affordable, and it shows: 67% of SMBs have already implemented cloud-based software for management purposes.
It is worth mentioning that the tech capabilities cloud computing offers also allow SMBs to easily implement other advanced tools, such as IoT or AI.
The power of cloud services stood out even more during the pandemic, as they are designed for agile, remote work conditions. As there was no chance to reach physical offices, but companies still needed connectivity to data services, cloud computing started to grow again, after the slowdown in 2019, and now is predicted to grow by 35% in 2021.
Cash payments are being driven out by the convenience of various contactless payment methods. Credit cards and mobile wallets allow for much easier and faster transaction execution, and they also looked to be the far safer option for check out in the depths of the COVID-19 pandemic. More and more people embrace these technologies: for example, in the UK, contactless payments accounted for 27% of total payments made in 2020 (which converts to a 12-percent year-over-year growth!)
As predicted, while the usual way of things is changing, customers are adjusting as well. Mastercard reports that more than 60% of the customers used a new payment method they wouldn’t try under other circumstances. So, against all odds, even hesitant people, skeptics and innovation-averse individuals are starting to turn to and slowly accept tools like Apple Pay, Google Pay, or PayPal, creating a new norm. And it’s not just talk: around 80% of transactions in grocery and drug stores are cashless nowadays, compared with 2% in 2018.
The Internet of Things is tightly integrated into different business ecosystems, from manufacturing to health facilities. IoT implementation is a straight pace to business automation and more conscious usage of the workforce, which can be redirected to the task with higher priority.
Interconnected devices that can work efficiently without human involvement change the old-school approaches to SMB’s work. New business models and revenue streams are quite possible to appear as a result of this trend; especially considering how quickly the IoT market is growing, namely, it is predicted to reach the mark of $1.86 trillion in 2028.
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Online shopping is hardly a brand-new, innovative trend. However, with physical stores losing their power and consistency, it’s only logical for retail businesses to strengthen their online presence, performance or even full-handedly enter the world of e-commerce. Just look at Walmart’s, however belated, response to Amazon taking the world of retail by storm.
Hence, retailers focused on improving infrastructure for a seamless customer experience and omnichannel communication. The tech industry is ready to provide appropriate tools thanks to the already mentioned cloud software.
The aggregate amount of data in the world is constantly growing, and we are developing technologies that are able to keep up, so why not take advantage of them? That’s why predictive analytics continuously gains importance and popularity among businesses. Detecting trends, customers’ behavior patterns, and forecasting future ups and downs — all of these give an opportunity to make data-driven decisions which, in turn, increases the total efficiency of work.
Predictive analytics is in the top 5 investment priorities for mid-sized businesses right now. There is a reason for that: a Deloitte survey shows that 95% of businesses claim that they benefit from predictive analytics in sales, marketing, supply chain, and HR.
Of course, streaming is strongly associated with Netflix, but the pandemic era has opened a new perspective and demonstrated that streaming can be successfully used for business purposes.
Online interactions become more personalized in order to try to make up ground for the lack of personable physical meetings. Companies have figured out creative ways to present or advertise their goods/services or conduct events through streaming platforms or live streams on social media.
This trend will stick around for several reasons. Firstly, it gives a simple mechanism for engaging and expanding an audience base. Secondly, customers themselves got used to attending real-time events through the Internet.
The importance of cybersecurity is only a logical extension of every above-mentioned trend. Businesses gain access to the private information of consumers, which has to be strictly and thoroughly protected. All data is stored on cloud servers, which increases capacities on the one hand, but jeopardizes its easy accessibility and security on the other. Hence, it quickly became the biggest concern for SMBs.
As the average SMB is far from being 100% prepared, equipped, and ready for hacker attacks, we are witnessing robust and widespread investment starting to flow into security measures of SMBs in addition to large [multinational] corporations now. The top implemented measures are encrypting, regular testing, and employees’ education.
Digital tools that impact SMB performance
New trends bring new demands, and businesses have to do everything to meet them. Business intelligence tools grant SMBs better performance by structuring workflow, storing and analyzing data, and offering mobility that may have been impossible without applicable digital solutions.
90% of SMBs use tools for communication, while 80% for logistics as well. However, the solutions that are designed to boost the performances of specific departments are usually neglected.
Integrating special systems for supply chain, sales, or management is the real path to growth for SMBs. The wide range of possible solutions allows improving any SMB by revamping the approach to any given part of the business. Your goal is to determine your needs and priorities and choose the type of software that is most suitable for your business.
While you decide on the preferred software, you also encounter the following dilemma: should you choose a ready-made solution or develop a custom piece of software? Both options have their respective pros and cons. However, if you are looking for a reliable, secure application that can be tailored to your business needs and doesn’t depend on the positioning of the services by a third party, it’s better to go to a software development company and seek custom development.
Around 90% of all SMBs report that digital tools have helped foster innovation in their business, particularly with helping to introduce products and services in new markets, communicate with customers more effectively, and operate their business more efficiently. SMBs at a more advanced stage on their digital journey were almost three times more likely to develop new products and services that could offer new opportunities for growth in both existing and new markets.
Deloitte, “The performance of Small and Medium Sized Businesses in a digital world”
So, here are some of the best examples of business applications that can improve the performance of small and medium-sized businesses.
Enterprise resource planning software has been around for a long time and shows impressive results: 88% of companies consider their ERP implementation a success. It’s the main tool for business processes automation and data centralizing.
Nowadays, businesses heavily rely on data in every process every step of the way, from determining the best marketing strategies to optimizing the total company costs. Hence, storing and establishing constant data access is essential for efficient cooperation between departments and employees. EPR usually precisely provides smooth data exchange, allowing employees, depending on what access level they’ve been assigned by the administrator, can reach required information by way of a couple of mouse clicks.
ERP is also able to automate routine, repetitive actions, for example, placing orders to vendors or recalculating merchandise.
The main features of ERP include:
- data analysis;
- reporting and forecasting;
- project management.
They are implemented for different reasons and adjusted for different departments, for example, sales, marketing, supply chain management, human resources, or manufacturing.
ERP can help SMBs in different ways:
- cost optimization;
- higher performance due to data-driven approach and automation;
- deeper business insights due to data analytics and reporting;
- improved communication and cooperation between departments;
- room for scalability and further growth.
The customer relationship management system’s goal is to track and improve your customer experience. CRM software creates a medium to store the info about every contact with the customer in one place, hence, all communication (calls, emails, messages, meetings, etc.) are transparent and trackable, and possible to analyze.
CRM makes your sales activity and customer interaction structured and more efficient. How? Firstly, real data serves as the input for the insights instead of rough guesswork. In other words, CRM gives the capacity to sort and analyze leads and channels they come from. Secondly, the whole customer history is available, which gives a basis to embrace a personal approach and create custom promotional campaigns. Thirdly, CRM can automate certain actions, such as sending out emails, which guarantees that nothing will be missed by employees.
CRM system usual features are:
- lead and contact management;
- employee tracking;
- sales analytics.
Businesses should consider investing in their CRM, at least because it pays back eight times more for every invested dollar. The major benefits that CRM bring to the SMBs are:
- improved customer satisfaction and retention;
- increased profit;
- a better understanding of sales and marketing activity and performance.
Point of sale system is a must-have for any retail business. It automates the purchasing process, allows cashless payments, and noticeably simplifies this action.
POS software usually consists of two parts: hardware — computer, which can be replaced by tablet or smartphone, cash drawer, credit card reader, barcode scanner, receipt printer — and software that programs every part of the hardware to connect.
Here are the features every POS has:
- billing processing;
- multiple payment methods support;
- sales monitoring;
- returns management;
- employee management.
SMBs can benefit from POS systems by:
- bringing excellent customer experience;
- improving efficiency and decreasing the time of an average transaction;
- better tracking and managing employees;
- providing easier accounting.
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Accounting is a huge and important part of every business, thus, taking a lot of effort and resources from specialists. Keeping track of it manually will take even more time, creating a drag on efficiency.
With the help of this specific software, accounting and financial matters become easier to run, producing more accurate results. It’s possible to apply these features to:
- accounting, billing, and invoicing;
- budgeting and forecasting;
- payroll management;
- project accounting;
- tax calculation and payment;
The benefits of using account applications are:
- cost saving by reducing human involvement;
- transparent and realistic view on the company’s financial situation;
- simplifying the accounting.
Inventory management software
This type of software is crucial for retail and manufacturing businesses. Just like with anything, when you operate a huge amount of inventory, it’s impossible to manage it without first devising a designated system for it. Inventory management software makes this system more advanced, accurate, and less mistake-prone as the monitoring and tracking are operated by a machine.
For SMBs, inefficient stock management becomes a key reason for business failure, thus companies should seek ways to improve this process. Inventory software guarantees:
- cost-savings by reducing human errors;
- higher inventory accuracy;
- avoiding stock-outs and excesses;
- improved business negotiations as you receive a deeper insight into your stock on different vendors’ inventory.
Inventory software has the following features:
- inventory control;
- inventory tracking;
- reporting and forecasting.;
- low stock alerts.
But these applications give the biggest impact when they are integrated with other software, especially POS and accounting apps. This way, you have an interconnected system that will make it significantly easier to go about your business.
The human resources domain is usually presented in software development as having two different possible types of systems: human resources information system (HRIS) and human resources management system (HRMS). Both of which are aimed at making employee management organized, efficiently storing employee information for easy as needed access, but only by authorized parties, meaning the systems have to be both practically functional and securely protected.
HR software helps to digitize interactions and make the relationship between employees and company more seamless and natural, as well as to help the hiring, onboarding, and existing employee qualification processes. Here are the most common features of such systems:
- tracking staff;
- absence management;
- onboarding and training;
- compensation management;
- performance management;
- analytics and reporting.
The main benefits from embracing HR software are:
- improved employee experience;
- higher rate of employee development and retention;
- easier access to employee data and documentation;
- accurate compliance following.
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Total digitalization is an inevitable eventuality for the SMBs that plan to grow and expand their services. Basically, it’s the only way to stay competitive and secure positions on the market right now.
Operating a business manually, no matter what size, is pointless, as it demands a lot of effort, workforce, and time, and that makes any business weaker than the competition. With the technologies constantly evolving, companies shouldn’t stand still either, especially since reassigning routine tasks to machines is an exciting prospect. It allows you to tap into the benefit of increased performance and improved accuracy.
Clients’ expectations are growing as well. People have become accustomed to quick and convenient services, online presence, personal approach, different options of mediums of communication are expected from all businesses, and only very little room for mistakes. There is almost no niche where monopoly can exist, as there is always someone faster, nicer, or more innovative. Any misstep may drive customers away to competitors or cause resentment that can easily be expressed publicly on the Internet with reviews or through word of mouth. Therefore, without embracing new technologies, businesses risk losing or driving away potential and previously acquired already existing clients.
We live in an era of change and high speed, and SMBs can’t afford to fall behind from society and market giants. Adapting your organization and continuously turning to modern technologies is without a doubt the right strategy. So, conduct an audit of your company, determine your bottlenecks and places for optimization and choose software that will invariably lead to success.
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- The performance of Small and Medium Sized Businesses in a digital world, Deloitte, 2019, <https://www2.deloitte.com/content/dam/Deloitte/es/Documents/Consultoria/The-performance-of-SMBs-in-digital-world.pdf>
- Covid-19 Induced Business Trends: Preparing for the new normal, Deloitte, 2020, <https://www2.deloitte.com/content/dam/Deloitte/de/Documents/covid-19-induced-business-trends-deloitte-whitepaper.pdf>
- Technology in the mid-market, Deloitte, 2019, <https://www2.deloitte.com/content/dam/Deloitte/us/Documents/deloitte-private/us-private-technology-mid-market-report-2019.pdf>
- The next normal arrives: Trends that will define 2021—and beyond, McKinsey&Company, 2021, <https://www.mckinsey.com/featured-insights/leadership/the-next-normal-arrives-trends-that-will-define-2021-and-beyond>
- UK small and medium-size enterprises: Impact of the COVID-19 crisis, McKinsey&Company, 2021, <https://www.mckinsey.com/industries/public-and-social-sector/our-insights/uk-small-and-medium-size-enterprises-impact-of-the-covid-19-crisis>
- The Digital Transformation of SMEs, OECD, 2021, <https://www.oecd-ilibrary.org/industry-and-services/the-digital-transformation-of-smes_bdb9256a-en>
- The impact of COVID-19 on SMB IT spending: latest insights from the SMB Technology Forecaster, Analysys Mason, 2021, <https://www.analysysmason.com/research/content/reports/smb-it-spending>