17/03/2011

By Jenni Sach, UK Manager, Colt

"Small and medium size businesses have the best opportunity in a generation to become the next big business success story."

The last few years have been painful for many small and medium sized enterprises (SMEs). Those that have made it through this challenging time have been forced to be creative, innovate, keep costs low and in some cases reduce workforces while continually providing great service to their customers.

While nobody is suggesting that Europe is out of the woods yet, there are clear signs from the leading ‘engine room’ countries across the continent that there is cause for optimism. At the same time, some of the great technological innovations of our age are now within reach of the smaller and medium sized business owner – technologies that provide the speed and scalability that enables smaller organisations to compete for business with much larger enterprise players.

Having robust IT is important in this context. In the UK for instance, the number of SME work days lost to failing IT systems is DOUBLE that lost to illness – costing an average of £5,000 per company, per year. The total cost to the European economy is enormous – in 2010, according to the European Union, SMEs accounted for 99.8% of all registered businesses. Perhaps more importantly, downtime damages their reputation with suppliers, customers and potential investors – the true cost is much, much higher.

Right now is the best opportunity in a generation for SMEs to jump to the next level

The SMEs that have survived this era of economic austerity and are entering this new period of opportunity are ideally placed to capitalise on the main forces affecting the marketplace today. Here are six reasons why SMEs should be excited about the future:

Fewer smaller competitors – if you survived the last few years, well done – around 150,000 businesses were wiped out in 2010 (according to the EU). There are fewer competitors out there than when the trouble started, and the chances are that you’ve become leaner and fitter through the process.

Fewer bigger competitors - In times of plenty, bigger businesses are always looking to find new areas of growth and cash in on small businesses’ evolving niches - this isn’t happening right now. We have seen the impact of systemic slashes to R&D budgets in major corporates over the past few years – companies are focusing on their key competencies and on doing the basics right. Now is a great time to invest in growth within niche areas.

Enormous pent-up demand – Major corporates and SMEs are starting to move forwards again having for the past few years heavily curtailed their spending. Systems now need updating, business needs moving forwards – and procurement cycles are coming on stream again – for those SMEs able to help, the opportunity knocks.

Corporate organisations are reviewing their suppliers – An era of belt tightening has brought ever more creativity to the procurement function. Deploying the status quo is no longer acceptable – especially if a rival supplier can provide more, for less. For those innovative smaller players, the opportunities to get into the enterprise sector can be a game changer.

New technology is opening up new markets - Cloud systems are efficient, scalable and secure and give SMEs access to the kind of computing power previously only available to big business. By deploying enterprise grade services, SMEs can support big business with the Service Level Agreements and flexible suite of products built on a fully scalable business-grade network normally only available to the enterprise sector.

New technology is opening up new product and service areas - Mass consumerisation of digital products, such as cameras and broadband internet has opened up a vista of new opportunities which threaten to change the shape of every industry – consider Moonpig.com, which has linked together personal imagery with the traditional greeting card business to create a hugely successful market niche.

Growth can be dangerous – prepare well!

While the opportunities are endless, smart business people know that growing too fast can be as dangerous as a painful slowdown. With orders too big to fulfil, cash flow issues magnified exponentially, pressure on customer service and other numerous problems, planning for intended growth is as important to delivering success as convincing new customers to do business with you.

SMEs need a modular approach to using IT systems and connectivity that is both affordable and comparable with the best that big-business has to offer that covers the entire spectrum of modern business services – from Internet, email and security through to PC backup and voice. With a modular approach, there is no need to pay upfront for capacity that might not get used -but it would be counter productive to have a solution that will not scale up when the business is required to do so.

Larger customers cannot work with suppliers that use back-up systems reliant just on a standard internet provider solution or an unsafe storage backup. Using these sub-optimal solutions will actively prevent SME from winning major contracts. SMEs need to ensure that no matter how fast they grow, or in which countries they are able to win business, they have scalable, affordable systems in place to compare with those offered by major corporate competitors.

IT is an engine for growth in the Small Business Sector

Right now, many SMEs are facing up to the challenge of reducing operational costs or overheads, while remaining innovative and having the flexibility to react to a number of external factors – from changing government policies and shifting macro-economic climates, to new opportunities and customer demands.

In many cases, SMEs can meet these challenges simply through the strategic deployment of smarter IT. This can deliver improvements in a number of business critical areas and demonstrate its effectiveness as an enabler of growth and flexibility in many ways, such as:


- Internal and external communications and instant collaboration with major customers
- Increased customer access, sales, service and support
- Productivity & flexibility (doing more with less)
- Value chain efficiency, through streamlined business processes and external integration
- Clearer operations and financial control
- Access to new markets and market segments

The economic malaise afflicted upon business across Europe has sparked a change in the way businesses think. Understanding that new opportunities are reaching SMEs like never before will be vital to long term business success. Markets across Europe have become leaner, trimmer and are ready to welcome new ideas.

The businesses that prosper in these circumstances are those that will add value to their customers, by enriching the product, service or experience that they provide. The SME success stories of this decade will be the ones which harness the advantages that new technologies bring quickly, to take advantage of the economic flux they find themselves in.