SME digital engagement on the rise

As technology continues to evolve, and SME competition increases, digital engagement remains a real opportunity, and real marketplace differentiator, for the sector.

Deloitte Access Economics’ Connected Small Businesses 2017 report for Google finds that in just 12 months, SMB adoption of digital tools has grown significantly – with 12% of businesses moving up the ladder and no longer having ‘basic’ levels of digital engagement.

For this first time, half have reached “advanced” or “high” levels of digital engagement across areas that include social media, eCommerce, websites, online marketing tools and data analytics.

Australia’s SME four-stage digital engagement ladder:

2017      2016     2013

Advanced            13%        9%         16%

High                      37%       34%       25%

Intermediate     39%       34%       24%

Basic                     11%        23%       35%

Deloitte Access Economics partner, and the report’s principal author, John O’Mahony said: “More than two million SMEs make an important contribution to the Australian economy, accounting for over half of private sector economic activity and over two-thirds of its employment.

“And in recent years, digital engagement in the sector has become a critical ingredient to success on a number of fronts – from revenue growth and job creation, to innovation and export opportunities.

“We’ve found that since our first report for Google in 2013, SME take-up of digital tools has been accelerating over time, and that there has been a particularly strong uptick since we last surveyed business operators only 12 months ago.”

The report also identifies an improvement in digital engagement across all industries. Despite perceptions of lower engagement, SMEs in traditional industries such as mining, manufacturing and utilities, and trade and hospitality, were found to be performing even more strongly in this area than knowledge industries such as professional and financial services, and health, education and public administration.

And relative to SMEs with basic levels of digital engagement, those with advanced levels of engagement are:

  • 50 per cent more likely to be growing revenue, and
  • earning 60 per cent more revenue per employee.

“Engaging with, investing in, and then keeping up with digital can open up significant new opportunities for SMEs in terms of agility, competitive advantage, innovation and growth, regardless of industry and geography,” O’Mahony said.

“It’s encouraging that digital engagement has increased across the board, but SMEs in regional areas and those with more established operations have lower digital engagement on average. Our research suggests that age of the business owner or manager, their attitude to and use of technology are key factors in determining the level of digital engagement for the business.”

SMEs have identified a number of barriers to increasing digital engagement.

“While we’ve seen a lot of improvement, nearly 90 per cent of SMEs are still not taking full advantage of today’s digital tools,” O’Mahony said. “There’s still work to be done in helping some business owners and decision makers to understand the value associated with increased digital engagement. And education and upskilling is certainly one areas that can help build trust in digital tools and address potential issues or perceived barriers to greater engagement.

“In the end, there can be a clear financial dividend for those smaller businesses that get things right, just as there are significant risks for those that haven’t yet taken the digital leap,” O’Mahony concluded.

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