With the bargain bonanza that is Black Friday on the horizon – swiftly followed by Cyber Monday’s sizeable online shopping discounts – the consumer feast which culminates in Christmas and the New Year sales will soon be well underway.
Increasingly, much of this consumer activity is both driven by and facilitated through technology; not just in terms of the products that are sold, but the way in which prices are compared and best deals discovered, objects (and in some cases services) bought, and distribution and delivery arranged, all through a screen – whether a smartphone, tablet or computer.
For those in the retail industry, technology has revolutionised the way business is done. While new players have emerged, and many existing businesses have adapted well, others have lagged behind, with some falling by the wayside altogether.
But what about other business sectors? Is technology opening up opportunities for growth and increased profits, or is it more of a dangerous disruptor that is cutting profit margins to the bone? The answer is both – depending on your viewpoint.
The latest Inside the Minds of Business Leaders report, published earlier this year by Price Bailey, revealed that technology was something of a double-edged sword for many businesses, with leaders recognising both the opportunities it offered and the threats it contained.
The report draws on the survey responses of 400 lead decision-makers at owner-managed firms across London and East Anglia, all with reported sales above £1 million. Fewer than one in five of those responding to the survey were from businesses in the tech or hi-tech sectors, with others from a range of 10 other sectors including property, healthcare, manufacturing, professional services, and retail, distribution and logistics.
And while most business leaders (77%) expected their firm’s financial position to improve over the next 12 months, that optimism was tempered by the rising threat of technological disruption, viewed as the main barrier preventing business growth by 76% of respondents – pushing Brexit into second place.
Maximising opportunities, recognising threats
Digging deeper into those responses, it’s clear that businesses are already identifying some areas of technology as having huge potential for their future development. For example, cloud services and online sales were viewed as positive opportunities by 80% and 74% of business leaders respectively, while artificial intelligence (AI) – often thought of as an emerging technology – was already in use by more than two-thirds of respondents. While it’s not clear what type of AI they are using, it’s most likely to be smart learning software – such as a ‘chatbot’ – which can automate online customer interactions. Automation (67%) and outsourcing (62%) were also cited as major opportunities for improving businesses over the next three years.
However, there were significant concerns about how social media marketing by new or existing competitors could damage companies – 73% saw it as a potential threat to their business, while only 42% viewed social media marketing as an opportunity. And it wasn’t just about marketing; almost two-thirds of firms (64%) predicted that fierce competition deriving from technology would hit profitability within three years, with 72% seeing outsourcing and 67% seeing AI as threats.
Don’t ignore the strongest agent of change
It’s no surprise then that technology emerged in the survey ahead of either politics or economics as the strongest agent of change – both good and bad. The key question is what businesses can do to stay ahead of the curve (or at least, keep up with it)?
One important message was the continuing need to invest in people. Business leaders don’t to be technology experts themselves, but they do need to employ those with the necessary skills to maximise the opportunities that technology brings. That may mean identifying and recruiting new talent or training existing staff to use the technology available.
Investing in the technology itself should also be a given, although some business leaders clearly seem to be reluctant to push ahead into areas they don’t know well. The reality is that while new technology can offer alternative ways of operating, driving efficiencies and reaching more customers, ignoring that potential could see businesses punished for their complacency, as tech-savvy new entrants up to speed with more effective ways of working threaten the technological laggards.
It looks likely that those best able to invest wisely in technology to realise process and business efficiencies will outperform when it comes to future growth and profits. Higher growth businesses are likely to be those whose investment best enables them to wield technology, rather than become victims of it.
This post was written by Jamie Gladstone Partner at Price Bailey. If you would like more information on this article, please contact Jamie using the form below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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