Kathy Gibson at the Xero roadshow in Sandton – South African SMEs are starting to embrace cloud tools, and they are seeing an increase in productivity and profitability as a result.
However, a lot of small businesses are still reliant on outdated systems for vital functions like accounting and have still to realise all the benefits that technology could offer.
In fact, a massive 83% of SMEs are still using Excel spreadsheets, while almost three quarters (73%) are still printing invoices. This demonstrates a distinct lack of awareness concerning the benefits that newer technology can bring, according to a new survey from Xero and World Wide Worx.
SMEs make up 91% of the businesses in South Africa, they contribute about 36% of the GDP, and are responsible for about 60% of the employment.
“Collectively there are incredibly important for the economy of South Africa — and generally they have really poor systems,” Gary Turner, MD: EMEA at Xero, says.
However, SMEs are using some technologies, and these are paying dividends.
The report indicates that 44% of South Africa’s SMEs are already using cloud technology; and 70% of them say it has saved them time — many claim to have saved more than 10 hours per week. And 52% of SMEs say cloud services have saved money.
In addition, 49% of entrepreneurs report improved efficiency; 38% indicate it has improved their business efficiency; 38% say it has improved that business continuity; and 33% highlight the way it has enabled remote working.
The report also points up the fact that SMEs still have a fairly relaxed attitude to technology: although 85% of them believe they are keeping up with the latest development, 52% admit that they are only just keeping their heads above water; and 45% acknowledge that they could be doing more.
The survey underlines that SMEs are aware of the benefits that technology adoption could offer, and are keen to do more, with 36% of respondents placing a high strategic priority on reviewing their technology usage
Almost two-thirds of respondents plan say that reviewing their technology strategy is a high or medium priority.
Cloud computing is gaining traction and features in 58% of SME’s business plans for 2018.
But connectivity is still an issue, with 41% of SMEs reporting connectivity problems, and 59% saying their connection is “OK”, but could be better.
It’s rare for SMEs to go a month without connectivity issues: 66% say they have severe issues for one to three days every month; and 29% struggle for five to 10 days.
This results in lost time, according to 56% of respondents, and frustrated employees (26%).
Colin Timmis, South Africa head of accounting at Xero, comments: “With economic volatility, it’s been an uncertain time for South Africa’s small business community. The entrepreneurs surveyed in our report demonstrate a strong awareness of the new tools available to them, and many are actively working to incorporate them into day-to-day working life.
“While it’s certainly encouraging that 58% of SMEs included cloud technology it in their business plans for the coming year, failing to adopt the right technologies, risks them being left behind.”
Turner adds: “One way or another, tech adoption is inevitable: South Africa’s businesses may as well take control of it.”
South African SMEs face many of the same challenges that small businesses face around the world, Turner adds.
These include simply staying in business. “Outside of just surviving in the choppy seas of the economy, and the ebbs and flows of struggling to find business, SMEs struggle to get access to capital to grow their businesses,” he says.
Access to skills is another challenge, Turner adds, along with the universal business challenges of the economy, exchange rates and cost of labour.
Xero provides accounting services in the cloud for SMEs It operates around the world, and has a full subsidiary in South Africa.