Complexity, not cost, is holding SMBs back from the cloud

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Technology adoption has played a huge role in how small businesses have navigated over the past couple of years. Some businesses have used their technology to stay in touch with their team and customers, while others have found digital solutions to be the difference between closing their doors and maintaining a steady income.

In many cases, cloud-based solutions have helped small businesses stay operational even when they couldn’t physically access their premises during shutdowns. Cloud adoption continues to play a vital role in small business survival, and we’ve seen it accelerate even after the pandemic.

According to our findings from the Xero State of South Africa Small Business 2022 report, conducted by World Wide Worx, half (51%) of businesses are now using cloud technology. Of those who have adopted cloud technology, 30% say it has helped them reach new customers, and more than a quarter can report improvements in their processes. almost a third (31%) have used it to simplify their financial processes, leaving them with less administrative work. Another 28% say cloud technology has improved their overall business operations.

But while companies are eager to embrace technology and explore new ways of working, many are still struggling to get to grips with digital tools. Xero has partnered with behavioral science experts to study the human factors that prevent small business owners from adopting digital tools, despite knowing the benefits. We discovered that small businesses have a set of deeply held beliefs about technology that influence their decision-making. Behavioral science seeks to understand these factors in order to help small business owners overcome them. We’ve identified five strategies that can help companies shift their mindset toward technology adoption.

1. Encourage small steps, not giant leaps

Small business owners often feel intimidated by the perceived uncertainty and hardship that comes with investing in something new. To make technology adoption easier and less uncertain, think of the process as a series of small, incremental steps rather than large-scale gambles. Every little change brings small but distinct benefits – and the further you go, the more those benefits turn into huge ones. Break down adoption processes into simple, clear steps to rethink the uncertainty about potential risks ahead.

2. Celebrate small business peers

We know that small businesses are more likely to try something new if they see their peers doing it – and benefiting from it. Connecting with others who have reaped the rewards of tech adoption can change what they might consider the social norm and motivate them to follow in the footsteps of their peers. Find similar companies and identify clear links between their actions and their technology results, and ask them to share their experiences – both positive and empowering.

3. Don’t get left behind

Take a long-term perspective on technology adoption – just as you would with financial or business goals – and it becomes clear that today’s “good enough” is usually tomorrow’s “not good enough” (think to Netscape or Blackberry). When considering a current solution and a new technology, quantifying and comparing the performance of the two options can help dispel illusions about the security of a “good enough” approach to the comfort zone of technology and inspire you to rethink how good the status quo is. it’s true.

4. Refine and simplify choices

Too many choices can be paralyzing in the decision-making process. More information isn’t always better, and often small business owners freeze up. Try not to get overwhelmed by the overload of information and options and instead ask your advisor for clear, knowledgeable technology adoption plans that build confidence, not confusion. When discussing your options with your advisor, ask them to limit the number of choices and use direct “like-for-like” comparisons that focus on outcomes rather than features.

5. Measure benefits meaningfully

Many small businesses, and sole traders in particular, experience anxiety or confusion when faced with information that is not relevant to their business. In general, we are much more likely to take action if the benefits of doing so align with our values ​​and identity. In terms of technology adoption, this means understanding the challenges and opportunities in a way that is relevant and tangible to small business owners, based on their real, lived experience of doing business.

For advisors, using metrics that small businesses are already dealing with can help, as can a transparent view of possible challenges and practical ways to overcome them.

It’s clear that changing mindsets requires more than education, explanation, or encouragement — the tools we use most often when trying to accelerate technology adoption. It’s clear that the biggest barriers to harnessing the benefits of cloud technology for small businesses aren’t a lack of information or choice, but a deeper concern about the complexity of the change process. By directly addressing the behavioral barriers that arise from how we naturally react to risk, reward, and uncertainty, I believe we can help drive adoption of cloud technology to benefit our small business.

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