Kathy Gibson is at the Xero roadshow in Sandton – South African small businesses are facing massive challenges in power and Internet connectivity, but they believe technology is crucial for their survival.
Xero presented its “State of Small Business 2019” research, conducted in association with World Wide Worx and examining what the main barriers and opportunities are for local SMEs.
Not surprisingly, 59% of SMEs cited load shedding as a major challenge, one tat cannot be solved at the business level.
However, SMEs can mitigate the power issues by using cloud systems, says Xero South Africa country manager Colin Timmis. Because cloud solutions can be used at any location, SMEs can plan their working places around load shedding schedules, he points out.
Other challenges include software compatibility, according to 45% or respondents, with different solutions not able to work with each other.
This ties into the third challenge, where 29% of respondents cite new technologies entering the market as a barrier.
The research finds that SMEs want solutions that integrate with their current IT systems and infrastructure tools. These solutions need to be intuitive, work across browser and mustn’t alienate key internal and external stakeholder.
Arguably one of the biggest challenges that SMEs in South Africa face is that of connectivity: Internet connections can influence the performance, availability and ability to function day-to-day.
A massive 49% of SMEs still use ADSL connection, although 37% have moved to fibre. Meanwhile, 14% of businesses are connecting via wireless services like 3G/4G phones or routers.
The quality of connections is a pressure point for SMEs: 45% say they are “great” and 43% say they are “okay but not 100% reliable”. The majority (57%) of those with a reliable connection are on fibre.
Timmis points out that, for many users, a poor connection is almost worse than no connection at all. “We need to figure out how to give our businesses better connectivity.
“A big ask we have of government has got to be how to get WiFi into communities.
“In uncertain times like these, technology can provide stability,” Timmis adds. “For example, cloud software can help overcome issues with connectivity. It helps to make your business more agile, meaning you can work from anywhere at any time. Being able to move when there are scheduled power cuts or patchy internet is crucial to keeping your business running.”
Nearly all respondents who had adopted cloud technology said that they noticed an increase in profit (98%) and an increase in efficiency (99%). More than half (51%) suggested that it had improved their ability to work anywhere, and a quarter (25%) said it had improved security.
In addition, nearly two fifths (38%) said their IT set up was ahead of the curve. Over half (56%) said they use basic automation, whether in operational or accounting tasks. A quarter (25%) said they were using Internet of Things (IoT) technology, followed by cloud computing (19%).
“It’s great that South Africa’s small businesses are seeing the benefits of adopting technology. But there will be a learning curve for anyone using new software and employees shouldn’t be expected to self-teach. Because people are more tech-savvy than they used to be, training normally only takes a few hours. It could make all the difference in getting return on investment on the technology that you buy”, said Timmis.
Other key findings from the research reveal:
* Three quarters (79%) of small businesses claim that accounting software support is very important;
* Three quarters (78%) of respondents use accounting software to manage financial records and over half (55%) are using desktop solutions;
* Only one fifth (22%) are using cloud accounting tools and nearly a quarter (23%) still do their books manually; and
* Only a tiny proportion of respondents (0.25%) are using AI and machine learning.
The research represents the opinions of 400 South African small business owners and 200 South African accountants. Almost half (47%) said their staff were highly tech-literate, but more than two thirds (67%) don’t allocate budget for training employees to use the software provided.