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Outsourcing your digital office is a clever strategic move
"The demand for cloud-based outsourcing
is going to increase"
Deloitte Global Outsourcing Survey, 2020
For SMEs, outsourcing is an essential business strategy. Many smaller companies are ambitious in their goals and targets but are constrained by having limited resources. Devoting these scarce resources to internal administrative solutions increases your overheads, such as office space and staff.
At best, this acts as a drain on resources; at worst it can inhibit the allocation of resources to the much more vital (and productive) areas of product innovation and development, customer service and satisfaction, and sales and marketing.
Search through the BizEquals Digital Office marketplace to find a fantastic range of apps, services and products, all dedicated to helping you save time and money.
Core in-house functions
In a small engineering design company, the design of the product would be strategically important and if it requires specialist manufacturing skill, it may be better to keep that in-house. However, if the manufacture is more straightforward, it may well make sense to outsource it.
If a function is strategically and operationally important keep it in-house otherwise it can potentially be outsourced. For those functions kept in-house, there is a huge range of digital technologies that can help you carry out the function more efficiently and cost effectively. These include CRM, accounting software, HR software, and employee workflow and communication.
Not all functions need to be conducted in-house and they can be outsourced to external companies, contractors, or freelancers. Some of the most common functions to outsource include IT, Finance and Payroll.
The top six reasons why small businesses should outsource
1. Cost Savings
2. Quality of Information
Benchmarking the digital capability of small businesses
The index focuses on businesses with an annual turnover up to £25 million and fewer than 250 employees.
The Index Score range is between 1-100 and is used to benchmark small businesses into one of five digital capability segments (Passive, Getting Started, Established, High and Advanced). Underpinning this score are eight key indicators including infrastructure, mobile and security. For a complete overview of the index and it's methodology, please refer to the report.
However, it highlights some interesting data about the digital profile of small businesses, what they're doing well, and focuses on areas that can be improved. The report concludes that if businesses with low digital capability (segements 1-3) moved to high levels of digitisation (segments 4-5), it is estimated the UK economy could benefit by around £75 billion.
Since 2014, the number of businesses in this segement has increased from 25% to 69%
Covid helped many businesses to seek wider markets and 23% said this was the main benefit to being online.
56% of businesses with low digital development said further development was NOT a priority.
Index Score range: 0-18
• Own website: <5%
• Email customers and suppliers: 25%
• Social media to communicate with customers & suppliers: <10%
• Use online government services: c.10%
• Internet Banking: c. 20%
• Online accounting software: 0%
• Essential Digital Skills: <5%
Index Score range: 62-100
• Email customers and suppliers: Nearly all
• Social media to communicate with customers & suppliers: c. 80%
• Use online government services: >90%
• Internet Banking: Nearly all
• Online accounting software: 70%
• Essential Digital Skills: 67%
Six Barriers to successful technology adoption by SMEs
Lack of funds
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Asked about their future plans, only 22% of SME leaders told us they’re pursuing a digital transformation strategy.
Almost half said they’re not currently using any of our 14 emerging technologies.
BT's The Future in 2021 report looks at how digital transformation and technology adoption has shaped UK businesses.
It investigates how companies are using technology to embrace and shape the changing business landscape, as well as highlighting the problems in sourcing and implementing these new technologies, such as skills-shortages, planning and awareness.
The report concludes that there is a tremendous opportunity to build upon the technological change forced upon many businesses due to Covid-19, ensuring that these changes fully contribute to the growth, increased productivity, and increased innovativeness that have occurred as the economy transitions out of the pandemic.
"Much of the story of productivity in the UK is a story about the use of technology."
It is no coincidence that there is also a materially larger proportion of low-productivity companies in the UK than in other advanced economies. Almost 70% of people employed in the UK work in low-productivity businesses, while the same figure for Germany and France is 60% and 65%, respectively. The majority of these companies are SMEs that lack the resources and capacity to adopt technology at scale."
Chief Economist, Bank of England (now former)
Chair, Industrial Strategy Council
Vivian Hunt DBE
Managing Partner, McKinsey & Company, UK and Ireland
Member, Industrial Strategy Council
Be the Business: The UK’s Technology Moment – why 2020 can be the year that changed our trajectory
150 hrs a year
£3,400 a year
BREAKING THE ‘CAN’T ADOPT, WON’T ADOPT’ CYCLE IN UK TECH USE
Enterpise Nation and Dropbox, November 2021
Adopting digital technology can significantly benefit SMEs
Coming into the Covid-19 crisis, just 20% of SMEs said their processes had been fully digitised, and just half of businesses said that investing in technology was a priority. With the rapid change in work practices and processes that the crisis necessitated, 73% of businesses said they have adopted new technology. Over two thirds say that investing further in technology would benefit their business but 50% say they have no cash to make any further investment.
When asked how much they would need to spend to implement new technology, the median amount was broken down as follows:
1 employee - £5,000
2-9 employees - £9,000
10-49 employees - £10,000
50-99 employees - £15,000
100-249 employees - £25,000
Despite SMEs having a high awareness of the benefits of additional investment, seen below, 56% report that the Covid crisis has made investment more difficult. This makes it vital for government to find an effective way to incentivise and support SME technology adoption. When asked what measures would be the most effective the two most poplar measures were tax incentives (setting off the cost of the technology against tax) and vouchers.
Covid, and the consequent serious disruption to business, has forced companies to consider new ways of working and new technologies. Two in three believe that technology can improve their business performance and 60% of medium-sized businesses expressed a willingness to invest in new technolgy post-Covid (45% overall).
Be the Business and McKinsey & Company: September 2020
Adoption of different digital technologies by firm size (%)
Source: ERC Business Futures Survey 2020
46% & 52%
Small & Medium firms
80% & 77%
Small & Medium firms
66% & 75%
Small & Medium firms
When leadership takes decisive action
It often takes a shock to kickstart change. Covid-19 certainly provided that, requiring companies to accelerate existing plans or rapidly modify existing technologies and working practices to the new working environment. As the chart, below, suggests, the old adage that 'necessity is the mother of invention' can be seen in the speed with which companies rapidly adapted to the new situation.
Productivity Benefits of adopting new technologies
Source: Office for National Statistics
"Now, even the smallest start-up can access the computing power and storage of Google, Microsoft, or Amazon. In so doing, they reduce capital investment in less-differentiating areas and invest instead in the technology assets and capabilities that provide an edge over competitors - and through which they have the ability (and sufficient scale) to be distinctive."
Covid-driven digital change could add 6.5% to UK GDP, meaning an extra £76billion by 2025 and an extra £236 billion by 2040.
Three areas of technology investment will create the bulk of this positive change:
1. Enabling new ways of working - such as Remote working, away from the office; Hybrid working with a blend of Remote and Office working; Flexible/Dynamic working, with employees able to choose what options work best for them.
2. Providing more digital services - to allow employees to work from home more effectively and to keep customers serviced and satisfied.
3. Making better use of data - including using data to improve insights into customer demand, improve efficiency, power better business intelligence and provide enhanced security.
Some Key Services Your Business Can Outsource
Accounting and Finance
Accounting is commonly done by small businesses in-house, initially, but the time and skills required to deal with the complexity and compliance often encourages outsourcing. Around 40% of businesses outsource these functions, including payroll and pensions.
Information Technology Services
IT management is a very popular service to outsource, as many small businesses simply don't have the resources or skills to maintain their IT requirements in-house. Services may include an IT helpdesk, cyber security, hosting, disaster recovery, and network management.
Whether it is online digital marketing or more traditional print marketing, the skills and time required to undertake this vital task are many and varied. Outsourcing to a professional firm ensures you get the benefit of their creativity and experience without the drag on your time.
Keeping customers happy is vital for any business. However, it can be a time-intensive process, diverting your staff away from other important functions. Cloud-based or shared-agent services may be a better solution, as long as you are able to provide a clear and comprehensive outline of your customer profile and requirements.
Finding staff with the right skills and experience can be a time-consuming, difficult task for smaller businesses. Dealing with the ongoing training, health and safety, pension and benefits administration can add further layers of administration. Outsourcing can ensure your business efficiently and cost-effectively looks after its staff, helping reduce turnover and disruption.
Logistics and Shipping
Depending on what products and services your business sells, outsourcing your logistics can be a siginificant time-saver. An outsourced provider of warehousing and delivery can not only ensure you meet all legal and customs procedures, vital if you export, it can also help your customer service as the outside expertise can ensure a smoother route to market.
Planning your digital transformation
The case for businesses to plan for, and implement, the adoption of new technology to help drive growth and productivity is compelling. However, as The Future In 2021 report produced by BT shows, only 22% of SME leaders said they were pursuing such a digital transformation strategy.
This BT report, co-produced with Cisco, sets out to help guide businesses through the planning and implementation stages. It found that a huge 70% of digital transformations fail - the most common problem being planning, not the technology itself. It guides you though five steps that will help your business take advantage of new technologies, ensuring that the benefits, such as improved staff morale, boosted efficiency, financial gain and enhanced security are fully realised within your business.
Deciding what you need for your digital office
Set your objectives
When you set out to invest your hard-earned money in new software, do you know what do you want the software to do? Are looking to boost your productivity, or reduce fixed overheads?
Do you have a specific bottleneck or staffing issue which needs addressing? Do you understand what problem(s) your software will solve and what benefits your business will gain from it (and how will you measure any such gain?).
Write down a list of your objectives and discuss them with members of your team so that they can share their ideas and make suggestions.
Define your requirements
Sometimes, the business functions of a company can be implemented in a slightly chaotic manner. Processes evolve organically and, with staff turnover, it can sometimes be opaque as to how a particular process or function has evolved.
Understanding each function that you want replaced, and planning for future development and growth will allow for the most effective and efficient replacement of your current processes.
Give a 'critical' score to your business processes and functions to better understand what you do and don't need.
Keep an eye on the costs
Budgeting for new software can be a little tricky. Sometimes attributing costs to a particular process or function can be hard. Once you understand your current cost of undertaking a function, it will be easier to assess the cost/benefit of buying in new software.
Working out the Return on Investment (ROI) will be made easier, especially in conjunction with the reasons to outsource, in the section above.
Create a calculator that will set all the current costs (and savings) against the cost of the new software. Be sure that the benefits outweigh the costs (and risks).
Making the purchase
When you have made the business case for new software, you will need to implement a process to search for, narrow down to, and purchase your chosen software. Ask colleagues, friends, read review sites, try a free trial if you have the time and resources.
Make sure you give sufficient time for your in-house team to get comfortable with the new software. Change can be good long-term but it will undoubtedly cause disruption in the processes as well as the team.
Make sure that all parties in your company have buy-in to the purchase process. If they feel engaged and with buy-in to the new software, it will ease the implementation process.
Get FREE help going digital
Be the Business
Be the Business is a not-for-profit organisation set up by the government to support SMEs. Their site is designed to provide FREE support and advice to help SMEs solve the 'productivity puzzle' through technology implementation.
With a series of guides and interactive action plans, the path to the successful adoption of technology that can really help your business has never been easier.
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