What SMEs can learn from e-commerce giants

Whenever anyone mentions the global economy, it’s easy to envisage the world of big business. Shining skyscrapers, mahogany boardrooms and cutthroat corporate acquisitions may all spring to mind—but they shouldn’t be our first thought.In reality, smaller businesses are the true driving force behind our economy. One glance at the UK numbers reveals why: small or medium-sized enterprises (SMEs) in the private sector make up 99.9% of all companies, employ 60% of the workforce and generate more than half of the total turnover. SMEs aren’t just the engine that keeps our economy flying, they’re more than half the plane.Empowering this array of SMEs to become more efficient, productive and profitable has the potential to supercharge our economy. Applying data and insight to make feasible gains of even just a few per cent across these areas will directly translate into more SMEs hiring, growing and staying in business. Small improvements can have a huge impact when they’re rolled out on a massive scale.Helping SMEs generate this greater value demands a new mindset from their B2B enterprise partners. Whether SMEs are their customers or part of their supply chain, large companies need to empower SMEs to work with them more easily and effectively—and this needs to be implemented at scale.
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The brainpower revolution
New technologies have a crucial role to play in meeting this challenge. Today, we’re witnessing the birth of an ever more interconnected world, where the relationship between people, processes, things and information is changing rapidly. Labelled the ‘Fourth Industrial Revolution’ by The World Economic Forum, this transformation is taking us from a world where machines assist and augment human choices, to one of ubiquitous automation and autonomous decision-making. Where the First Industrial Revolution was all about horsepower—with hand production replaced by faster and lower cost factories—machines are now poised to automate brainpower. This doesn’t just mean that what once took a team of 50 people can now be done with a group half the size; today’s SMEs also have a level of scalability that was inconceivable even two decades ago, empowering that team to vastly increase it’s performance, rather than just lowering headcount. In addition, smaller businesses are well-placed to benefit from the growing trend towards remote, flexible and freelance work, enabling greater operational agility, easier access to talent, and reduced expenditure on business premises.
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Supporting SMEs at scale
From free trials and product discounts, to supplier training courses and events, B2B enterprises have traditionally struggled to address the core issues facing their SME partners and customers in a cohesive way. For instance, SMEs are often forced to take a piecemeal approach to procuring the products and services they rely on day-to-day. So, how can B2B enterprises change their approach to make the biggest difference to the broadest possible group of SMEs? We can take inspiration from the thriving world of e-commerce. Retail giants like Amazon and Alibaba have transformed the world by operating at unprecedented scale—in fact, Amazon now nets half of all online sales in the US alone. Yet, these companies are also increasingly harnessing the same mass market mindset to support the B2B world.For an SME retailer, Amazon now almost offers a one-stop-shop—aggregating a digital shopfront, delivery logistics—web services and more, in one enterprise partner. This makes life simple and easy for SMEs, which can harness Amazon’s economy of scale to reach a massive market, minimise operating costs and seamlessly grow with demand.
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Of course, this business model is also very beneficial for Amazon, as you’d expect from a Top 10 player in the Fortune 500. Once an SME enters the Amazon ecosystem, it’s easy for the company to offer additional services, all of which are designed to work together seamlessly. With SMEs understandably more interested in running their core business than researching and managing a disparate set of services, Amazon has a huge market advantage—almost a captive audience in fact. With thousands of SMEs as a user base, the company has a fantastic foundation to build on when it explores new market opportunities.B2B enterprises should take a leaf out of the e-commerce book to serve SMEs better at scale. Enterprises need to do more than just solve their own internal challenges, they need to make sure they can better support their customers, focusing on the common threads that run through the entire SME community. We need to shift our attention from supporting individual companies and partners, to unleashing tangible change in how thousands of SMEs do business.
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The connectivity win-win
To accomplish this, B2B enterprises need to move towards business networks, enabling SMEs to connect easily to a cohesive ecosystem of capabilities that can address all of their core needs. By building a business network, B2B enterprises can harness data and insight to solve challenges for SMEs seamlessly and deliver value automatically.As an example, consider how this can impact finance departments. At a basic level, interconnecting services can move the needle on areas like SME productivity—for instance, by enabling company cars to track trips to complete expense reports, or filing restaurant receipts via a mobile app. With an automatic, real-time feed of information, finance teams can see expenditure and cashflow instantly in a single dashboard, rather than through the onerous analysis of reports.Yet, finance teams can take the benefits of this interconnectivity even further. For instance, thanks to immediate insight into expenditure, an unspent client hospitality budget in one department could be automatically flagged for reallocation to another, so a forthcoming event can be made even bigger and better.
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As more and more enterprises join the dots on their capabilities, we can even imagine scenarios where smaller businesses might be able to access an economy of scale that previously was far out of their reach, again lowering costs for core services by linking up with other businesses looking to purchase similar technologies or services. Increasingly, this kind of interconnectivity will supercharge SME success by eliminating wasted time, highlighting new opportunities and supporting growth.Applying an ‘e-commerce mindset’ has the potential to transform many different business sectors. The unprecedented combination of innovation, agility and scalability that results may ultimately change the balance of power in the corporate world, shifting the focus from big business to its smaller counterparts. With a combined annual turnover of £2 trillion in the UK alone, enabling SMEs to become more efficient and productive won’t just be a win-win for their owners, employees and B2B service providers, but for the entire global economy. Steve Roberts is the Vice President of Sales, UK SMB at SAP Concur.
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