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The success of most small and medium-sized enterprises (SMEs) is reliant on their ability to put new disruptive technology at the centre of their business strategies writes Callum Adamson, Founder and Project Director of Distributed.

Rightmove, Just Eat and ASOS are just a few examples of UK start-ups which have been able to grow rapidly using technology to offer their customers services on terms that suit them: online and on-demand. We are seeing SMEs across a wide range of verticals embracing digital transformation (DX), by adapting processes and adopting digital strategies to ensure they can operate efficiency and meet the evolving requirements of their customers. Technology is constantly advancing, and SMEs must adopt new digital practices at an early stage of their development, placing them in a strong enough position to compete with market leaders.

Relevant skills and teams capable of working in blended, cross-industry disciplines are essential to UK SMEs if they going to prosper during DX. However, in their attempt to adopt new technology, many SMEs are hitting a stumbling block. They are finding that their digital ambitions are being stunted by a lack of skills to help them incorporate new practices into their businesses.

Recent research conducted by Distributed into the way SMEs are dealing with DX, produced some worrying results. Over 65 per cent of respondents said that they are currently in the process of DX, but 67 per cent said that they did not have access to the digital skillsets required to continue the overhaul process. This insight follows the trend currently appearing in broader market research into the growing skills gap. According to a survey conducted by Nimbus Ninety and Ensono, two-thirds of decision makers claim they do not have the skills to service new IT models, highlighting particular gaps in data science and AI.

The risks of upskilling

A small business that cannot adapt to change is unlikely to survive. According to research by Ormsby Street last year, only four in 10 small businesses will be trading after five years. SMEs need to up-skill in emerging tech channels to differentiate themselves in the marketplace, but they do not have any guarantee that new digital strategies will deliver profitable results. Without specialist teams with experience of implementing new technology in a business, companies risk betting big on tech, only to find that their clients are left underserviced.

Cost can present a major factor in an SME’s decision to hire new staff. The IAB estimates that hiring a new staff member costs an average of £18,000 and will take in the region of five months. With senior digital skillsets more sought after than ever, salaries are often grossly inflated due to demand. Hiring staff to drive a new digital channel is a significant risk to any SME, which will be unable to guarantee return on investment. SMEs are realising that attempting to offer everything through a permanent team is a likely way of accelerating margins down to zero.

Some companies are relying on contractors or temporary staff to try and help them explore new opportunities, but this is also a significant investment, both in time and cost, not to mention the added risk of hiring the wrong team member. There’s also the concern that freelancers or temp workers are not readily available when needed, particularly if their time is consumed with larger, more lucrative business.

Developing a team for the future

So what can SMEs do to fill the skills gap and ensure that they can progress with their DX ambitions?

SMEs need to pursue a new approach, hiring staff with digital skills. They should look to specialist agencies that have a broad range of vetted industry experts, which can deliver in-house talent with the required technical skills on demand, without the costs of full-time technology staff or contractors. These external specialist teams exist to provide senior technical and strategic support to an agency, offering experience in a wide range of new digital domains. They can act as an extension to agencies, introducing new digital skills into the workplace with minimal investment. This approach allows agencies to service their clients effectively and meaningfully without having to up-sell or cross sell services because they have had to invest in a permanent team.

Often SMEs looking to disrupt the marketplace, will rely on using new technology to create a better experience for their customers. With the confidence that specialist teams can deliver these new services, business leaders can focus on developing the roadmaps to ensure that they are serving their customers, using the most innovative and efficient means possible. This approach can enable SMEs to grow into successful global brands in a matter of years, whilst reducing the risk of failure.