Thinc insights
Productivity continues to make headlines in the UK. SME productivity is core to this, as organisations balance their ambitions with caution. So, what lies ahead? We talked to decision-makers to get the picture.
When the topic of the UK economy is discussed, SME productivity often isn’t far behind. Medium-sized businesses make up just 0.5% of UK companies, yet account for 26% of employment and a staggering 30% of UK economic output, according to NatWest.
However, recent years have seen this burden turn to drag, with many complaining in a Grant Thornton survey that a lack of funding to invest and increasing levels of staff burnout were slowing their productivity.
Few of these businesses were expecting this year’s Budget to signal a dramatic change in fortunes, or will have been surprised to see the OBR’s lowering of its productivity forecasts for the medium-term. Indeed, many will have been relieved that it didn’t bring significant tax increases.
But with businesses expecting to reduce headcount in the next year, according to a Bank of England report, the need for efficiency in processes and systems is more important than ever. The challenge for SMEs is in knowing what the right investment should be and how to get the most from it. After a long period of caution, many may be ready to be ambitious, but picking the right direction is crucial.
Our survey of IT decision makers paints a picture of how the UK’s mid-market is feeling about this challenge. As we emerge from the Budget towards the new year, and businesses ponder how to unlock productivity, let’s look back at what we learned.
Maximising productivity is not something that’s achieved by individuals and teams – it’s a strategic decision, particularly when it comes to the technologies that your people will be using. The old cliché still holds true – it’s not about working harder, but working smarter.
To understand what hurdles IT decision makers face in their strategies, we asked them to tell us which concerns slow down their decisions. The three most common responses were:
Interestingly, the economic factors that have made headlines in recent months – from tax burdens to international tariffs – were cited as concerns, but less so than these three main blockers.
“Too often, businesses are trying to solve the right problems with the wrong tools, or they’re stuck debating whether tech or people are the answer,” notes Dominic Ball, Managing Director at Thinc. “The truth is, the answer is different for every business, and looks different from every business role.”
As noted in the above section, SMEs see the use of AI and automation as important to their IT strategies. When asked specifically for their thoughts on how these tools will address their business challenges, some 54% of business leaders and 42% of IT leaders see them as an immediate game changer.
Only one in a hundred respondents see no role for AI and automation. However, like every new technological advance, the benefits of AI are only fully realised when fully integrated into working processes.
Related to automation is the idea of systems integration. While automation is built into many business and finance systems these days, cutting time from repetitive and time-consuming tasks, systems integration goes further still by connecting separate systems. By ensuring data flows smoothly between, for example, your ERP and CRM systems, you’re removing manual and error-prone double-keying, and opening up the potential for even greater automation.
Integration, we learned, is top of the agenda for IT decision makers when they evaluate the performance of their core business systems. It’s the most common priority for SMEs, cited ahead of process efficiency and real-time reporting.
Many SMEs will look outside their organisation for guidance when it comes to their IT systems – but our research found that there’s a disparity among the sources that leaders turn to. This could be leading to differences in expectation that compound those constraints felt in strategic planning.
Breaking it down by role, we found that CEOs get most of their advice from trade shows and industry events (62%). MDs are the least likely to rely on those sources (36%), instead, preferring guidance from existing IT partners and consultants (56%). This trend was even stronger among CTOs, of whom 64% draw on a wide range of sources.
“In mid-market companies, where leadership teams are smaller and more tightly connected, one might assume alignment would come naturally. Yet differences in perspective can still stall progress before it begins,” says Ball. “Our survey found that CEOs often focus on ambition and opportunity, while IT leaders focus on practicality and feasibility. Without a shared approach, technology initiatives risk remaining aspirational rather than impactful.”
Encouragingly, though, when the decision is made to outsource IT services, this is done with long-term success in mind. The most common priority, when asked what’s the most important reason for appointing an external technology partner, was to ensure stronger alignment of IT strategy with business objectives.
There also seems to be a strong appreciation of the service provided by IT service providers that aren’t tied to a particular brand’s solutions. Most SMEs – 61% of respondents – associate independent IT service providers, not tied to specific software vendors, with flexibility and adaptability. Half also recognise the value of stronger partnerships, bolstered by consistency in their team and the deep expertise offered by non-aligned consultants.
At Thinc, the messages we hear in this research chime with the conversations we have organisations every day. SMEs have never understood the need for efficiency – and the potential of technology to deliver it – better than they do today. But the first step, when the stakes are so high, can remain a daunting one.
“Mid-market businesses stand at a crossroads – in a testing climate, they understand that they need to find more efficient ways to work. But it’s hard to decide on, let alone commit to, the technology investments that will make this a reality,” says Ball. “There’s never been more information out there about the power of technology. What businesses need is unbiased, practical advice that cuts through the hype.”
At Thinc, we’re here to help SMEs make sense of their options. Proudly independent with more than 30 years’ experience of supporting ambitious organisations in achieving their potential, we’ll give you unbiased guidance on the system and process improvements you need to unlock greater productivity.
Want to know more about our research into IT needs among midmarket businesses? Read our blogs:
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