Four reasons we need to upgrade Canadian SMEs’ tech adoption and skills

Four reasons we need to upgrade Canadian SMEs’ tech adoption and skills

Canadian SMEs are falling behind larger firms in terms of technology adoption and digital skills. Here are four charts that show why we need to fix that.
Four reasons we need to upgrade Canadian SMEs’ tech adoption and skills
Kayla Zhu
Communications Intern
July 5, 2021
Print Page

Digital technologies, from email newsletters to project management software, have become central components of how businesses operate, market themselves, and generate sales. With COVID-19-related restrictions forcing businesses to move their operations online, digital management and communications tools have become even more integral in helping companies stay afloat. In particular, e-commerce functionality is becoming essential as Canadians’ online spending grew to $84.4 billion in 2020, up 47 percent over 2018. 

But not all Canadian businesses are making the most of these digital technologies. Small and medium-sized enterprises (SMEs) in Canada are lagging bigger firms in terms of digital maturity, with 57 percent scoring low in both technological adoption and digital skills, and only 19 percent scoring high on both, according to a 2018 BDC survey. This means that SMEs lack both the technologies they need to compete in a post-pandemic environment, as well as the knowledge and leadership to successfully integrate it.

SMEs make up a significant part of Canada’s economy, comprising 99.8 percent of all businesses and employing 10.8 million people. SMEs represented 70 percent of hours worked in Canada in 2008, versus 56 percent in the U.S. Yet compared to our U.S counterparts, Canadian SMEs are not investing as much into digital technology, missing out on opportunities and growth in a range of their business operations.

A recent report from the Brookfield Institute, Picking Up Speed: Digital Maturity in Canadian SMEs and Why Increasing it Matters dives into the state of digital maturity among Canadian SMEs, some of the barriers businesses face in digitizing, and why increasing digital maturity matters. In the report—produced in partnership with the Toronto Regional Board of Trade, World Trade Centre Toronto, and the Scale-Up Institute Toronto, and sponsored by Xero—the research found that digital maturity among SMEs benefits not only individual businesses but local communities, and the economy at large as well. Here’s why: 

1. Industries that adopt and use technology more effectively are more productive.

Share

 

Digitally intensive industries—such as computer systems design, architecture, engineering, advertising and scientific research—have reaped the benefits from higher digital maturity. These industries, which have made technology a central part of their business model, have outpaced the rest of the Canadian economy in labour productivity growth since 2002, growing 22.1 percent compared to 6.3 percent for non-digitally intensive sectors.

Labour productivity growth, or the change in the amount of real gross domestic product (GDP) produced by an hour of labor over a set period of time, means that these sectors produce more goods and services for the same amount of relative work.

 

2. E-commerce sales are booming in Canada.

 

E-commerce sales grew up to 140 percent in some “non-essential” business categories, showing the accelerating demand for online shopping in Canada. Retail e-commerce sales, including retail trade, electronic shopping and mail-order, and e-commerce sales, have all experienced significant growth since December 2018.

The ability to sell goods and services online may involve digital technologies like social media and having a website, particularly one with e-commerce functionality. These technologies are often the starting point for SMEs to increase their digital intensity, and can have a great impact on sales and marketing. 

 

3. More workers will be working from home in the future.

 

Enterprises of all sizes experienced an increase in the number of employees teleworking or working remotely in the early months of 2020, and Brookfield Institute research suggests that businesses of all sizes will make this type of work possible further into 2021.

 

 

Companies with more than 100 employees reported the most remote work capacity, with over 60 percent reporting that it’s a possibility for a proportion of their employees to work from home, compared to only 39 percent of companies with 5 to 19 employees. 

Remote work options involve internal digital technologies, such as video conferencing platforms or cloud storage, as well as customer-facing ones.

 

4. Cybersecurity measures can be a lifesaver.

 

SMEs are typically lower-value targets for cybercrime compared to larger enterprises, but a potential attack could be devastating. As businesses adopt more digital technology, this increases the exposure to digital security incidents.

The chart above shows that SMEs fall behind larger enterprises across all types of cybersecurity measures. 

While SMEs might not be the prime targets for hackers, these attacks can be extremely costly. According to a 2019 survey for the Insurance Bureau of Canada (IBC), 57 percent of SMEs that had suffered a cyber attack were either unaware of the extent of the damages or stated that the breach cost them over $100,000, and around 60 percent of small enterprises who suffer a cyber attack go out of business within six months.

As businesses digitize, investing in digital security as a preventative measure could be a critical lifesaver.

For media enquiries, please contact Lianne George, Director of Strategic Communications at the Brookfield Institute for Innovation + Entrepreneurship.

Kayla Zhu
Communications Intern
July 5, 2021
Print Page

Share