In the struggle to remain competitive, much of what started out as ‘disruptive tech’ is now mainstream and as costs fall, it is becoming more accessible to small businesses than ever before. However, taking the decision to introduce such technologies is not as straightforward as it sounds and businesses must be clear about what they expect to achieve from their investment before taking the plunge.
The phrase ‘disruptive tech’ is widely used nowadays to describe virtually any innovation, and despite it being well understood by many in business tech communities, its meaning is sometimes misunderstood by others. So, what exactly makes a technology ‘disruptive’?
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In its simplest form, we can say that it is modern technology that challenges the way current business models work – Netflix’s disruption of the home video market serves as a good example. Previously, the way to watch videos at home was to go and rent them from a Blockbuster store and a large part of the company’s revenue was derived from fees for late returns. Netflix’s arrival on the scene allowed consumers to stream and watch content without leaving their own living rooms. This disruptive business model has since changed the market irrevocably.
In the business world, cloud accounting software, Xero, is another example of a disruptive technology that is changing things for the better. Rather than relying on clients sending forms and information back and forth to their accountant, data is held in the cloud and is available to view by business managers and advisers, as and when needed. Through this, the nature of the client relationship has evolved and professional services firms are able to work with their clients in a much more proactive and integrated way.
Cloud technology itself forms the basis of much ‘disruptive’ tech and is useful mainly because of its ability to cater for mass integration. Cloud-based systems enable the formation of ecosystems; allowing systems, processes and software to be linked up, delivering data-based insights and facilitating greater collaboration.
For an SME looking to adopt the latest disruptive tech, diving straight in is not the best option and making sure base-line processes are in order is a good first step. There is little point in forging ahead with robotic or automation strategies if the business still uses legacy systems that require data to be inputted manually, for example. Such transformations may need to be phased in slowly to avoid excessive workforce disruption and to ensure skilled operatives are trained appropriately.
Managers or business owners looking to implement innovative technologies should always take a step back and consider their objectives. They should also ask themselves what exactly they will need to do in order to achieve their objectives. For some, the solution may lie in the integration of robotics or automation, for others, it may be as simple as beginning to move away from physical data servers to the cloud.
Technological know-how is moving on a daily basis and even early adopters will find themselves using legacy processes and systems before too long. Successfully capitalising on the latest tech trends involves being prepared to rethink the entire business model, or change its operational infrastructure, not just bolting on new elements.
Particularly for SMEs, cost is often cited as the most prohibitive factor when choosing to implement new technologies. However, in reality, people themselves are often the most resistant to change. Winning over teams who may be set in their ways and somewhat resistant to the implementation of new, external ideas is a key goal for senior-level management. The ability to sponsor a corporate vision is vital in driving through any significant change in a business.
Obviously, once company-wide buy-in has been secured, businesses must prepare an implementation plan whilst keeping a close eye on strategic objectives. Customer experience is a key area of improvement for many businesses and personalisation of service is playing a pivotal role in creating greater value for the end user. Big companies such as Amazon and Netflix are leading the charge in this area with bespoke recommendations, but smaller players are realising that personalisation is integral to forming long-standing relationships and attracting repeat business.
For SMEs, novel digital marketing tools are revolutionising the way they can interact with their customer base. Where previously, sending an e-shot was an onerous communications task, CRM and databased tools offer user-friendly, personalised mailing that are capable of getting the right information in front of the right people.
From a cost perspective, with many tools and systems now offered on a subscription basis, the days of having to finance a large system or infrastructure upgrade are long gone. Most new products provide regular updates, ensuring that businesses are always working with the latest version.
This flow of information strengthens intrinsic links between the customer and the business and new mobile interfaces, in the form of apps or portals are increasingly recognised as the de facto way of managing customer accounts and services. For SMEs, having an efficient and useful customer portal allows information sharing and transparency to be central to the relationship. Taking cloud-based accounting software as an example, the use of mobile-enabled dashboards means invoices can be created and shared, along with useful benchmarking statistics and data sets, quickly and easily. The value of the service is enhanced by this flow of data and communication.
Whilst SMEs aren’t necessarily expected to offer the same level of service to their customers as a large multinational corporation, improved access to big data now means it can be harnessed at all levels. While smaller businesses might find the phrase ‘big data analytics’ daunting initially, many quickly realise that they can drive additional value from the data sets they already have on file.
Data can be used effectively to analyse the customer base – who orders what, who pays on time and who delivers on time. Taking time to use data to analyse and streamline performance where possible can be incredibly beneficial for any organisation, regardless of size. Spotting gaps in the market and trends within customer data can also generate cross-selling opportunities; allowing bespoke products and services to be offered to different customers.
For any business uncertain about whether to invest in a ‘disruptive’ technology, the potential boost to productivity and/or efficiency should be sufficient to convince them to make the move. The key lies in quantifying the benefit that the investment is expected to bring, over a defined period of time – this is known as return on investment.
At its heart, disruptive technology encourages existing businesses to keep changing
Long-term survival should also be front of mind when making investment decisions. The sheer pace of technological change means that businesses can quickly be left behind if they fail to invest at the right time. Many smaller businesses also have agility on their side, which means they can bring new products and services to market more quickly and in so doing, challenge the dominant players. At its heart, disruptive technology encourages existing businesses to keep changing, whilst offering newcomers the chance to identify and capitalise on new market opportunities.
Facing considerable Brexit uncertainty, disruptive technology offers all businesses an opportunity to acquire resilience and strengthen their proposition. Finding ways to improve customer services and communication could help to ring-fence clients at a critical time and allow the business to focus on developing its business model to meet the future needs of the marketplace.
Graham Seddon, technology sector head at accountancy firm, Menzies LLP.