How effectively do South African SMEs use technology? Arthur Goldstuck and the team at market research company World Wide Worx had the same question, and recently embarked upon the first South African SME Tech Index, looking into SA SMEs’ relationship with and use of technology in their businesses.
Surveying 303 SMEs employing 1 to 100 people, the inaugural index found that around 63% of South African SMEs effectively utilise technology.
However, this also implies that more than a quarter of South African small businesses do not effectively use technology in their operations. Encouragingly, the index highlights a significant opportunity to empower these businesses to enhance daily operations, efficiency and customer experience.
The trend: why, when and who uses tech
According to Goldstuck, the company’s CEO, the rate at which SMEs have adopted technology in the country is dependent on certain recurring themes.
“The size of the company heavily dictates how tech-ready the company is,” says Goldstuck. “For companies that have more than 30 employees, their tech readiness sits at 89%, but for those with one to five employees the tech index drops to 48%.”
He adds, “We tend to think of startups as tech companies who are tech savvy but the vast majority of companies starting out are not tech companies, they are anything from small retailers to plumbers, electricians or a gardening service.”
The index also showed that SMEs led by men used technology more effectively than SMEs led by women. About 56% of women-led SMEs reported effective or very effective use of technology compared with 72% of SMEs led by men. This means that as much as SMEs in general need support when it comes to technology adoption, women-led SMEs should be priority number one.
“Another challenge for SMEs and technology adoption is that when things go wrong, most SMEs have no idea what to do about it. Having the capability to scale your business increases your tech readiness radically – it almost doubles it.”
“That tells you that greater support is needed in enabling small businesses to hire or to bring in skills. And that speaks to the job creation imperative in South Africa,” he says.
SMEgo, a practical example of tech for SMEs
Old Mutual’s SMEgo is a comprehensive solution to the myriad challenges faced by small businesses when it comes to adopting technology. It serves as a one-stop platform designed to assist entrepreneurs in running and expanding their small businesses. Notably, the platform is accessible through web and mobile devices, making it a convenient choice for tech adoption.
SMEgo saves business owners time and improves efficiency by enabling business owners to transform the way they do business. With SMEgo, businesses can create, download and send unlimited quotes, invoices, purchase orders, customer statements and more. SMEgo makes customer engagement much easier, allowing customers to accept or reject quotes and purchase orders with comments, notifying businesses instantly and enabling them to do proper planning for their business.
SMEgo also has automatic categorisation of business transactions through secure linking of business bank accounts to allow tracking of income expenses and cash flow in real-time, improving informed decision-making. Businesses can also get paid more quickly and on time by accepting online payments via multiple payment methods, sending recurring invoices as well and setting up automated payment reminders.
SMEgo also has a customer support function to assist the not-so-tech-savvy businesses to adapt and make use of its timesaving features.
This SME solution aims to empower small businesses by providing them with the necessary tools and support to integrate technology into their daily operations effectively, ensuring that they don't adopt technology merely for its own sake but rather to enhance their overall efficiency.
What not to do with technology
The single biggest challenge for SMEs, Goldstuck says, is not knowing what technology is available to them and not knowing how to use that technology effectively, while one of the biggest mistakes an SME can make is adopting technology it does not need for its daily operations.
It’s crucial, he says, that SMEs don’t get “technology for technology’s sake” but integrate it daily.
Goldstuck says that to support SMEs effectively in their quest to adopt technology at a faster pace, it’s important to know what kinds of challenges they face so they can be solved.
He concludes by saying that every sector and business is different and this allows SMEs to become skilful in finding resources, even online, that guide them on what to do in their daily operations to find best practices in their particular sector.
“Generative AI is also good at giving guidelines for how businesses can optimise whatever they want to do. They can couple this with available technological support structures,” Goldstuck said.
The number of SMEs in South Africa is steadily increasing, and they require technological support structures such as SMEgo which allow entrepreneurs to bolster their small businesses and catapult them to success.
To get more business insights for SMEs, visit the SME Focus section of our content hub.