COVID-Induced SMB Struggles Hurt the Enterprise Market

Small businesses are being disproportionately affected by the pandemic. Can technology save them?

COVID-19 shutdowns have hammered the viability of small and mid-sized enterprises (SMEs). Figures released by Yelp show that about 100,000 small businesses shut down in the last six months, about 30% of them restaurants.

And a study by SMB Group discovered that almost 80% of SMEs report that they are doing worse since COVID-19 hit. The survey canvassed 750 companies with one to 2,500 employees. Only 22% said the virus had not negatively affected business. Smaller businesses fared worse overall as well as businesses dependent on in-person, physical locations.

But a ripple effect may be coming along the business-to-business supply chain. Remove enough SMEs and the supply chains of larger companies suffer. The automotive industry around Detroit depends on thousands of SMEs for parts, services and support. Major food suppliers have become more dependent on small organic farmers, as well as smaller transportation firms to bring goods to their distribution centers. The failure of those same SMEs, and the repercussions on larger partners, then impacts surrounding communities. That in turn, causes pain to all sorts of sectors.

Various stimulus packages aim to bring relief to SMEs. It remains to be seen how effective they will be in the long run. The good news is that SME optimism is rising. SMB Group found that only 23% of those surveyed expect revenue to fall over the next six months. The rest are faring better.

SME tech spending

74% of SMEs plan to maintain or accelerate technology investments. Their priorities are customer-facing: sales, marketing, website, e-commerce, and customer service. Next up are technologies that support employees: remote IT support, HR, talent management, and cloud collaboration.

The cloud, in particular, has flourished during the pandemic. Cloud-based tool adoption has soared. Businesses firmly committed to on-premises computing have been forced to adopt cloud tools. Many came to like them. 83% of SMB Group survey respondents said cloud applications have been valuable in weathering the crisis. 37% said that COVID-19 made them more likely to select a cloud solution for application investments.

Those emerging from recent chaos, therefore, are prime candidates for cloud-based applications. But to appeal to the SME market, tools must be easy to use and multi-faceted.

For example, HCL, NetApp and Microsoft are partnering on a joint offering addressing enterprise storage, data protection and server monitoring requirements through a unified pane of glass. Such tools have SME appeal. Expect other vendors to follow suit with stronger relationships aimed at simplifying operations for small and mid-sized enterprises. The one thing they share with their larger counterparts is that everyone is scrambling to move applications to the cloud as fast as possible. In many cases, their survival depends on it.

This article was originally published on 10-06-2020
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