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New report finds SME leaders lack digital tech skills

Photo of a woman with a laptop

A new report has revealed that 77% of leaders of small and medium sized businesses (SMEs) in the UK do not have the skills required to successfully implement new technology into their businesses.

  • The Open University and Be the Business report also found that while business leaders value training and technology, time and money barriers stand in the way of upskilling.
  • Only 50% of business leaders in Scotland say they plan to address gaps in skills in the next 12 months.
  • The value of technology isn’t clear to all business leaders, with only a minority seeing it as having a positive impact on increasing efficiency (39%), profit margin (24%) and revenue (37%, vs UK average of 31%).
  • However, rapid technology adoption over the past 15 months of the Covid-19 pandemic by SMEs demonstrates there is an opportunity to maintain the uptake of technology and digital skills.

The Open University (OU) has jointly published a report with Be the Business titled Skills for Success: supporting business leaders with digital adoption. The research involved surveying 1,500 business leaders of SMEs from across the UK and listening to the experiences of businesses which have needed to make drastic changes to adapt to the challenges presented by the pandemic. 

Covid-19 accelerated the adoption of collaboration and e-commerce software, for example, in more than half (54%) of UK SMEs. Of the business leaders who adopted new technology or accelerated its use due to Covid-19, at least 85 per cent plan to continue using it at the same level once restrictions are fully lifted.

Large companies have the resources, often at an integrated departmental level, to deliver skills and training, and successfully adopt technology.

However, as many as 33% of Scottish business leaders surveyed said time and cost can make digital adoption too expensive and too time consuming, slightly higher than the UK average of 30%.

On the other hand, the report found that even without dedicated resource, many small- and medium-sized businesses have shown themselves to be flexible and resilient around digital skills and training, with 65% of Scottish business leaders expressing an interest in some form of learning and development in the next 12 months. 

In addition, approximately a quarter of business leaders turn to technology providers for direct support across the four stages of tech adoption – objective setting, purchase, implementation, and ongoing maintenance – but a higher proportion rely on internet searches at the objective-setting (31%) and purchase (34%) stages.

The report’s other key findings include:

  • Photo of the Skills for Success reportFewer Scottish business leaders say they are confident in adopting technology (59% compared to 67% across UK), while just over half (54%) think they make good purchasing decisions about technology.
  • Scottish business leaders value basic digital skills (38%) or technical understanding of technologies (23%) ahead of the leadership skills required to successfully implement technology (6%, vs 12% UK average).
  • One fifth (20%) of all business leaders don’t think adopting technology could have a positive impact on their business at all.

Interestingly, contrary to popular belief that young people are more tech savvy, leaders aged 35 and older report being more generally knowledgeable about cloud-based computing, online accounting, video conferencing and cyber security. In contrast, younger business leaders (18-34) are more knowledgeable about marketing automation and Enterprise Resource Planning (ERP) software, highlighting differences in understanding according to the type of technology. Younger leaders are also most receptive to training.

SMEs know that being ahead on technology adoption is a crucial factor in determining their competitiveness and productivity yet Scotland, along with the rest of the UK, lags behind its competitors in this area.

The Skills for Success report makes a number of key recommendations for business leaders looking to adopt technology successfully, including:

  • Identifying the right digital tools to tackle a company’s biggest challenge
  • Securing time and budget to enable an attitude of continuous learning
  • Empowering SMEs to embrace a digital culture
  • Recognising the power of a varied skillset in an organisation

Susan Stewart, Director of The Open University in Scotland said: 

“Small and medium sized businesses are vitally important to Scotland’s urban and rural economies and this report shines a light on some of the challenges they face in order to remain competitive in the global marketplace.  With our flexible approach to lifelong learning, The Open University in Scotland is well placed to help Scotland’s SMEs address many of the digital skills gaps identified in this report.   

We recognise the validity of the two key barriers - time and cost investment - and have been working in close partnership with businesses, agencies and government since the start of the pandemic to broaden access, often through enhanced funding options for employers and individuals.” 

Anthony Impey, Chief Executive at Be the Business said:

“Great leadership combined with productivity enhancing technology is at the heart of our most successful businesses.  

"But adopting new digital technology can be challenging, even for the most confident business leaders. That is why getting the right skills and training – focused on both digital and leadership capabilities, is essential.”

JohnPaul, Network Operations Centre Manager at Glasgow-based business Systal, features in the report. JohnPaul has undertaken an OU growth leadership course and the company is upskilling their staff with the OU through the Flexible Workforce Development Fund and Graduate Apprenticeships programme. 

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Woman with laptop. Photo by Surface.

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