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Three Lessons for SMEs Adopting Technology

Dec 09, 2013
Sarah Dimick
Sarah Dimick
Research Associate
Technology and Innovation

It’s no secret that Canada’s economy relies on SMEs. According to Statistics Canada, non-agriculture private business SMEs account for 54.2 per cent of the GDP in Canada.1 In fact, SMEs contribute the majority of GDP in 10 out of 14 Canadian industries.2

Large firms have considerably higher labour productivity than small or medium-sized enterprises. Statistics for 2008 on productivity, defined as GDP per hour worked, are $71.60 for large firms compared with $42.30 per hour for medium-sized firms and $34.60 per hour in small firms.3 Given the difference, with small firms less than half as productive as their large counterparts, it is clear that increasing productivity in SMEs will play a substantial role in growing the Canadian economy as a whole.

The Conference Board of Canada’s Innovation Policy team recently hosted a one-day workshop aimed at bringing together SMEs to explore the role that ICT adoption can play in driving productivity and growth. Three SME presenters from different businesses shared their stories of ICT adoption and three key themes emerged from this:

  1. Know your process, keep it simple. The first commonality among these SMEs was that they all had to identify the processes involved in their business and work diligently to keep those processes as simple and straightforward as possible. One presenter indicated that his firm was already working with “lean” principles and that this clearly eased the process of adopting new technology. The other presenters talked about the need to get their houses in order first by simplifying their existing processes before trying to adopt new technologies.
  2. You need champions. Each of the representatives from SMEs who spoke, and many of the other participants in the room, mentioned the need for champions when adopting new technology. Champions were needed at different levels within the organization: strong top management support was needed alongside project managers who could shepherd the adoption process.
  3. Outside expertise can be invaluable. The representatives from SMEs who spoke all accessed NRC’s Digital Technology Adoption Pilot Program for funding and support. Each of the three found incredible value in the program’s offerings—the key resource they depended on seemed to be the connection to someone with the expertise and knowledge they needed. Being able to outsource the assessment of the need and potential fits for new technologies meant that the process could go forward while those responsible for keeping the business running did just that.

There is an extensive body of research that points to the links between ICT adoption and increased productivity. From over a decade of research, we know that “the use of ICT by staff increases productivity … the adoption of computer networks and more than one type of ICT drive labour productivity and growth … [and] ICT investment can be an important catalyst for a profound transformation of the firm.”4

From the SMEs in the room, we heard that they were being forced to look at technology adoption to be able to compete with international companies that had begun to be active in their regions, as well as to address skills shortages and increase margins. Although rarely a seamless process, they confirmed that digital technology adoption had not only increased productivity, but had also driven growth in their companies.

1  Danny Leung and Luke Rispoli, The Contribution of Small and Medium-Sized Businesses to Gross Domestic Product: A Canada–United States Comparison (Ottawa: Statistics Canada—Economic Analysis Division, June 2011).

2  Ibid.

3  John R. Baldwin, Danny Leung, and Luke Rispolia, Canadian Labour Productivity Differences Across Firm Size Classes, 2002 to 2008 (Ottawa: Statistics Canada—Economic Analysis Division, August 2013).

4  Roger L. Martin and James B. Milway, Enhancing the Productivity of Small and Medium Enterprises Through Greater Adoption of Information and Communication Technology (Ottawa: Information and Communications Technology Council, 2007).

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