Small and medium-sized enterprises (SMEs) were already moving to more technology and cloud-based solutions which is likely to have been accelerated by the Covid-19 pandemic.

According to research from global small business platform Xero, SMEs using cloud accounting grew by almost 50% between 2017 and 2020. This is despite cloud computing remaining the top skills gap for small businesses in the country.

“It’s great to see small businesses embracing digital tools, but investing in technology is only the first step. Many small businesses don’t yet have the skills to match,” said Colin Timmis, country manager at Xero South Africa.

According to Xero’s fourth annual State of Small Business report, more than two thirds (67%) struggle to source the right tech talent, and only 14% planned to upskill their team to narrow the gap.

The survey is based on the responses from 400 small business owners and 200 accountants. It was conducted just before the Covid-19 pandemic struck.

Timmis said: “The challenges raised in this survey will only have been exacerbated by Covid-19. We’ve used the findings alongside advice from industry experts to map out the key areas small.”

Other key findings from the research include:

  • Over half (53%) of businesses found that adopting technology resulted in ‘somewhat big’ or ‘big’ increases to their profitability;
  • A third (33%) of small businesses reported that they are finding it hard to keep pace with tech developments, despite good progress; and
  • More than two in five (41%) businesses indicated that they’re only just keeping up with technology.

The report also found that almost every small business has adopted new technology as 97% invested in it in 2019. This includes cloud accounting which increased from 13% in 2017 to 61% in 2020.

The Covid-19 pandemic has also impacted the budgets of small businesses for tech training. Before the national lockdown, 61% planned to allocate money to it.

Respondents said these were the biggest tech skill gaps:

  • Cloud computing (39%);
  • Programming and app development (33%);
  • Digital product management (12%);
  • Digital project management (10%); and
  • Digital design (9%).

“The research shows quite clearly that all businesses are becoming, to a greater or lesser extent, technology-driven. The cloud is now at the heart of almost every business, which explains why cloud computing skills represent the single biggest skills gap across all SMEs,” said Arthur Goldstuck, technology analyst and founder of World Wide Worx.

“With the digital revolution that occurred as a result of Covid-19 and remote working, this trend will only accelerate,” he said.

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