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New Report Reveals Challenges Ahead for SMEs in Wales

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Open Uni

The Open University in Wales (OU in Wales) has released the findings of its report, Skills for Success: Supporting business leaders with digital adoption, jointly conducted with Be the Business, revealing the challenge ahead for Welsh businesses in adopting digital technology.

The Skills for Success report surveyed 1,500 business leaders of SMEs from across the UK, including Wales, listening to the experiences of businesses which have needed to make drastic changes to adapt to the challenges presented by the pandemic.

The report reveals that the pandemic has had a positive impact on progress when it comes to digital technology, with the research finding that half of UK SMEs (54%) accelerated their adoption of collaboration and e-commerce software at the onset of Covid-19. At least 85 per cent plan to continue using it at the same level once restrictions are fully lifted.

However, challenges still exist for Welsh businesses when it comes to implementing and accelerating the use of new technologies. There are key differences between the way large companies and SMEs approach the implementation of new digital technology into their businesses. While large companies have the resources, often at an integrated departmental level, to deliver skills and training and successfully adopt technology, as many as 30 per cent of SME business leaders surveyed said time and cost can make digital adoption too expensive or time-consuming.

But SMEs, which accounted for 62 per cent of all employment and 40 per cent of turnover in Wales in 2019 have shown themselves to be flexible and resilient around digital skills and training, with 70 per cent of business leaders expressing an interest in some form of learning and development in the next 12 months.

The Welsh Government’s Digital Strategy for Wales makes a clear commitment to upgrade digital and communications infrastructure, and create a workforce that has the digital skills, capability and confidence to excel in the workplace. It also identifies flexible education and training, and all-age apprenticeships as a crucial intervention.

One of the businesses involved in the research, which has also taken advantage of flexible degree-apprenticeship routes, is Pembrokeshire-based SME CraftCourses.com, who were forced to rapidly digitise their business amid the pandemic. Founded in 2011 by Kate Dewmartin, it is a leading creative experience website, offering thousands of arts, crafts and wellbeing workshops, classes and courses.

Having previously offered a largely in-person product, the pandemic presented an acute challenge to CraftCourses.com, forcing them to pivot to digital offerings and having to invest heavily in the company’s software infrastructure to bring in new digital tools.

Kate recognised that having the right engineering team was crucial, so she enrolled a CraftCourses.com employee on The Open University in Wales’ Applied Software Engineering Degree Apprenticeship – training which is fully funded by the Welsh Government through the Higher Education Funding Council for Wales.

Kate said:

“Working with the OU in Wales’ apprenticeship scheme has offered us great stability. The apprentice stays with the company for four years and becomes an integral part of the team, while you have an opportunity to nurture homegrown talent. It’s a win-win situation.

She added that “the OU degree apprenticeship takes a lot of discipline to combine work and study”.

As a result, CraftCourses.com is looking to take on another apprentice.

On the future of CraftCourses.com, Kate said:

“training will remain essential to the growth of my company.”

Lynnette Thomas, Deputy Director at The Open University in Wales said:

“Over the last year, many businesses have been forced to completely transform the way they do business and connect with their customers, with technology playing a crucial role. Digital infrastructure is now central to our way of working across all sectors, particularly for our economic recovery post Covid-19, and businesses are making plans for longer term investment and implementation.

“The Welsh Government’s Digital Strategy for Wales sets out its ambition to drive economic prosperity and resilience by embracing and exploiting digital innovation, with a commitment to support businesses in Wales to accelerate the adoption of digital to work smarter, drive innovation and optimise the opportunities ahead. With this new programme for government in place, it’s an ideal time for us to look at opportunities to improve skills in this sector.

“The report emphasises the importance of flexible learning opportunities, and routes like our own degree apprenticeships are a great option for Welsh businesses. We are pleased that the Welsh Government have committed to create 125,000 all-age apprenticeships between now and 2026 expanding the use of degree apprenticeships like the one CraftCourses.com has taken advantage of. But in order to truly take advantage of the digital opportunities ahead and equip Welsh SMEs with the skills they need, we’ll need a collaborative effort across business, Government and the public sector.”

Anthony Impey, Chief Executive at Be the Business said:

“Great leadership combined with productivity enhancing technology is at the heart of our most successful businesses.

“But adopting new digital technology can be challenging, even for the most confident business leaders. That is why getting the right skills and support – focused on both digital and leadership capabilities, is essential.”

Other key findings from the report include:

  • Two thirds of business leaders (67%) say they are confident in adopting technology, although only half (54%) think they make good purchasing decisions about technology
  • Business leaders value basic digital skills (33%) or technical understanding of technologies (20%) ahead of the leadership skills required to successfully implement technology (12%)
  • One fifth (21%) of all business leaders don’t think adopting technology could have a positive impact on their business at all
  • Approximately a quarter of business leaders turn to technology providers for direct support across the four stages of tech adoption – objective setting, purchase, implementation, and ongoing maintenance – but a higher proportion rely on internet searches at the objective-setting (31%) and purchase (28%) stages.

While younger people are often believed to be more tech savvy, leaders aged 35 and older reported being more generally knowledgeable about cloud-based computing, online accounting, video conferencing and cyber security. Whereas younger leaders (18-34) are more knowledgeable about marketing automation and Enterprise Resource Planning (ERP) software, highlighting differences in understanding according to the type of technology. Younger leaders were also found to be more receptive to training.

It’s proven that being ahead on technology adoption is a crucial factor in determining business competitiveness and productivity, yet the UK lags behind its competitors in this area.

The Skills for Success report makes a number of key recommendations for business leaders looking to adopt technology successfully, including:

  • Identifying the right digital tools to tackle a company’s biggest challenges
  • Securing time and budget to enable an attitude of continuous learning
  • Empowering SMEs to embrace a digital culture
  • Recognising the power of a varied skillset in an organisation