Introducing Crowd Views III: Small Business and Technology

G2 Crowd is releasing its third quarterly research report: Crowd Views. The first two focused on “Solving the Talent Crisis” and “Solving Common Enterprise Problems.” This edition is about small business and the technology they use to solve their problems. The goal of this edition of Crowd Views is to help other small businesses understand what their peers are using to solve business problems. Below are some of the takeaways from the report, which you can also download in full.

Crowd Views III

Small Business and Technology

Seventy-seven percent of small businesses in the U.S. are investing in growth in 2017, and 75 percent reported growth as their main business objective (G2 Crowd, March 2017, N=301). Technology, in particular the internet, has created a much more level playing field in business, opening up many new opportunities to the small business to compete effectively on a global scale.

Small businesses face the same business challenges as their medium and enterprise competitors but do so with unique resource constraints. Faced with these constraints, the growth-oriented small business often turns to technology as an equalizer. In 2016, 63 percent reported investing in growth plans and of that investment, 18 percent invested in software, cloud software and other IT systems (G2 Crowd, March 2017, N=301). The technology investment was tied for first along with marketing/advertising and new equipment. Isolating just the businesses that reported focusing on growth, software, cloud software and other technology moves up into a clear number one at 20 percent, which supports the idea that the use of technology and growth are interrelated.

Technology-enabled outsourcing, or business process as a service (BPaaS), is another tool for growth-oriented small businesses. Fifty-one percent indicated that outsourcing is an important part of their business plans (G2 Crowd, March 2017, N=301). For growth businesses, the average moved up to 56 percent, while those businesses that were more focused on maintaining the status quo were well below at 36 percent. The most often-outsourced functions were reported as payroll and legal (each at 36 percent) and bookkeeping (31 percent). Outsourcing functions that are not core to the principal business frees up resources to support growth plans. The smallest businesses, those with 1-to-25 employees, fell below the average in the use of outsourcing at 42 percent. Conversely, the larger segments were all above average, and the largest segmentation, those with 100-to-250 employees, led with 80 percent reporting the use of some outsourcing. Outsourcing IT management, which had an average score of 26 percent, jumped up significantly for the larger segments as well (100-to-250 employees, 58 percent; and 26-50 employees, 47 percent).

The G2 Crowd survey shows that technology is important to small businesses, particularly growth-oriented ones. Forty percent of the respondents plan to increase IT spending this year, and among the growth-oriented businesses that jumps to 47 percent.  As for the types of systems the small businesses used or planned to use, a large number had some form of core IT systems such as accounting, payroll, marketing and CRM. IT systems related to collaboration and work execution, which include team collaboration, project management, and file sync and share/business content management, are being deployed and replaced at a much higher rate. This focus on IT systems that help with work coordination and execution is probably related to the need to maximize the effectiveness of limited resources.

If this data and the underlying analysis is of interest, the G2 Crowd research team has a report using the survey data, that goes into much more detail. The report, which is the 3rd edition of the G2 Crowd “Crowd Views” report series, is available for download here.

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