Small and medium enterprises (SMEs) are notoriously slow when it comes to adopting new technologies, but South African SMEs are about to do a U-turn in this regard, thanks to the Internet of Things (IoT). In fact, as many as 83% of decision-makers responding to a new survey expect to be using IoT in their business within five years.
This was one of the most notable results from SME Survey 2018, a research project conducted in partnership with QuickBooks, based on 1400 interviews with SME decision-makers. However, the IoT (the network of devices featuring an IP address and the communication between these internet-enabled devices and systems) is very much an outlier in terms of future technology uptake by SMEs, says Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey.
“The IoT is crucial to the development and success of many SMEs and it’s no surprise that South African businesses are recognising the value of implementing and applying this technology,” says Rich Preece, Global Leader of the QuickBooks Accountant Business. “Time and insightful data are essential commodities for any small business and they are two of the biggest advantages the IoT can offer small businesses.”
While the Survey asked SMEs about multiple future technologies – including artificial intelligence (AI), Big Data, 3D printing, crowd-sourcing, Blockchain and virtual reality (VR), as well as IoT – only the latter appears likely to have significant uptake among SMEs in the next few years.
“SME decision-makers are generally only willing to embrace a new technology if there is a clear business case to do so,” says Goldstuck. “We noted in the interim results that the uptake of fibre ahead of ADSL is paralleling that of ADSL’s growth over dial-up in this sector a decade ago. This is clearly due to the obvious benefits fibre delivers to SMEs. It has become obvious over the years that only technologies that directly benefit the SME, by helping it to save or make money, or become more efficient, will be adopted. IoT clearly fits the bill here.
“Many SMEs have already been exposed to the benefits of the IoT in some form or another, thanks to technologies for vehicle tracking and asset management, so they are already aware of its benefits. This is the most likely reason SMEs foresee this as an area of major investment in the near future.”
He points out that next on the list were AI and Big Data, which came far behind and were only expected to be adopted by 29% and 27% of SMEs, respectively. This is not too surprising, says Goldstuck, considering that these technologies are mostly beneficial to businesses with large customer bases or complex logistics.
“Only 21% of SMEs state they will consider 3D printing, and this will likely be mostly in those fields where models or prototypes are required, or that need a limited run of a particular product. While the potential benefits are huge, the current cost-benefit ratio is not at a level that most SMEs would find attractive.”
Crowd-sourcing was also not popular with SMEs, with only 16% of respondents answering positively. Goldstuck puts this down to it being too new as a business tool. Because it requires a new way of thinking, adoption requires a mindset change within SMEs, something that always takes time to achieve.
“Blockchain is also a very new technology, so its value proposition is not entirely clear for SMEs. Furthermore, it is intimately tied to Bitcoin, which, due to its crash earlier this year, has had a damaging impact on perception of Blockchain. Before Bitcoin climbed through the roof, 13% SMEs were prepared to consider Blockchain, but following the January crash, the figure dropped to a mere 5%.”
Similarly, he points out, AI also saw a major fluctuation between the interim results (34%) based on late-2017 interviews and the more recent early-2018 data (19%). He suggests this disaffection with AI stems from the intensification of coverage of the impact that Facebook and Google algorithms have had on the promotion of fake news. Since it was AIs that effectively made the decisions that drove many of the fake news stories’ popularity, this may well have had an impact on how much trust SMEs are willing to place in this technology.
Innovative hardware did not fare much better, though.
“Only 8% of SME owners indicated they would be utilising virtual reality (VR) within the next five years. This is probably due to the fact that VR is still regarded by many as a toy, with few real benefits for a business.
“Technology vendors should note that, while 70% of SMEs are ready to embrace new technologies, the only one they really seem enthusiastic about is IoT. This demonstrates that, while the willingness is there, they will only embrace something new if it makes sense for their business. Moreover, it also serves as a warning to technology developers that, just because SMEs say they are ready to embrace new technology, doesn’t mean that they are willing to purchase any new technology.”
SME Survey is the original and largest representative survey since 2003 to measure the forces shaping SME competitiveness in South Africa.