Connected technology can unlock the next wave of small business growth
Steve Hare, Chief Executive Officer
| Sage
Digital technology has transformed what small businesses can achieve. By helping their trusted tools work together, government can unlock greater productivity, investment and growth in communities across the UK
Starting a business has never been easier. Running one should be too.
Digital technology has transformed what small businesses can achieve. A retailer can sell globally from a laptop, a plumber can manage invoices from a smartphone, and a growing business can access tools and insights once reserved for larger organisations.
Well-designed policy has helped create the conditions for that progress, supporting adoption, innovation and trust in new services.
Yet many businesses are held back by disconnected systems. Owners do not spend their days thinking about accounting platforms, payment providers or software integrations. They spend them deciding whether to hire, invest, manage cash flow or plan for growth. Too often, the information behind those decisions is scattered across different places: banking in one, accounting in another and invoices somewhere else.
Our research shows that the average UK small and medium-sized enterprise (SME) relies on 52 digital tools and 27 separate logins. Nine in ten regularly re-enter or move data between systems that do not connect. We call this the app trap: businesses have embraced digital tools that each perform a valuable role, but owners are left to connect the information between them manually.
Across the year, the average business loses 19 working days to manual tasks that technology should be removing.
At Purple Creative, office manager Amanda Winstanley sees the impact first-hand: “Every new customer of ours has to be manually entered into five different systems. Even for the most straightforward project, that can take 15 or 20 minutes before the work has begun.”
Across the economy, businesses are caught in an app trap, with app-switching costing an estimated £31bn each year in lost productivity. Recovering even part of this would release more time and money for investment, innovation and job creation in communities across the UK.
Just as policy helped support the first wave of digital adoption, it can now help unlock the next by creating the conditions for connected technology to drive productivity and growth.
This will become even more important as AI transforms the way businesses operate.
AI can automate routine tasks, improve forecasting and unlock new insights, but it is only as powerful as the information behind it.
When information is trapped across disconnected systems, its value is limited. Four in ten SMEs tell us they want to do more with AI but are held back by fragmented data.
Unlocking the potential of AI starts with fixing the foundations. The government can do that by building on reforms already under way.
Maintaining momentum on e-invoicing and open finance, while working with industry to create a reusable, verified digital company ID for businesses, would help information and payments move securely between trusted services. Alongside an internationally aligned approach to trusted AI, these reforms would support greater productivity and growth.
Get this right, and £31bn in lost productivity could be put back to work in small businesses and communities across the UK.
To learn more about Sage’s recommendations for building a connected digital economy,
contact Ben Robinson at [email protected].
