Last year’s security breaches, legislative changes and emerging innovations proved that SMEs need to harness the power of the latest advances and innovations.
At the end of FY22, the Australian Bureau of Statistics reported over 2.5 million actively trading businesses in the Australian economy. Every single one of them would have made some kind of technological decision along the way, even if they don’t realise it. The early adapters embrace technology and lead innovation and growth, often getting a step ahead of their competitors. For example, the SMEs that have been forward-looking and open to innovation in recent years have benefitted due to the obvious challenges of the pandemic. Over half of all Australian businesses (52 per cent) reported being innovation-active in 2022, with 24 per cent of them collaborating to make this innovation possible. We will see an increasing number of small businesses not only moving with the times, but actually leading them, creating an inherent and perennial relationship between SMEs and innovation.
“AI software provides pathways to holistic business branding within the constraints of limited resources.”
What challenges does this present? For business, collecting and harnessing data has become important for reaching consumers. When done well, this supports personalised marketing, product curation and recommendation, and can deliver strong business results. But 2022 highlighted the challenges and opportunities in holding and managing personal data and leveraging the latest technology.
Security
It was hard to avoid talk of cyber-security breaches in 2022. But it’s not often the impact on small businesses is discussed. With 48 per cent of Australian SMEs spending less than $500 annually on cyber-security, they are becoming more susceptible to hackers while large businesses invest in cybersecurity skills and tools. Not having an effective information security plan in place can have severe repercussions for your business.
Many small businesses will think this is not something they need to worry about. But if your business holds any data that helps support customer intel and drive business decisions, or if you simply have a mailing list and customer directory, you could be at risk. This data can help you grow your business and should be protected.
Small businesses are particularly vulnerable because, as we all know, they have finite resources, time and expertise to handle a complex ICT issue like this. And too often it is the time needed to resolve an issue that is the greatest expense.
That’s why having protection and policies around this is so crucial – the last thing any small-business owner wants is to be robbed of access to their confidential files, accounts, finances and the contact information of suppliers and customers. Effective cybersecurity and data controls are a risk-management tool that small businesses should consider mandatory to reduce their exposure.
How best to do this? You could hire someone, either as part of your business or as a consultant, but not everyone can afford such an investment; however, there are simple steps you can take to cover yourself better. These include: having a secure password manager; two-factor or multi-factor authentication on all your core systems, including email; unique and strong passwords that are changed a few times a year; training yourself to notice phishing and spam; having a secure back-up system for your data and operations; and setting up a basic incident response plan should a breach occur.
Investing in educating your staff in cyber-security standards, having reliable and trusted hardware and software, providing firewall security and encrypting customer data are all valuable investments. A cyber-security culture is often the best – and cheapest – defence.
Privacy Act changes
The federal government passed an amendment to the Privacy Act late in 2022, focusing on the implications for any data breaches.
If your business or not-for-profit has an annual turnover of over $3 million, you are subject to penalties covered by this Act.
The AIIA recommended in its submission to the Privacy Act Review Discussion Paper that the government remove the distinction between SMEs and larger entities around security breaches. The Privacy Commissioner recently agreed, calling for SMEs to be included in the Act, meaning companies with under $3 million in turnover will become liable. The Privacy Act amendments and legislation are expected to be released early in 2023.
The AIIA doesn’t support SMEs being grouped with large multinational corporations regarding data security. This places a significant burden on SMEs that puts them at a structural disadvantage.
While we believe SMEs need to protect their customer data like any business, regardless of size, we do recognise that SMES have less capacity than large companies. Therefore, we’ve called for a long implementation timeframe for any changes, a funded government educational campaign, continued funding of tax deductions for cyber uplift and software investments, and lower breach penalties than for larger companies.
Artificial Intelligence
The applications of Artificial Intelligence (AI) are still growing and expanding, with the recent launch of ChatGPT beginning to show to a wider audience the possibilities AI offers. A form of AI called automatic decision-making (ADM) is being widely adopted by businesses.
A 2018 report by the CSIRO and AlphaBeta Advisors found digital technologies, including AI, would potentially be worth $315 billion to the Australian economy by 2028. Our economy and innovation sector continue to develop and unearth this incredible potential.
For the Australian innovators who are leaders in the development and implementation of AI globally, the AIIA continues to seek greater support to keep these innovations Australian and not something we need to import in future years. The transition from innovation research to commercialisation needs greater support and funding from government to help Australia continue to be a leader in this innovative space.
While AI is ever-evolving and cutting-edge, it is easier to implement into small businesses than you might think. It offers the opportunity to streamline processes and general admin to restore time to focus on growth and other responsibilities. Think of autocorrect, predictive typing and facial recognition to unlock your phone. That is AI at work.
Externally, AI can help enhance the customer experience for SMEs. From creating social media posts, copywriting and analysing website and social media traffic, to developing websites and providing chatbot assistance, AI software provides pathways to holistic business branding within the constraints of limited resources, when they were recently available only to major companies. For example, many SMEs are using ChatGPT for its amazing ability to write HTML and other computer coding, saving great time and effort.
Many of the corporate analytics and business tools, best-of-breed cyber-security options, and AI capabilities that large companies use are baked into modern IaaS, PaaS and SaaS ( cloud) platforms and systems that SMEs can also enjoy. The leveraging of MFA in SME platforms like Office 365 email, Xero accounting and Salesforce CRM are great examples of baked-in capability that only needs to be turned on.
Key takeaways
There are many aspects to the quickly evolving space of innovation technologies that all businesses, big and small, need to keep up with:
- Businesses that invest in innovation and automation are best placed to adapt and evolve as technology continues to support efficiencies and productivity.
- The security of all data your business holds is highly important and significant steps must be put in place to protect it.
- Changes to the Privacy Act in 2022 require any data your organisation holds to be secure and that you have strong practices in place to ensure this.
- How businesses use and learn from data is increasingly influencing their success at connecting with customers.
- AI is fast-developing technology that can help transform businesses and offers incredible economic opportunities for Australia.
Let 2023 be the year that you embrace innovation and the opportunities it offers your business.
This article first appeared in issue 40 of the Inside Small Business quarterly magazine
