Ten highlights from Cisco’s study on Small Business Digital Maturity
It is generally accepted that small businesses are the growth engine of any economy, but how are they coping during a pandemic? A recent report from Cisco examined the digital maturity of small businesses across eight countries (the UK, the US, Germany, France, Canada, Mexico, Brazil and Chile). It looked at their readiness to adopt new technologies, the impact of technology on growth, and the challenges and opportunities they had experienced. Some insights that stood out for me:
1.COVID-19 has accelerated digitisation in small businesses — Over 70% of the businesses surveyed said that they were digitising faster as a result of the pandemic. This figure rose to 80% in Latin America, although admittedly from a lower start. A massive 93% of the companies said that they had become more reliant on technology since the start of the pandemic.
2. Increasing digital maturity could help all eight economies recover more rapidly from the pandemic — The study estimated that if 50% of companies increased their digital maturity, they could add over $2 trillion to the economies of the eight countries studied by 2024. This would hugely accelerate the economic recovery of those countries.
3. Businesses in the UK, US and Germany were more digitally mature — The report split digital maturity into four stages (Digital Indifferent, Digital Observer, Digital Challenger and Digital Native). Companies in the UK, US and Germany were more mature than those in Canada and France, who were in turn a long way ahead of Mexico, Brazil and Chile. However, on average, no country was more mature than Digital Observer.
4. Over three-quarters of companies were no more than ‘Digital Observers’ — At individual company level, the picture was more nuanced — but still on the low side of digital maturity. In total, 26% of companies surveyed were Digital Indifferents, and 50% were Digital Observers. A total of 20% had reached Digital Challenger status, but only 4% had reached the maximum level of Digital Natives.
5. Most planned technology investments were fundamental, not add-ons — The top three technologies for planned investment were cloud, infrastructure hardware and software, and security. These are not add-ons; these are fundamentals. Cloud was considered a priority by all four levels of digital maturity, as was security. This suggests a clear focus on upgrading capabilities to meet new requirements from digitisation. However, the most mature businesses were also planning to invest in analytics to increase competitiveness.
6. The purpose of investment varied quite widely — Many of the businesses reported that they planned to invest in technology to increase resilience. The top requirements were to help employees work remotely (36%) and to improve online sales capability (33%). Similar proportions were planning to develop a digital strategy with clear goals (32%), and to invest in talent and digital skills (32%).
7. Improving your business’s level of digital maturity has clear economic benefits — The study found that Digital Natives were able to grow their revenues twice as fast as Digital Observers, the second category. The difference was even starker compared with Digital Indifferents: Digital Natives grew eight times faster.
8. Digital Natives were more likely to be thriving during the pandemic — In total, 46% of Digital Natives reported that they were thriving during the pandemic, compared with 37% of other firms. Only 5% of the Digital Natives thought they might have to shut down, compared with 7% of their peers. However, these differences are quite small in the overall scheme of things, with most businesses reporting that they were generally coping.
9. There were several important challenges to going digital — The top three challenges were shortage of digital skills and talent, cultural resistance to change, and lack of budget. These were all cited by 13% of the businesses in the study. The next four challenges were all cited by 11%. They were lack of necessary technologies, lack of digital mindset, lack of a digital roadmap, and lack of insight.
10. Cisco identified a seven-step plan to help companies to become Digital Challengers — The first step is to identify a three-year roadmap aligned to business goals. Businesses then need to prioritise critical business processes to automate, and evaluate suitable technologies for investment. Step four is investing in digital talent and skills, and step five is finding the right technology partner. Step six is to keep up with industry trends and best practice, and finally, step seven is to start small, learn and scale.
