SME BUSINESS EFFICIENCY SURVEY

Transcription

1 SME BUSINESS EFFICIENCY SURVEY 2018

2 Executive Summary Efficiency is a catch-phrase that Australian SMEs live and die by. Minimising the costs of doing business, while making investments to improve the organisation s competitive advantage, are critical in establishing the long-term health of the business, and from there helping it to grow and prosper. But how many Australian businesses consider themselves to be efficient, how do they define efficiency, and what are the pain points that inhibit their journey towards efficiency? These are the things that the OKI SME Efficiency study, now in its fourth year, seeks to track over time. In understanding the efficiency goals of SMEs, the entire supply chain, from vendor through channel partners, can better adjust their offerings to meet one of the most pressing concerns of Australian organisations. The following study highlights a couple of core themes: Australian organisations do generally consider themselves efficient. Historical data shows that around 80% of Australian SMEs consider themselves to be efficient organisations, and this rate has held steady for the past three years. Australian organisations continue to invest in efficiency. Overall, 75% of organisations have either invested in efficiency in the past year, or plan on investing in efficiency in the next year. Again, this is a trend that has continued from year to year. The bulk of efficiency investments are less than $15,000, which shows that organisations see efficiency as something to invest in gradually over a period of years, as new and more efficient technologies come to market. Technology is the key pain point in finding efficiency. Almost 50% of organisations listed general IT concerns as a key contributing factor to inefficiency within their organisation. From that we can see that a significant number of organisations are still unaware of how to meet their efficiency goals. OKI Australia would like to thank all the organisations that participated in this year s study. In terms of raw numbers, the 2018 survey had the best response on record, which tells us that efficiency remains a critical concern for Australian organisations. This study forms part of OKI s ongoing commitment to help businesses across the country achieve greater efficiency. Page 2

3 Contents OKI SME BUSINESS EFFICIENCY SURVEY Executive Summary 2 Methodology 4 Demographics 5 Do Australian SMEs Run Efficiently? 8 Data Insights 10 What Is Driving Inefficiency In Business? 11 Data Insights 13 How Are Organisations Investing In Efficiency? 14 Data Insights 15 What Defines Efficiency? 16 Conclusion 17 Page 3

4 Methodology In August 2018, OKI created an online survey designed to analyse how SME organisations are engaging with technology. Specifically, the survey was designed around the question of efficiency: Do IT decision makers see their organisations as using technology to improve efficiency (and therefore productivity), and where there is an opportunity to do more. The survey was answered by 798 of OKI s active Australian business customers. In the majority, it was provided to the business owners, or those in high-level IT management positions, and was provided to organisations across a wide cross-section of industries. This was a branching survey, which asked respondents a different set of questions, depending on whether they felt their business was running efficiently or not. This is now the fourth year that the OKI SME Business Efficiency survey has been run, so the following report will also consider how the data this year compares to years past, keeping in mind that this year the survey responses were around 15 per cent higher than in years past. Page 4

5 Demographics The 2018 OKI SME Business Efficiency Survey was answered by 798 small and medium business owners and senior decision makers that are current customers of OKI. As OKI has customers in all states and territories in Australia, the breakdown in responses are as you would expect for a national survey NSW was the biggest market, with 33% of responses, followed by Victoria (27%), Queensland (19%), and Western Australia (9%). The limited number of other responses, below, refers to organisations unwilling to share geographic location, as well as a handful of organisations that OKI Australia supplies in New Zealand and Papua New Guinea. The demographic breakdown has remained consistent from year to year. In last year s survey, NSW was also the largest demographic (30%), followed by Victoria (26%), Queensland (23%) and Western Australia (8%). Proportionally, the survey continues to reach the same organisations that is has in years past. ACT NSW Northern Territory Queensland South Australia Tasmania Victoria Western Australia Other (Please Specify) As the survey was predominantly targeted towards SME businesses, the bulk of the respondents were from businesses with either 1-5 employees (74%) or 6-20 employees (17%). Of the larger organisations surveyed, 4% of respondents were of employees in size, and 1% had more than 200 employees. Page 5

6 This, too, aligns with the types of businesses surveyed in previous years, with data from 2017 showing 70% of organisations have 1-5 employees, 17% of businesses being of 6-20 employees in size, 6% of organisations having between 51 and 200 people, and 1% of organisations having over 200 staff Finally, as with previous years, a breakdown by industry sector shows that Australia s SME space remains vibrant and varied, with 32% of organisations reporting other when given a list of 14 sectors to chose between, with responses ranging from religious and non-profit, through to consultancy, veterinary, government and utilities. Of the sectors listed in the survey, the top responses were retail (9%), Manufacturing (7%), IT (7%), Financial Services (7%), and construction (7%). Page 6

7 Administrative/Support Services Agriculture/Environmental Construction Creative Industries/Entertainment Education/Training Financial Services IT Manufacturing/Transport Marketing/PR/Advertising Medical/Health care Mining/Resources Real Estate/Property Retail Other (Please Specify) Page 7

8 Do Australian SMEs Run Efficiently? The big question that this survey looks to answer is whether Australian businesses believe that they are running efficiently. This year, 83% of organisations responded in the positive to that question. This is a slight lift on the result in 2017, where 82% of organisations reported the belief that they were running with efficiency. In 2016, just 76% of organisations answered in the positive. Given the rate of change in technology, and given how quickly new products and services land on the market that enhance efficiency, the three years of historical data suggests that Australian SMEs are willing to continue to invest in maximising efficiency. Over the course of three years, the typical organisation would need to have undertaken technology refreshes, and with over 3/4s of Australian organisations continuing to report that they are running efficiency over the three years, that indicated that efficiency is a core consideration when making technology purchases. Yes No Indeed, this is further substantiated by 84% of those organisations that answered yes to the efficiency question, above, responding that when choosing suppliers of technology and equipment, cost is a critical consideration in deciding which supplier to secure. Only 16% of organisations that believe they are running efficiently are not concerned with the cost of IT purchases and suppliers. Page 8

9 Yes No Of those organisations that don t believe they are running efficiently, the desire to improve efficiency is overwhelming. A full 88% of respondents said that cost-efficiency was a critical component in deciding which supplier to secure; this is a higher percentage that found with those organisations that do believe they re running efficiently (84%, above). Yes No Page 9

10 Data Insights Taken over a three-year period, there is a clear understanding in the Australian SME environment that efficiency is something to be valued. Regardless of whether an organisation believes that it is running efficiently or not, it greatly values those suppliers that are able to offer it efficiency. Furthermore, over the course of three years, the consistency in which efficiency is valued suggests that organisations look at it as a long-term investment and ongoing concern. This is further supported another question in the survey, which asked respondents if they had implemented new initiatives to improve cost efficiency over the past year, to which 50% responded that they had, and a further 25% responded that they were planning to within the next year. This indicates within the Australian SME space a rolling, ongoing effort to invest in efficiency. Yes No, but we are planning to within the next year No, and we have no future plans to This would, in turn, also suggest that organisations would be more than willing to change suppliers were there opportunities to find greater efficiencies through their technology purchases. This survey doesn t track brand loyalty, however the emphatic demand for efficiency suggests that were a supplier to come along that could offer greater efficiencies, there would be a migration away from incumbent technology. Page 10

11 What Is Driving Inefficiency In Business? For those SMEs that believe that they are running inefficiently, the most common underlying causes include IT and business systems (48%), Digital marketing and Online Businesses (33%), HR and staffing (31%), and Website/ e-commerce costs (30%). There was significantly less concern around operational costs (26%), supply chain (20%) and leasing (10%). IT/Technology/... Other (Please S... Digital Marketi... Website/Apps/... Leasing Office/... Supply chain an... HR/Staffing co... Operational mat... When added to the high value that organisations place on efficiency (as determined in the previous section), this data suggests that while organisations wish to find greater efficiencies within the organisation, the small percentage of organisations that don t believe they are running efficiently are struggling to find alternatives that would help them realise greater efficiency. Of organisations that do see themselves as running efficiently, the principle cause of that improvement is overwhelmingly due to general efficient IT purchases (64%), with investment in finding efficiencies in digital marketing (28%), and Website and e-commerce (28%), sharing second spot. This is nearly a complete inverse of the challenges that other businesses are facing in finding efficiency. Page 11

12 General effici... Other (Please S... Automation Website/Apps/... Digital Marketi... Supply chain an... Leasing Office/... Operational mat... HR/Staffing co... It s also worth noting that this graph is nearly a perfect replica of the 2016 results, with approximately the same percentages at play (2016 result replicated below). These trends, year-to-year, have remained very steady, indicating that a majority of organisations that are running efficiently are either unconcerned with finding efficiencies around leasing, supply chain, and HR/ staffing costs, or don t consider these to be areas where efficiencies can be found, especially when compared to the opportunity that are provided in areas such as IT. General effici... Other (Please S... Automation Website/Apps/... Digital Marketi... Supply chain an... Leasing Office/... Operational mat... HR/Staffing co... Page 12

13 Data Insights It is clear that organisations see IT as both a burden, and an opportunity for efficiency, and one of the main differences between an organisation that is running efficiently, and one that is not, is whether the organisation has been able to find an opportunity to improve efficiency in this area. Organisations that are not running efficiently are much more inclined to find staffing costs to be a burden, while this is not an issue that concerns the bulk of efficient organisations. For SME organisations, one of the benefits of efficient technology is that it doesn t require additional resources to manage, allowing the organisation to limit the size of the IT team that it requires. Once an organisation is running efficiently, each new staff member brought into the organisation can be seen as an asset to generate additional revenue, rather than an expense to manage another expense (complex technology), so the stress to minimise staff costs is greatly reduced. The appetite is there. Remember 75% of SMEs have either invested in efficiency, or are planning to within the next year. The challenge, in drawing closer to that goal of having 100% of organisations running efficiently, is in helping some organisations find the right investments to make. Page 13

14 How Are Organisations Investing In Efficiency? For the most part, investments in efficiency don t need to be major up-front expenditure. The bulk of Australian SMEs including those that are running efficiently, spends less than $5,000 per year on technology to increase efficiency (67%). A further 21% spend between $5000 and $15,000, while just 3% spend between $50,000 and $100,000, and 1% invests over $100, $5,000 $5,001-$15,000 $15,001-$50,000 $50,001-$100,000 $100,001+ When compared to 2017, there is a significant jump in organisations spending in the lowest bracket on efficiency in 2017 only 59% of organisations were spending less than $5,000 in efficiency technology per year, while 26% were spending between $5,000 and $15,000. This would indicate that over the past year a number of organisations have finished a major investment (by SME standards) in efficiency technology and over the past year this has settled down into smaller-scale projects. Those organisations that are realising savings from efficiencies are investing those savings in a number of ways. While some of the savings are simply being saved by around a third of organisations (30%), another 24% of organisations are re-investing at least some of the efficiency savings in driving even greater efficiencies, while 19% are using the money to expand product and/or service offerings to the market (potentially generating new revenue and profit streams), and 16% are ear-making some of the money to find new competitive advantages for their business. A small percentage (8%) are even using the money as an opportunity to increase the scale of the organisation by increasing headcount. Page 14

15 We are reinvest... We are investin... We are using it... We are using it... We are using it... We are saving t... We have yet to... Other (please S... Data Insights Investing in efficiency doesn t need to be a major, multi-year, multi-million dollar business transformation exercise. Often when people talk about technology modernisation within the organisation, it s those massive technology projects that are brought to mind, but finding efficiency can be achieved with small investments in efficient technology over a period of years. Replacing aging technology with more modern, efficient technologies is one of the best opportunities that SMEs, with their limited resources, can invest in technology as a way of improving their business position. Page 15

16 What Defines Efficiency? The final question of the survey invited participants to provide their definition of efficiency what it means to them and their organisation. As the top 10 responses below show, efficiency is 1) Efficiency for me is running a small business with minimum staff operating at peak performance for a rewarding outcome. The ability to include new ideas to improve and speed up productivity that is embraced by all concerned. 2) The ability to reduce cost and time spent on each task to increase the profit margin. 3) I believe efficiency is the ability to identify and understand the processes within the business and find ways to improve on them. These will help make a lean process to give us more opportunity to be able to invest in areas which will help our business. 4) Efficiency is the ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without waste. 5) Efficiency can be best defined as time consumption, practical results and success from both time consumption and the end result and the profit retained from the effect of what is implemented and the manner it is achieved. 6) Efficiency is simply a measure of how effectively we work, the output achieved by an individual over a fixed period, taken together with the quality of that output or result. The more efficient we are, the greater the output at the same or improved level of quality over a unit of resource / time. 7) Efficiency to me is the ability to offer superior outcomes to our customers by doing more with less which differentiates our products and services from those of our competitors. 8) Efficiency is being able to focus time and energy on the areas of business that matter the most in IT it s removing the focus on the equipment and systems and letting them run themselves moving the focus to all end users. 9) We look at all aspects of production and try to find a better way of doing the same job quicker and more effectively. If we find equipment to help in this way, then we invest. Within the next year we hope to have a bigger kitchen and a pie pressing machine as we expand our client base. 10) Efficiency to me is producing more output for less input - that is, looking to spend less time on jobs or implementing cost saving alternatives that provide the same functionality as existing systems. Page 16

17 Conclusion After four years of running the OKI SME Efficiency Survey, there have been some definite trends that have emerged from Australia s SME space with regards to efficiency: 1) Australian SMEs value efficiency. There is an overwhelming appetite within Australian SMEs to find opportunities to improve the efficiency of their operations. Unfortunately, for a number of organisations, this is often easier said than done, and those businesses are struggling to run as efficiently as they would like. 2) Technology is key in realising efficiency targets. Of all the factors that might contribute to an inefficient business, technology rated as the #1 concern, both for businesses that are running efficiently, and those that are not. 3) Savings from efficiency measures are invested back into the business. The nature of these investments would vary from organisation to organisation. Some would invest it into finding further efficiencies. Others would use it to further product and service development, and increase their portfolio as a business. Still others used it to increase staff count and the scale of the organisation. Money saved through efficiencies is put to good use within the typical Australian SME. Our survey findings reveal that when it comes to efficiency, technology is the primary concern for businesses. Providers of technology solutions, including OKI, are in a position to enable and facilitate efficiency optimisation for SMEs the engine room of the Australian economy, said Antonio Leone, Marketing Manager at OKI for Australia & New Zealand. For more information on how OKI printers and solutions can help your business run more efficiently, visit the website Page 17

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