Top 5 Tech Challenges for SMBs, Small Businesses

Top 5 Tech Challenges for Small Businesses

Welcome to the TekEfficient SMB Tech Blog! The intent of this content is to provide small businesses with resources, trends, best practices, and more as it relates to technology. We are defining small business using Gartner’s employee and revenue counts, then including a “startup” classification as well as mid-sized business range of less than 1,000 employees and less than one billion dollars in annual revenue.

5 Technology Challenges Facing Small Businesses / SMB

1 | The Cost of Technology Can Be Prohibitive for Small Businesses / SMB

No shocker here. Technology can be really expensive and as the Internet of Things takes over, keeping up with the larger players in your space can become increasingly difficult without comparable resources. According to independent research firm Ipsos, 9 of 10 small business owners identify the costs of maintaining and upgrading technology as their most significant challenge. Also only 46% feel their budget allows them access to the same technology tools as a large company.

So, how much does the average company spend each year on IT? According to a recent surveys, the average US IT budget is 4% to 6% of revenue. How does that rank with overall other costs associated with SMB? Forbes Advisor put out a recent article will this and all kinds of useful stats for you to use in comparing how your world is progressing. This may explain why so many small businesses feel as though the tech playing field is less than even.

Where are small businesses spending IT budget?

  • Email (84%)
  • Laptops (66%), desktop computers (62%)
  • Smartphones (55%)
  • Outsourced tech support (48%)
  • Landline telephones (45%)
  • Cell phones (43%)
  • Cloud computing technologies (30%)
  • Tablet devices (29%)
  • Online storage (27%), File sharing (24%)
  • Website development tools (21%)
  • Video conferencing (15%)
  • Online collaboration tools (12%)
  • VoIP (11%)
  • Development platforms (8%)
  • Specific applications such as Office Suite, CRM, payment processing, and many others were not included in this list and are just another source of IT spend for growing businesses.With cash flow at a premium, every dollar spent on technology should be well thought out. Small businesses without the bench strength to make informed decisions as it relates to specific or all technology needs should seek out a partner who can help. There is too much at stake to go in willy nilly.Which leads us to the second technology challenge facing small businesses.

    2 | Lack of IT Skill Set / IT Human Resource Constraints

    As was referenced in challenge number one, nearly half of small businesses outsource most or all of their technology management and support. For those companies, IT human resources are limited by budget and the capabilities of the services provider of their choice. This can be a scary proposition as many non-technical business executives have no or little technical training, which can lead to overdependence on the recommendation, and as a result, possible wasted spend and technology that is not a proper fit.

    For those who do bring IT in-house, the challenge of recruiting and retaining talent can be daunting. IT unemployment historically is less than 2%. With CIO Insight reporting recent major tech layoffs pushing this slightly higher, finding high-performing, IT generalists for your small business takes time and patience. Maybe even a bad hire or two before you finally get to where you want to be.

    To say IT talent is in demand would be the understatement of the decade. Not many are on the market and even if you land a gem, competing salaries from other companies in desperate need of your talented personnel is a constant worry.

    The top 5 IT skills shortages companies report include big data/business intelligence, security and risk management, application development, mobile technologies, and enterprise architecture. Others include cloud architects and engineers, network engineers, and project management with AI soon to make this list.

    3 | Rapid Rate of Change & Proliferation Leading to Difficulty in Vetting/Understanding

    There are more than 1.13 billion active websites according to Forbes, up from 10 million in the year 2000. Technology continues to change at an exponential pace making it nearly impossible for those outside of direct interaction to fully understand and vet real technology and services provider capabilities.

    If you buy into Moore’s Law, the computing power of a CPU doubles every two years. The size of the entire, global “datasphere”, is estimated to be 50,000 to 500,000 zettabytes by 2050. Somewhere, Michael J. Fox is saying, “What the heck is a zettabyte”?! That’s a lot of storage. Storage technology has changed and continues to improve as has hardware like Graphics Processing Units (GPU), the core foundation for AI applications. 32 GB RAM for an employee computer is now commonplace in order to keep up with the rich media / apps of today’s marketplace.

    Software iterations can bring new functionality to the same application multiple times per year. New development platforms have made the creation of complex applications easier than ever before, leading to an explosion of online tools such as collaboration, business intelligence, automation and monitoring, and many more. A software challenge can be identifying what features are present and which are missing. Does the product really work as advertised or is it just an optimized demo? Will the company even be around next year and if not, what happens to your data?

    Software as a Service has changed the game for small businesses, but also made things more dangerous. When using SaaS CRM tools, companies entrust their proprietary lists and sensitive data to the software provider’s infrastructure. What happens to the data when the customer leaves? Is there a data destruction policy? And which of the 100s of CRM providers is the right one anyways?

    Integrating applications is another challenge. You may have all of the features you like in one application, but if it doesn’t talk to your other application, than all of those features make no difference. While many applications are built with open APIs, there are still plenty with high fences around their applications or a “pay for play” integration business model where there are costs associated with blocks of API calls.

    Translation: if your team is more than busy trying to keep up with the current pace of your business, it is unrealistic to think you will have the time to understand what technology is right for your company. They key – as in all of the challenges – is to find the right partner who can do this for you, while you focus on what you do best.

    4 | Security & Compliance

    While this doesn’t apply to all small businesses, for those who operate in the realm of government regulations and compliance it can be a serious challenge.

    And, even though security and compliance may warrant their own category, they go hand-in-hand as one of the core pillars of compliance framework such as HIPAA and PCI is privacy and by direct extension the security of sensitive information.

    At a high level, if your company in any way transacts and/or stores information that should not be made available to the public, you are probably governed by some kind of regulatory rules. For example, a government contractor working on a classified project, would be expected to protect all files associated with the project from being exposed publicly.

    Law firms are governed by eDiscovery regulations that take this even further. In order to provide for full disclosure of all relevant case data, all digital copies must be available for recovery/distribution immediately upon request, which mandates special software that not only backs files up for long periods of time – but also offers an easy way to segment and recall the segment with a few clicks of a button.

    The recent hack of healthcare giant Anthem is a chilling reminder to small businesses that even the largest of players in healthcare and beyond are susceptible to security breaches.

    So, if the largest can’t keep their security and compliance up to date, how can small businesses with microscopic comparative budgets be expected to do any better? Security hardware adds huge costs and configuring security infrastructure takes skilled IT labor or partner personnel. Backup and DR mandates additional storage and compute resources and the backup software at a minimum to be able to create a repository to draw from if an emergency declared.

    Then there is the cost, time, and follow-through associated with compliance audits.

    For small businesses operating in a regulated industry, engaging experienced technology services partners and vendors with the proper compliance audit reports is critical to long-term success – even if IT is brought in-house. There is just too much at stake not to have every cog in the technology services delivery not be well-informed and experienced dealing with sensitive information.

    5 | Scaling IT as the Company Grows

    So, your new social monitoring software has hit its stride and droves of users from around the globe are lining up to leverage its innovative intelligence and automation tool sets. You now need to hire more people to help keep up with the demand. Spin up new infrastructure to store the new user data and process it efficiently. Your Google shared drive or free trial Dropbox account probably isn’t going to cut it any more.

    Congratulations. And, welcome to the next phase of your business. It’s a challenging one, especially as it relates to technology.

    Step one should be to get a trustworthy, technology advisor who has helped other small businesses do this before – one with relationships and an understanding of a wide-range of technologies that will help your business successfully evolve past the growth stage.

    The choices you make now will dramatically affect cost, performance, integration, ease of use, security, elasticity, speed to market, potential talent pools, and many other business variables related to IT. Thinking big picture from a technology perspective will help prevent being architected into a corner and experiencing the pain of undoing this.

    The 30% of small businesses referenced in the “cost” section of this blog who are using cloud may be at a distinct advantage when it comes to scaling in a more cost-effective and operationally efficient way. Cloud offers a pay-as-you-go (PAYG) model that allows users to map IT infrastructure like servers and storage to needs as they present themselves, with the ability to scale up and down in real-time as demand warrants. You pay for what you need only and are in essence “never” out of resources when you need them most.

    Skilled cloud architects can be hard to find. Also, for companies in the security and compliance buckets, there is a degree of control that is lost with outsourcing to a cloud infrastructure provider. Their servers, storage, and data handling policies and procedures are standing between you and some pretty hefty fines should a breach occur.

    It takes a lot of courage to start your own business, especially in today’s highly competitive, global economy. We applaud those who have taken the leap and are pouring everything they have into achieving success.

    There are numerous technology challenges that must be overcome for small businesses like yours to succeed long-term. Getting some basic knowledge of technology, if you are not a tech-driven company, is a good idea. A better one, is to ensure you have highly capable partners – like TekEfficient – and employees that can steer you in the right direction.

    Now more than ever, your technology can make or break your success as a business.

    If you haven’t seen our small business technology checklist blog – for those considering a new business venture or those looking to see what tech addition is next –  you should! Good resource.

    Also, if you would like to talk with TekEfficient about your company’s technology environment and the challenges you are facing, we would love to help. There is never a fee for our consultation.

    Thank you for your time and best of luck to all small businesses out there!

    ~Patrick Etheridge – TekEfficient President & CEO

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