- Recommendations published by The Coalition for a Digital Economy (Coadec) advises the creation of a Digital Adoption Fund to incentivise tech adoption amongst SMEs, and address the UK’s decades-long productivity problem.
- Report comes as Ministers are looking at how the Government can promote wider digital adoption amongst SMEs.
- 30% small business owners consider costs to be the biggest barrier to adopting digital technology. But once they make that initial leap to using technology they are delighted with the results, and 80% would recommend their peers to use similar products and services.
- With an estimated £92 billion worth of productivity gains up for grabs, the report urges the government to take advantage of the ‘Zoom boom’ and double-down on tech investment to drive post-pandemic economic recovery.
DOWNLOAD THE REPORT HERE.
Coadec has launched a new paper arguing that the Government should provide financial incentives to first-time adopters of tech in order to to boost SME productivity, which will be vital for the post-pandemic economic recovery. Over a third (38%) of British SMEs have very low levels of digital adoption, according to the EU’s Digital Intensity Index. By contrast, in Sweden and the Netherlands just over a fifth (23%) of firms have very low levels of digital adoption. In Finland, just one in ten (11%) have low levels of adoption. This helps to explain why the UK languishes in the bottom quartile of the OECD’s productivity rankings.
According to the research, Covid-19 has promoted SMEs to take up basic forms of technology like email, office software and video conferencing, but there are still extremely low levels of adoption rates for advanced technology solutions that can boost long-term productivity and profitability. 1 in every 3 small business owners consider costs to be the biggest barrier to adopting these products. But once businesses make that initial leap to using technology they are delighted with the results, and 4 out of every 5 would recommend their peers to use similar products and services. The new report, including survey data from both SMEs and tech startups, has four recommendations for the Government to boost digital adoption and productivity, including:
Creating a Digital Adoption Fund, notable lines coming out of the research include:
- 69% of SMEs said that financial incentives would result in their business implementing more digital tools.
- 90% of SMEs believe that these incentives would directly benefit their business performance.
- Several regions with the lowest levels of productivity particularly welcomed this approach, such as the North East (75%) and Yorkshire & the Humber (72%).
- 93% of tech startups believe a digital adoption fund would boost their sales and revenue, which would be a win-win for British industry.
Establishing a sector-by-sector matrix, notable lines coming out of the research include:
- SMEs lack the capacity to understand all the digital tools available to them. The Government should a sector-by-sector matrix that lists a set of pre-approved productivity tools as a guide for SMEs.
Work with LEPs and local groups to build links between startups and SMEs, notable lines coming out of the research include:
- 90% of tech startups are eager to help SMEs to understand the benefits of tech adoption and lean business models but the necessary communication channels are lacking.
Commenting on the report Dom Hallas, Executive Director of Coadec, said:
“Throughout the pandemic, small businesses (SMEs) have had to adapt to survive – which has been no mean feat. But there is a massive difference between using Zoom out of necessity, and investing in the type of digital technology that can improve a company’s long-term productivity and profitability. Cost is the biggest barrier to digital adoption for SMEs, and this barrier could be easily dismantled by the government if they provided first-time adopters of technology with a financial relief on their initial digital adoption investment. An overwhelming majority of SMEs say that a Digital Adoption Fund would result in their business implementing more digital tools. We’re on the verge of finally cracking the UK’s decades-long productivity puzzle, but we’ll lose out on these massive gains if we do not encourage this investment now. It would be a win-win for British industry.”
Chris Lier, Co-Founder of LeadGen said:
“From our experience, US and European SMEs are much more open to new technologies than their counterparts in the UK, who are very cautious when it comes to adopting productivity-boosting technology. This difference in attitude can help to explain the UK’s poor levels of productivity. Attracting customers is our biggest challenge, but once SMEs adopt our product we find they love the results and word-of-mouth forms a huge part of our new business growth. If the government provided financial incentives to SME’s to get them over that initial ‘cost hump’, it would help improve the uptake of digital technologies and boost the UK’s productivity. It goes without saying that a government scheme that encourages SMEs to adopt new technologies would be hugely beneficial to both our company and our customer base. This would open up opportunities for other startups like us to expand to new audiences. We have less resources than the tech giants to educate potential customers so a scheme that creates the space for SMEs to link with start-ups would be of huge benefit.”