Are small businesses the future for the new normal?

Small and medium-sized businesses (SMBs) are the backbone of the UK economy, representing 99 per cent of businesses and employing over 16 million people, according to statistics from the UK Department for Business, Innovation and Skills. Fast-growing and innovative, SMBs help to drive long-term economic productivity and growth, so it is vital that they are equipped with essential digital tools and technical support.

During the pandemic, many SMBs were forced to rethink their existing business processes to maintain continuity, drive productivity and, in some cases, survive. To achieve these goals, they increased their investments in digital technologies and introduced new processes – Goldman Sachs’ Small Business Britain: The Impact of Covid-19 To Date survey found that 45 per cent of SMBs changed their business models in response to Covid-19. According to Rob Hancock, head of platform at Microsoft partner and cloud service provider (CSP) Giacom, this has been easier for SMBs than larger enterprises.

“SMBs tend to be more agile because they do not have to manage the same level of bureaucracy and can bring on services and tools at a much quicker pace than larger organisations that may have to go through many layers of approval,” he says. “During the pandemic, agility has never been more crucial, with the necessity of remote working, collaboration tools and security protocols to implement.

“Further, there is also a misconception that SMBs can’t deploy similar technologies to that of larger businesses. This is untrue. Today, SMBs can quickly develop a strong infrastructure that is based in the cloud, including key applications like security, customer data management, data backup and more.”

The Covid-19 pandemic has driven a dramatic increase in cloud adoption, with social distancing restrictions increasing the need for remote working and cloud solutions. In fact, research from Centrify found that over 50 per cent of UK business leaders say the shift to a cloud business model ultimately saved their company from collapse during the height of the pandemic.

Meanwhile, a study from SMB IT market research and industry analyst firm Techaisle, showed that just five years ago most SMBs were still evaluating how they could use cloud software to address their business needs. However, by 2020, 80 per cent of small businesses and 99 per cent of mid-market organisations were using it to support some, or all, of their business processes.

“Traditionally, it was thought that cloud services were used more by larger enterprises with well-developed IT departments than by the SMB market,” says Hancock. “Even before Covid-19, there were questions about how businesses would adopt the cloud, as many large organisations were starting to explore and implement digital transformations. And, although cloud-based productivity solutions have become well established in the enterprise market, reach and service to the SMB market has traditionally been more challenging.

“But this is changing, and most of the vendor community has recognised the available SMB opportunity. As a result, it sought out relationships with SMB-focused CSPs who can aid managed service providers (MSPs).”

Research from Spiceworks Ziff Davis suggests that the cloud will continue to be crucial for the SMB market and channel in 2021 and beyond, indicating that 71 per cent of companies plan to adopt cloud technology directly and more than one-third will rely on the support of MSPs, value-added resellers, retailers or distributors.

“Often after an economic downturn, there is an increase in new smaller businesses that enter the market, for example the insurance industry has seen large year-on-year increases of SMBs,” says Hancock. “Going forward, these new SMBs will aim to have flexibility and scalability, especially if hybrid working is here to stay, so they’ll require more bespoke cloud-based solutions and will turn to IT service providers for their technology needs.”

Outsourcing IT management and cloud migrations to specialist SMB-focused MSP channel partners is particularly beneficial for SMBs who have fewer internal resources at their disposal. “In these cases, MSPs can support them while they focus on growing their business,” says Hancock. “In addition, many entrepreneurs often don’t have the spare time for, or access to, the training they need to manage IT. Therefore, the MSP and wider channel has an opportunity to educate this market and provide complete offerings to it.”

Migrating to the cloud with the help of MSPs and channel partners offers multiple business benefits and opportunities for SMBs.

“Using appropriate cloud software provides SMBs with the resilience and scalability they need to adapt as they grow and easily react to market changes – such as moving to remote working – freeing them from the restrictions of on-premises infrastructure,” explains Hancock. “When you add in flexible financial models and better business protection during a time when cybersecurity is also priority, cloud becomes more compelling. And, with Verizon’s 2019 Data Breach Investigations Report showing that 43 per cent of small businesses have been victims of cyberattacks, it’s clear that SMBs would want security to be included in the cloud too.”

Despite recognising these benefits, IT teams still often view cloud migrations as risky. “This is because when implementing the cloud, IT teams must ensure that any technology they use truly contributes to the business and keeps information safe, rather than leading to the firm accidentally becoming the next data breach news headline,” explains Hancock.

To overcome this issue, the CSP community needs to provide MSPs with confidence that they have a strong technology roadmap that will be able to protect their clients’ data from security breaches and more. Meanwhile, MSPs should ensure they deliver services that truly benefit their customers.

“MSPs must provide the right mix of technology to their customers as they build their IT estate, beyond offering unified communications suites,” says Hancock. “Monitoring market trends and understanding the needs of their customers is vital here. Again, this is where the role of CSPs is key because they need to collaborate effectively with their MSP partners to ensure they are aware of the latest technologies that are available to offer to their clients.”

Working with a partner that is focused on the smaller business market enables SMB end users to access the right products to support their growth as they move from basic requirements to more advanced needs. “Specialist SMB-focused CSPs with strong and relevant vendor partnerships, and a solid technology roadmap, can play a key role in supporting MSPs effectively as they strive to capitalise on the SMB market and grow their customer base,” says Hancock.  

Noting that small businesses are the engine of the UK economy because they provide jobs for local people, drive innovation and invest in the next generation of talent, Hancock adds: “Agile business models have never been more important in today’s climate. Able to respond to unexpected situations, such as Covid-19, SMBs are paving the way for future growth. Moreover, the landscape is ever-changing as we increasingly move into a digitally led world.

“However, it’s the resilience and creativity of this SMB community that will continue to drive business success into the new normal – but only if MSPs can provide it with the right tools, technology and education to survive and grow.”