How does your business technology spending measure up?
By Rieva Lesonsky
What are your business priorities for the near future, and how is business technology helping you achieve them? A new survey by CompTIA has some insights. Top priorities for SMBs in the year ahead include implementing new systems and processes, identifying new customer segments and markets, renewing existing customer accounts, innovation, and launching new products and services.
Underlying all of these priorities is a focus on improving efficiency, whether by implementing brand-new systems or by fine-tuning the systems you already have. To help accomplish their goals, small businesses are turning to technology. In fact, nearly two-thirds (64%) say technology is a primary factor in pursuing their business objectives, and more than half (56%) of firms with fewer than 20 employees say the same.
How are small businesses using business technology?
Overall, 59% of small businesses are mostly satisfied with their use of technology. However, there is still room for improvement. The areas in which small businesses say they most need to improve their technology are:
- Integrating different applications/data sources/platforms/devices: 38%
- Cyber security/data security: 35%
- Effectively managing and using data: 35%
- Modernizing aging equipment or software: 31%
- Getting more ROI or bang for the buck from technology investments: 31%
- Hiring workers with the skills needed to work with newer technologies: 30%
- Next-generation customer engagement/management 28%
- Managing increasingly complex technologies: 25%
- Understanding or deciding among the extensive choices available: 24%
- E-commerce or mobile commerce: 23%
Technology spending: Too much or too little?
The average SMB in the survey spends between $10,000 and $49,000 per year on technology. More than half (52%) of small business owners feel they are spending too little on business technology, 22% feel they are spending too much and 44% feel they are spending the right amount.
What have small businesses spent their technology budgets on in the past two years? Some 36% of respondents say they have been focusing on infrastructure: laptops, desktops, servers, phones, storage and the like. (New or upgraded hardware is a top item on respondents’ technology wish lists.) In addition, 31% said they have been spending on industry-specific software, while 30% say their technology spending has focused on both areas.
Asked what type of technology is their biggest priority going forward, 23% say customer experience, 16% say worker productivity, 17% say vertical industry sector, 14% say core infrastructure and 6% say operations. Thirty-five percent of companies also say hiring skilled workers to help them drive technology initiatives into the future is a priority. (Learn more about digital transformation for small businesses.)
How SMBs choose business technology
The majority of SMBs choose technology from several different sources, including directly from the technology company, from a primarily online retailer such as Amazon, or from a brick-and-mortar based retailer such as Best Buy. The survey surmises that small business owners do a lot of research, including a source’s product offerings, prices and reputation for customer service, before making their decisions.
With so many different offerings and options, it’s becoming more challenging for SMBs to fully implement the technology they envision. The study notes that in 2016, 23% of survey respondents reported excelling in technology vision and strategy; in the current survey, that number dropped to 18%. SMBs also reported less satisfaction with their execution and ongoing management of technology in 2016 than in 2018. “Many firms are taking two steps forward and one back as they navigate these new learning curves,” the report states.
How SMBs view emerging technologies
“Emerging technologies” encompasses a wide variety of technology, from IoT devices to artificial intelligence and drones. More than half (53%) of SMBs believe emerging technology represents opportunity for their businesses, and 30% are already incorporating it into their businesses. (Wondering how AI can help your business?)
Small businesses use emerging technologies for the following reasons:
- Increase productivity: 63%
- Customer demand: 47%
- Increase innovation: 42%
- Boost sales: 42%
- Competitive differentiation: 39%
- To avoid obsolescence: 22%
But not all SMBs are so optimistic about emerging technology. Almost a quarter (23%) say it’s too early to tell what impact emerging technology will have, and 10% believe it will have a negative impact on their businesses. The biggest challenges small businesses worry about with emerging technologies are the cost of entry (46%), the need for technical training (44%) and the difficulty of identifying the best vendors or suppliers (40%).
Finally, the report identifies a new trend: Many SMBs are incorporating technology as a service or product offering for their customers. For example, 52% of professional services SMBs (such as accountants, lawyers and marketers) offered technology services to customers in the last year, and 30% are considering doing so. This might include an accounting firm reselling software or providing cyber security audits. Among respondents who offer technology services, nearly half say revenue from tech-related activities is growing faster than the rest of the business.
What are your business technology plans for the coming year?
Attractive couple using tablet in business stock photo from nd3000/Shutterstock