Have you outgrown your mid-sized business’ technology?

Many small- to medium-sized businesses (SMBs) have outgrown the technologies they started up with and are facing unprecedented efficiency and process challenges they didn’t experience in the past.

In a recent survey conducted by Wakefield Research for Intuit among 1000 business owners, 93% of businesses of 10 to 100 employees indicated that they had outgrown at least some of their digital tools. In that same study, 79% of respondents said their digital tools are too small or too large and feel as though they often overpay for unused features.

But with all the technological advances that have been made around the globe, why are SMBs still operating with legacy systems that cannot keep up with operational demand? Why do they keep investing in disconnected solutions that drag their efficiency in a downward spiral? And most of all, what can they do to fix their tech stack problem as they embark on the next phases of their growth?

Why SMBs struggle with their tech stacks

To understand SMBs’ technology conundrum, it is important to identify what got them there in the first place. According to the Harvard Business Review, there are five stages of small business growth. When a start-up comes to life, it is a micro-business with minimal complexities and formal systems. As the company evolves from one stage to the other, the organization, management style, strategy, extent of formal systems, resource needs, and even ownership can change. In other words, the technologies a start-up uses to get to Stage 2, for example, will likely not be adequate to bring the business to Stage 3, 4 and beyond. With a small company, getting by with a mix-and-match of different platforms, software and applications is easier. But during subsequent growth phases and increases in complexity, working with a hodgepodge of systems is no longer a viable IT strategy.

What are the negative impacts of an SMB outgrowing its tech stack?

Outgrown technologies and the workflows they are based on end up draining an organization’s efficiency, creativity, innovation and competitiveness.

On the one hand, employees waste time looking in multiple places to find the critical information they need to complete their day-to-day tasks and fulfill their project roles. If applications are not seamlessly integrated with one another, a lot of manual data entry or re-entry must be carried out, which can boost the probability of errors and inconsistent information.

On the flip side, managers and C-level executives cannot quickly tap into the analytics or insights they need to make better decisions. Because they cannot rely on their start-up gut feelings anymore, the lack of data visibility and management puts a growing business at risk from a financial, operational, and regulatory standpoint. Furthermore, with a patchwork quilt of systems, IT teams may not have the expertise or tools to safeguard the company from security breaches.

Top signs your SMB has outgrown your technology

Are you stuck with aged technology? Is remaining loyal to your current systems holding your business back, wasting money and preventing you from scaling your business?

Here are the top signs that your business is in desperate need of a technology overhaul:

1. Your systems and applications don’t integrate with one another. If they cannot communicate with each other bi-directionally, you are likely doubling up or even tripling up your employee workload.
   
2. You don’t have complete visibility on or management of your data. As a ripple effect of siloed technologies, your tech stack may be preventing you and your teams from accessing essential information required to efficiently and effectively run the business. For example, if you cannot tap into period-over-period trends or if two software solutions have incongruent information on customers, you know you have a problem.
   
3. Your team keeps developing workarounds or stops using a system altogether. Your IT or other teams may be developing workarounds or using alternative methods to make up for your tech stack’s shortcomings. Unfortunately, these workarounds can waste a lot of time and may not be the sure-fire solutions your staff needs. In addition, your business is probably paying for systems that are not utilized to their fullest potential.
   
4.  Your IT budget keeps ramping up—and you don’t know why. If legacy systems are no longer supporting your processes, your teams may have “slapped on” additional applications to circumvent the problems. But those add-ons can cause your tech-related costs to skyrocket. These costs include: maintenance, security enhancement, new development, tech support, employee onboarding, lost opportunities and revenues, and downtimes. Some studies have shown that legacy technologies can cost a business anywhere from 20 to 25% more on an annual basis.

How can an SMB embark on a digital transformation?

How can an SMB mitigate the problems caused by legacy systems and unlock growth with modern technologies?

Keep in mind that a digital transformation of a mid-sized company takes time. If you try to squeeze it into an extremely tight timeframe, your project is likely to backfire; trying to cut corners will undoubtedly generate longer lead times, higher costs, employee disengagement and ultimately, complete implementation failure.

Start by scouting out a potential technology partner, like Nexus Innovations, to evaluate your current state of tech affairs, conduct a needs assessment, and co-develop a roadmap for the tech stack you envision.