Dynamo6 Report: Without Investment, NZ SMEs Risk Further Innovation Decline And Productivity Stagnation

Research into the IT priorities and opportunities for New Zealand small and medium businesses has highlighted the pitfalls and productivity gains that should be considered by owners and IT decision-makers.

IT and digital technology services provider Dynamo6 canvassed more than 300 Kiwi SMEs a year on from the onset of COVID-19 and found while SMEs display a large appetite for investing in technology and most budgets are increasing, many may be at risk of overstretching or delivering on poor implementation strategies.

“What struck us were the stark differences when comparing the IT challenges and plans of small business against those of their medium counterparts,” says Dynamo6 Founder and Executive Director, Igor Matich.

Matich notes that the majority of SMEs in New Zealand are planning to increase their IT budgets this year (56%) – with medium businesses reflecting seven out of ten increases – while 42% of SMEs are keeping their budgets the same and only 2% are decreasing.

The median number of planned IT investments was three per business, though some risk overstretching themselves, with several wanting to tackle up to 16 projects.

The focus of technology investments this year and beyond seek to address the three core business challenges of SMEs last year; driving revenue, keeping and delighting customers, and addressing operational efficiency.

The planned technology investments will focus on security and risk management and building out data and analytics capabilities. Projects to engage with employees and keep them productive and connected are also being prioritised. High up in plans too is the use of more cloud applications and completing cloud migrations projects.

The report found there was a wave of post-lockdown remediation work and difficulty getting employees to adapt to new tools, and this often came down to a lack of proper integration plans, which impacted successful adoption rates.

“As an IT provider to primarily mid-market businesses, we understand the critical need to partner with an IT provider to ensure any investment in digital transformation is done effectively.”

Part of this planning, says Matich, is effective and appropriate investment in cybersecurity - an increasingly critical element of IT, with CERT NZ reporting 1,431 cyberattack incidents causing a direct financial loss of $3 million to business in Q1 2021, reflecting a 7% increase from the previous quarter[1]

“Despite New Zealand being exposed to some high-profile cybersecurity incidents, investing in cybersecurity and risk management ranked only 12th priority for small business, compared to number one for medium enterprise.

“While we understand many small businesses are quick to focus on technologies that boost business processes and enhance customer experience, we often see security deprioritised with an ‘ambulance at the bottom of the cliff’ approach employed only when major issues arise.

“I’m surprised at the huge rate of this pitfall for small businesses in particular and would urge smaller operators across the country to reconsider their proactive management and funding in cybersecurity. Some SMEs have hit a wall with the pressures of digital transformation fatigue in this regard and putting the foot back on the accelerator is vital for protecting both individual businesses and our national economy.”

Matich hopes the recent uplift in digital technology across the board with SMEs will result in a much-needed boost to New Zealand’s productivity levels, which according to Stats NZ have remained stagnant at around 1% growth for almost a decade.

To improve this, he points to the potential of cloud software like Microsoft Office and Google Suite, two tools that see an approximate 50:50 share amongst medium enterprises, according to the report.

“From my experience, many organisations are only scratching the surface in embedding cloud platforms into their businesses. There are lots of missed opportunities to streamline or automate menial daily tasks, automate business processes, and improve general work collaboration.

“This could be as simple as updating your website, selling your products on Shopify, moving your ordering or booking process into a better online system – which are simple ways to digitally innovate and boost productivity and bottom lines.”

For example, one of Dynamo6’s retail and property sector clients, Kiwi Property, implemented Shopify and e-gift card solutions to provide their shopping centres like Sylvia Park with a new digital channel to engage with customers.

“What this report has shown us is that while some claim digital transformation has been pushed forward 10 years, there is a smart way for Kiwi SMEs to invest and implement new tools and it’s best done with the bespoke guidance of IT experts,” concludes Matich.

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