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How small and medium businesses buy high-tech

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Small and medium enterprises are seen as a gold mine for technology vendors, but there is a secret to how they buy high-tech, writes ARTHUR GOLDSTUCK.

There are more than 650 000 small and medium enterprises (SMEs) in South Africa, making the sector a major target market for vendors of almost any type of product aimed at other businesses. High-tech products, solutions and services rank high among these, with SMEs seen as a gold mine for those who can crack the code of how to sell to them.

The problem is that there isn’t really a code, but one very simple secret: SMEs will only buy high-tech solutions when they’ve become a “no-brainer”.

That attitude goes hand in hand with what is to some an unpalatable reality about SMEs: they are notoriously slow at adopting new technologies.

However, that does not mean there is no hope in selling to them. 

SME Survey 2018, a research project conducted by World Wide Worx in partnership with Intuit QuickBooks, showed there is one clear exception: the Internet of Things (IoT). Interviews with 1400 SMEs revealed that 83% of decision-makers expect to be using IoT in their business within five years.

The reason for this enthusiasm? Many of them have been using IoT all along, in particular with fleet- and vehicle-tracking systems, and asset management. The SIM cards hidden in vehicles to allow them to be tracked are in fact part of IoT. They act as sensors that report vehicle positions to base stations, and that information can be aggregated and supplied to live mapping services. In fact, it is just that technology that makes Google Maps so effective for navigation.

However, when it comes to more futuristic technologies, SME enthusiasm vanishes. The next highest-ranked high-tech options were artificial intelligence and Big Data, but they are expected to be adopted by only 29% and 27% of SMEs respectively.  Just 21% of SMEs expect to use 3D printing, while crowdsourcing drops to 16% of respondents. 

Right at the bottom of the list came Bitcoin, the technology underlying Bitcoin, at 9%, and Virtual Reality, at a mere 8%.

The reason is simple: Blockchain is so new, its value proposition remains a mystery to SMEs. Not only that, but it is strongly linked in the public mind with Bitcoin. The massive fluctuations in the value of the cryptocurrency makes it too volatile and risky for the cautious SME decision-maker.

While virtual reality doesn’t suffer the same bad press, it is still regarded as a toy, and falls far short of the no-brainer status SMEs require of technology.

Even the technologies that fare a little better, like artificial intelligence, are still far off the mark for SMEs. Because they require large amounts of data, which are typically generated by large customer bases, they tend to make sense only to large organisations. Further, it requires a new way of thinking, and adoption requires a mindset change, something that is not even on the radar for most SMEs.

The annual SME Survey has shown again and again over the years that decision-makers are generally only willing to embrace a new technology if there is a clear business case.  So, for example, when the massive technology shift from dial-up to ADSL happened between 2003 and 2009, it was not because SMEs were attracted by higher speeds. Rather, it was a combination of speed, cost-effectiveness, efficiency and the ability to connect multiple users to the same connection, at a lower price. In short, it was a no-brainer.

Now, we are witnessing the beginning of the decline of ADSL, for the very same reason. High-tech history is repeating itself as ADSL is replaced by fibre to the home or office. 

ADSL usage peaked at 73% of SMEs in 2009 and remained at this high until 2015, when fibre arrived. SME Survey 2018 indicates that ADSL usage has now dropped to 59% among SMEs, while fibre has increased to 25% – meaning adoption of fibre is taking place even more rapidly than ADSL did 15 years ago.

This is partly due to the rapid rise in availability of fibre across urban areas, coupled with the falling price of the technology. In conjunction with this, the increasing uptake and use of bandwidth-intensive technologies by SMEs has resulted in a perfect storm that is driving a need for technology replacement. In other words, it’s a no-brainer.

When SMEs see such a clear value proposition, they are ready to embrace it rapidly. On the other hand, when it has to be explained or demystified – as originally occurred with the concept of cloud computing – they tend to stay clear of it for far longer. However, the fibre value proposition is so obvious, that SMEs are clear about how it will improve their business, and so adoption is taking off.

A key benefit SMEs obtain from switching to fibre is that it enables SMEs to operate online without the performance and quality constraints they faced before. This means that their communications are significantly improved for  solutions like video-conferencing and social media. It also gives them more confidence in transacting online, thanks to the quality and speed of the connectivity.

Those selling gadgets and other high-tech will probably take courage from one particularly startling finding in SME Survey 2018: that 70% of SMEs are ready to embrace new technologies.

However, it is clear that, while the willingness is there, they will only embrace something new if it makes sense for their business. In other words, just because SMEs say they are ready to embrace new technology, it doesn’t mean that they will buy just any new technology.

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube

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Welcome to world of 2099

The world of 2099 will be unrecognisable from the world of today, but it can be predicted, says one visionary. ARTHUR GOLDSTUCK met him in Singapore.

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Futuristic structures tower over the landscape. Giant, alien-looking trees light up with dazzling colours amid the hundreds of plant species that grow up their trunks. Cosmetic stores sell their wares via public touch-screens, with products delivered instantly in drawers below the screens.

This is not a vision of the future. It is a sample of Singapore today. But it is also an inkling of the world we may all experience in the future.

Singapore was the venue, last week, of the World Cities Summit, where engineers, politicians, investors and visionaries rubbed shoulders as they talked about the strategies and policies that would enhance urban living in the future.

As part of the Summit, global payment technologies leader Mastercard hosted a small media briefing by one of Singapore’s leading thinkers about the future, Dr Damian Tan, managing director of Vickers Venture Partners. The company’s slogan “We invest in the extraordinary,” offers a small clue to Tan’s perspective.

“We look as far forward as 2099 because, as a venture capital firm, we invest in the long term,” he tells a group of journalists from Africa and the Middle East. “Companies explode in growth because there is value in the future. If there is no growth, they won’t explode.”

The big question that the Smart Cities Summit and Mastercard are trying to help answer is, what will cities look like in the year 2099? Tan can’t give an exact answer, but he offers a framework that helps one approach the question.

“If you want to look at 81 years into the future, and understand the change that will come, you need to double that amount and look into the past. That takes us to 1856. The difference between then and now is the difference you can expect between now and 2099.”

Click here or on the page link below to read on: Page 2: Soldiers and Health in 2099.

  •    Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube

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Street art goes electric

Kaspersky Lab and British street artist D*Face have unveiled the first-ever “art helmet” design at the Formula E finale for electric cars in New York.

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The ‘Save The World’ helmets will be raced by DS Virgin Racing’s drivers, Sam Bird and Alex Lynn, as they traverse the New York street circuit during the final races of the Formula E season.

The announcement signals the first art helmet by a Formula E team, continuing the heritage of art in motorsport and the cybersecurity brand’s commitment to contemporary art, creativity and innovation. D*Face took inspiration from Kaspersky Lab’s tagline, “A Company To Save The World”, and hopes that his colourful work will inspire people to take positive action.

D*Face will announce his first-ever art car design with a custom-made livery for the DS Virgin Racing Team. Its design will be released at the “Art Goes Green” event after Saturday’s race. The helmets and art car are the latest installations in the “Save the World” collection, following a major permanent public mural that was installed in Brooklyn, New York, in May.

D*Face, whose real name is Dean Stockton, said: “It is exciting to work with Kaspersky Lab on this project and create art with a real message of hope for a better future. After all, this is our world and we need to look after it. It will take every one of us to make a real lasting, impactful change. I love the mentality of the DS Virgin Racing Team and that of Formula E by showcasing sport in a way that doesn’t harm the environment, but is still just as exhilarating and fun.

“It is time for us all to stand together and make a change… be that stopping data steals, climate change, plastic waste or using damaging fuels. I want everyone to make a pledge to do one thing that will help make a change.”

As a sponsor of DS Virgin Racing Team, Kaspersky Lab is responsible for protecting the team’s devices against cyber threats. The company sees the technical environment in the global sport of Formula E as the next frontier in furthering its research and development of new technologies to keep vehicles secure in the digital world.

Sylvain Filippi, Managing Director at DS Virgin Racing, said: “The whole team fully supports this great initiative and our thanks got to Kaspersky and D*Face for their collaboration. It’s an honour to have such an innovative artist bring his talents to bear in our team ahead of the season-finale; the car, drivers’ crash helmets and mural all look amazing.”

Aldo Fucelli Pessot del Bo, Head of Global Partnerships and Sponsorships at Kaspersky Lab added: “There is a need for innovation on a global scale, both in contemporary art and in the fast-growing sport of Formula E. Now, for the first time ever, Kaspersky Lab is proudly bringing together the two sectors in an effort to Save the World and unleash creativity, encourage freedom of expression and further innovation.”

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