By Mayumi Hiramatsu
Small to mid-sized businesses (SMBs) are the backbone of the U.S. economy. As major employers and contributors to global commerce, SMBs play a critical role in the financial health of the nation. Today, the onslaught of global competition, highly demanding customers, and the high-stakes pressures to compete in ecommerce can strain the limited resources of SMBs, making them vulnerable. Keeping pace with the rapid rate of innovation—while controlling risk—isn’t easy. Fortunately, modern software solutions deployed in the cloud provide the tools SMBs need to compete and contribute to economic stability.
By the Numbers
According to the Small Business Administration, nearly 27 million small businesses are dispersed across the U.S. in a variety of industries, ranging from the self-employed barber to the design-build remodeler, metal fabricator, HVAC contractor, or fast food franchise owner. The hard work of these companies generates over half of the gross domestic product (GDP), totaling roughly $6 trillion every year.
SMBs also generate jobs. Employing approximately 130 million people, SMBs represent more than 99.7 percent of U.S. employers, responsible for 60 to 80 percent of the new jobs available every year.
These statistics underscore the critical contribution of SMBs and why it so important that these companies are successful. Consumers, communities, and workers depend on them.
Venturing into the Digital Arena
For many SMBs, today’s digital transformation brings both optimism and stress. The razzle-dazzle of innovative technologies, like the Internet of Things (IoT) and artificial intelligence (AI), hold enticing promises that stir the imagination and conjure visions of customer intimacy, global supply chain networks, and boundless online sales.
But there’s a catch. SMBs need the capital to invest in technology solutions and resources for designing and deploying new initiatives, from proof-of-concept stages through tactics for storing massive volumes of data and distilling relevant insights from it. How does a startup, a family-owned business, or small commercial enterprise get started on a digital journey?
One idea is enough. An innovative mindset willing to reimagine processes and products is really the only essential prerequisite. Digitalization is about employing technology and data to better serve customers while increasing efficiency. The benefits far outweigh the challenges.
First, the Good News
SMBs have many advantages, such as agility and an innate drive for innovation. By incorporating modern technology like augmented analytics or predictive science, the organization can seize even more opportunities. Small businesses may also have a focused business model with less complexity. This allows for faster adoption of technologies that can differentiate their business model.
A recent analysis in Connected Small Businesses in the United States found that digitally advanced small businesses experienced several benefits over competitors with low levels of digital engagement. Benefits include two times as much revenue per employee, four times the revenue growth over the previous year, three times as likely to be creating jobs over the previous year, and an average employment growth rate six times as high as the previous year.
Now, the Bad News
The report also reveals that, despite these potential gains, 80 percent of U.S. small businesses aren’t taking full advantage of digital tools. The report also speculates on the reason, saying, “With so many small businesses not fully embracing the digital age, one might expect to find a broad range of barriers that are tough to overcome, such as inadequate broadband, a lack of technical skills, or huge financial barriers to investing in technology. However, the issues are actually much simpler—many small businesses need to be made aware of the benefits of the internet and other digital tools.”
Customer Centricity
By virtue of their size, SMBs tend to be close to their customers. This gives them a leg-up on building customer-centric programs and gaining long-term loyalty. “Shop local” is a rallying cry that resonates with many consumers who are willing to spend more to support a local enterprise that provides exceptional service.
The ante is being upped, though. To keep pace with demands, large enterprises, too, are upgrading their services and customer-centric offerings to enhance the buying experience. Amazon’s infamous two-day shipping standard is an example of a behemoth enacting a policy that is hard for a SMB to match—without risking profitability. SMBs, trying to remain in the race, can find themselves in roles that exceed their comfort level and abilities.
Instead, SMBs should acknowledge when they need new software technology to automate tasks or speed decision-making. With the right technology in place, SMBs can confidently expand their value-add programs and services.
Security Risks
A recent report on SMBs and security indicates that SMBs often cite security risks as a top concern. As companies embark on ecommerce and IoT projects, the use of wireless networks increases with data moving beyond the company’s firewall. Protecting this data from sophisticated attackers is a challenge. “It is difficult to balance the need to innovate with the need to protect and secure company, employee, and customer data. Even large corporations with dedicated security operations centers struggle to counter the metastasizing cyber threat. For SMBs—which often lack security expertise and resources—these challenges can seem overwhelming,” says SMB Group research.
Turn to the Cloud
While there are no easy answers or cure-all solutions for addressing security risks, organizations can take protective measures. Turning to cloud deployment, for example, is a highly effective defensive step. The top cloud providers apply large resources and expertise to solving security issues. They are masters at creating secure environments, continuously monitoring for assaults, and providing automatic back-ups and disaster recovery. Because of the extra attention and built-in safeguards, cloud solutions are often more secure than on-premise solutions.
Some factors to consider include security tactics, need for security professionals, confidence level, weakest links, and cloud equality, we review them in more detail below.
Evolving Security Tactics
Cloud solutions have built into them sophisticated firewalls, encryption tools, verification safeguards, and defenses against harmful attacks. Turning to cloud deployment means the enterprise will benefit from the most modern technology and expertise. Plus, cloud solutions can continually evolve, always adding features and adapting as types of risks evolve.
Shortage of Security Professionals
SMBs that consider hiring their own security professionals will likely be disappointed. Demand for security professionals has outpaced supply for years, and the prospects of reducing this talent gap are dim. Cybersecurity Ventures predicts there will be 3.5 million unfilled cybersecurity positions by 2021.
False Confidence
Some managers may think their SMB is too small to attract the attention of cyber attackers. However, a recent Data Breach Investigations Report categorized more than 53,000 cybersecurity incidents and 2,216 confirmed breaches and found that small businesses were the victims of 58 percent of the breaches.
Weakest Links
Even the best security solutions can be undermined by careless user practices, such as opening malicious attachments and clicking on dangerous links in phishing emails. SMBs must train employees to become vigilant watchdogs and first line of defenses against cybersecurity threats.
Not all Clouds are Created Equal
When evaluating the capabilities of cloud-based solutions, it’s important to remember there are a wide range of deployment models and services, from infrastructure-as-a service, platform-as-a-service, and software-as-a-service offerings. SMBs should take the time to carefully research options, choosing one that brings a high level of confidence.
Final Take Away
SMBs play a critical role in the U.S. economy, providing jobs, products, and services that keep the gears of commerce turning. As digital technologies sweep across industries, SMBs feel pressure to keep pace with change and incorporate new software solutions in their arsenal. While many SMBs are eager to leverage their agility and seize new opportunities, they also worry about security.
Thanks to modern cloud solutions, though, SMBs can stay on the forefront of innovation, while relying on the expertise of cloud providers to manage security. Cloud solutions can scale up as SMB businesses grow, which helps with expense management tied to revenue growth.
Cloud is now the platform for distributed data management and analytics to differentiate your business. Modern cloud solutions help SMBs stay modern, stay protected and focused on the future while cloud consumption model allows SMBs to scale their infrastructure as the business grows. SW
Mayumi Hiramatsu is the EVP of cloud technologies for Infor.
Sep2019, Software Magazine
