SOURCE: The Boston Consulting Group

The Boston Consulting Group

October 05, 2013 01:00 ET

Tech-Savvy Small Businesses Outperform Peers in Sales and Job Growth

IT-Enabled Small and Medium-Sized Enterprises Increase Revenues 15 Percentage Points Faster and Create Jobs Almost Twice as Fast as Other SMEs, New BCG Study Finds

BALI, INDONESIA--(Marketwired - Oct 5, 2013) - Leaders in the adoption of the latest information technologies among small and medium-sized enterprises (SMEs) far outperform their peers in the marketplace, according to new research by The Boston Consulting Group (BCG). Technology leaders increased their annual revenues 15 percentage points faster than companies with lower levels of technology adoption and created jobs almost twice as fast as other small businesses from 2010 through 2012.

The BCG report, "Ahead of the Curve: Lessons on Technology and Growth from Small Business Leaders," which is being published today, found that if more SMEs could achieve the growth rates of technology leaders, there is potential for SME revenue to grow by a combined $770 billion in the five primary countries surveyed: the U.S., Germany, China, India, and Brazil. This rate of growth would add some 6.2 million new jobs in those countries alone.

"Throughout the world, SMEs play a vital role in their economies, often acting as the primary drivers of job and economic growth," said David Michael, a BCG Senior Partner and a co-author of the report. "There's a big opportunity for both SMEs and policymakers around the world. More tech leaders would also help lead to more vibrant economies because leaders outperform in innovation."

The results of the BCG survey of more than 4,000 SMEs in five of the world's largest and most diverse economies were consistent across all industry sectors -- with some surprises from emerging markets and with women-owned firms. Tech leaders in emerging markets grew jobs and revenue faster than those in developed markets and are even quicker than their developed-market counterparts to embrace new tools. More than 80 percent of tech leaders in emerging markets use cloud services, communication tools, and enterprise resource planning software, while only 60 percent of tech leaders in developed markets do so. Technology-leader companies with female founders have achieved average revenues that mostly match or surpass those of male-founded companies.

Overall, the survey found that the outperforming subset of SMEs stayed ahead of mainstream IT adoption, riding new waves of advancement to improve efficiency, connect with new customers and markets, and compete with much larger players. These companies employ the full range of available tools -- from productivity software to Internet connectivity to cloud-based services.

"What we are seeing is that technology can help level the playing field for groups with historical disadvantages in business, and we would like to see more SMEs benefit from being technology leaders," said Orlando Ayala, corporate vice president, chairman of Emerging Markets, at Microsoft Corporation. "Microsoft is committed to enabling people from all over the world and bridging the gender gap in computing careers with tools and programs, to provide opportunities for business growth and innovation."

Microsoft commissioned the report, which was produced independently by BCG.

The BCG report argues that the latest wave of technological advancement -- which encompasses cloud-based software, services, and solutions -- brings the potential for the most far-reaching innovation and business growth ever. The cloud gives companies of any size access to the kind capabilities and services that to date have only been available to the largest of enterprises -- at a fraction of their historical cost. Moreover, for those who make the right moves, this new wave can leverage an already-connected community of consumers and businesses, which is of unprecedented size.

Drawing on interviews with decision-makers at technology leaders, BCG identifies a number of barriers to faster and more widespread IT adoption among SMEs. Some SMEs -- and the national economies they support -- are already behind. And the leaders of companies in a good position today may not be leaders tomorrow if they rest on their laurels. Both SMEs and the governments of the countries in which they reside should take action. The report provides a roadmap of recommendations for governments and SMEs to help overcome hurdles to IT adoption. It argues that the imperative to do so has never been greater.

For each of the more than 4,000 SMEs surveyed, BCG took an inventory of each one's IT capabilities. These include foundational technologies, such as personal computing and productivity tools; connectivity tools such as access to the Internet and use of mobile technology; whether they have online presence and use social networks; and the use of enterprise- capabilities such as cloud-based services. It focused specifically on IT tools and services (hardware, software, and cloud services) and examines the practices that set tech leaders apart and what other companies need to do to catch up.

A copy of the report can be downloaded at https://www.bcgperspectives.com/content/articles/technology_software_globalization_ahead_curve_lessons_technology_growth_small_business_leaders/.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 78 offices in 43 countries. For more information, please visit bcg.com.

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    Eric Gregoire
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    Tel +1 617 850 3783
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    gregoire.eric@bcg.com