SPECIAL REPORT: Technological change is making parts of small business, such as managing accounts and chasing up invoices, less time and cost intensive.
A focus on automated systems and back-end technologies is driving change in small businesses as they try to catch up with productivity gains achieved by bigger companies’ investment in information and communications technology.
Bookkeeping, invoicing systems and website development are among the tasks where the greatest impacts are being felt.
Cloud computing is seen to be a key driver of ever increasing ICT accessibility.
West-Perth based Diversus director Dien Tang said bigger businesses had moved on to focus on user experience and customer centred apps, whereas smaller businesses were still seeking to improve productivity and processes.
Diversus is an information technology company offering a range of services including project and process management, web design and big data.
“It’s actually interesting times,” Mr Tang told Business News.
“Most of our small and medium enterprise clients have been looking at trying to automate processes.”
Process automation involves the use of computing solutions to undertake tasks that might otherwise require large amounts of human input, such as balancing ledgers, chasing up invoices or managing stock levels.
Such automation is increasingly done through cloud-based programs, where large amounts of data are stored centrally, not in user devices.
Mr Tang said using automation could generate significant savings for a small business, or free up staff for higher value tasks.
“If you look at leave processing or expense processing, instead of those paper forms people fill in for leave getting put on someone’s desk to get a signature and then basically processing (through) their payroll system or their finance system, what we’re seeing is them coming to us and asking if the process can be automated,” he said
Other benefits included the ability to find bottlenecks in processes, and easy reporting of information, with software providing real time feedback about the state of a business.
“From an efficiency point of view, it’s not just alleviating administration staff but also about empowering the end user, because they know whereabouts their leave form went or their expense claim form,” Mr Tang said.
iQuest Consulting director Anderson Chong said greater mobility and scalability were other benefits of cloud-based systems.
Cloud systems enabled remote working, he said, citing the example of a financial planner who could access files in the cloud while visiting a customer.
Scalability meant that a firm could easily increase or reduce its subscription to a program based on staffing levels and needs, Mr Chong said, making it more fit for purpose.
Cloud-based software programs that can automate processes include Xero, which was created by a New Zealand company of the same name.
One impact of using such software, according to Xero small business director (Australia) Anneliese Urquhart, is that it can automatically invoice and chase up payments.
Ms Urquhart told Business News invoices issued through the Xero platform were paid about 80 per cent faster than average.
A further factor contributing to the take-up of Xero was the large number of add-ons and plug-ins that are becoming increasingly elaborate, such as estimating inventory needs and making purchases ahead of time, she said.
Carbon Group founding partner Jamie Davison said Xero had an ecosystem of hundreds of other applications that could be added on.
Osborne Park-based Carbon is largely an accounting and bookkeeping business, but also provides advice on business systems, or technology that would help an owner manage a business.
Mr Davison said while a business may have used a variety of different programs and applications to manage operations previously, the number is starting to be cut, partly because of the growth of add-ons and plug-ins that operate inside an app.
“There’s probably almost a little bit of a convergence really,” he said.
“Maybe six months or 12 months ago, a lot of businesses had 40 different apps that they used to run their business, the people who were ahead of the curve would just jump on everything as it came out.
“They’d get a new email platform, then they’d get something else.
“We’re seeing more of a consolidation, more people are asking how they can run their business with only three of those as opposed to 40.
“We’re also seeing the software providers, they are still creating specific products, but they’re starting to, say, create a client relations management system that also does invoicing, or also does stock management.
“Therefore we don’t need to bolt three together, we can just use one.”
He said the market was getting more mature, with the most successful app creators spending on research and development, leading to horizontal integration.
Jamie Davison says there is greater horizontal integration as the business process technology market matures. Photo: Attila Csaszar
Capital costs
Technology has also reduced the capital cost required to start a business.
“A retail store, a point-of-sale system with cash registers and everything, used to cost maybe $200,000 10 years ago, Mr Davison said.
“Now you can do the same thing for about $10,000 for a medium-sized one.”
Smaller businesses might simply use a tablet, including food trucks, tradies or retailers, he said, with the devices automatically linking to record keeping software.
Carbon moved into business systems three years ago via an acquisition, Mr Davison said.
Process automation was an investment that paid off for businesses longer term, he said, making it less likely to be at the top of the list when the economy was softer, although he said he was pleased by the unit’s performance.
Off-the-shelf solutions such as Wix, Weebly and Shopify have reduced the cost and complexity of building websites for small businesses.
Diversus’s Mr Tang said that meant vendors such as his company needed to think about how it could add value to customers in order to compete.
That is done by understanding the client’s marketplace, working on their business plan and then translating that to a website, he said.
“If we know something about that person on the other end, we might serve content differently,” Mr Tang said.
“(It’s) not just having this static website like you have in Wix.
“The website is actually dynamic and it changes based on what they are browsing or how they’re interacting with the website.”
Risky business
Increased reliance on technology brings challenges, however.
iQuest’s Mr Chong said that, as an IT company, his role was becoming increasingly like that of an insurance agent.
“We look at a company (and ask) what is your business risk?” he said.
“If the internet gets cut, how can you work; you can’t access email, can’t make phone calls.”
One solution was greater reliance on the cloud for data storage, Mr Chong told Business News.
However, some technological risks can be man-made.
One recent example was the Wannacry ransomware attack that took place earlier this month.
That involved hackers encrypting and locking user data, threatening to delete it unless a ransom was paid.
Although such ransoms are usually in the hundreds of dollars, the virus can sometimes spread to large numbers of systems very rapidly.
Perth-based Probax founder Kevin Allan said small business users were generally becoming more security conscious.
The company operates disaster recovery software for managed service providers, who resell to end users.
The software enables a business to minimise operating downtime in a crisis, and can include services such as data backup and the ability to use emails or applications.
Mr Allan said such software had been too expensive for smaller businesses to use previously, but was now becoming more easily available.
