Forecast: holding steady Shining a light on tech trends Data, backed by insight What's changed since 2016? Caution and concern increase Bracing for Brexit It pays to invest in technology Focus on why CX appeal Ahead in the clouds All-pervasive technology Staying in touch Conclusion: glass half full? Where do you go from here?

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Irish Business
Mindset Report

2019/2020

How - and why - Irish SMEs Invest in Tech

Forecast:
holding steady

The 2019/2020 Irish Business Mindset Report provides an unrivalled perspective into Irish companies’ confidence levels in today’s business environment. It gauges their thoughts on the trading conditions now and for the year ahead.

It’s a snapshot of the mood among businesses, the potential challenges that lie ahead, and ways to address them.

Now in its fourth year, the report draws its findings from an extensive survey carried out by Three Ireland. Our respondents come from businesses of all sizes, across 18 different industry sectors and spanning several areas of responsibility including management, operations, sales, and finance. This means the findings reflect a broad swathe of businesses, making the report an excellent source of competitive intelligence.

Shining a light
on tech trends

The Irish Business Mindset Report 2019/2020 doesn’t just reflect the mood among SMEs, but also shines a light on their attitudes to technology as a lever to boost efficiency or improve customer service in their business. The 734 respondents comprise: sole traders (13%); companies of 2-10 employees (45%); 11-79 employees (26%); 80-249 employees (10%); and 250 employees and above (6%).

We present the key findings from the survey below. The insights it contains, combined with analysis from Three’s business technology experts and guest commentators, make the Irish Business Mindset Report a source of learnings to give your business a competitive edge.

Data,
backed by insight

By looking at the bigger picture and bringing their specialist expertise and business knowledge to bear, Three’s expert commentators add value to the raw data, by interpreting the statistics and giving practical meaning you can apply in your business.

Our panel of experts includes:

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Padraig Sheerin
Head of SME, Three

Padraig Sheerin

Head of SME Business, who considers the state of mind of Ireland’s small-medium businesses (SMEs) and what lies behind it.

Ciara O'Reilly
Portfolio Manager, Three

Ciara O'Reilly

Portfolio Manager, who discusses the increasing importance of Customer Experience.

Sven Spollen-Behrens
Director, Small Firms Association

Sven Spollen-Behrens

Director, Small Firms Association, discusses the challenges ahead for SMEs in Ireland - and why there are plenty of reasons to be optimistic.

Karl McDermott
Head of 3Connected Solutions, Three

Karl McDermott

Head of 3Connected Solutions and IoT, looks at the importance of the cloud and the opportunities it presents.

What's changed
since 2016?

Since the first Irish Business Mindset Report in 2016, we have looked to capture attitudes among Irish SMEs to technology. The surveys show a continued upward trend of technology adoption among SMEs, but the devil is in the detail.

The number of SMEs using customer relationship management (CRM) tools today (40%) has almost doubled when compared to 2016 (22%). Together with the growing importance of customer experience outlined elsewhere in this report, it suggests that growing numbers of Irish businesses are making sure the customer is king as never before.

But how they stay in touch with customers is changing. Since our first report, the number of businesses using social media to interact with customers has increased by a factor of almost 25%. In 2016, less than 50% of businesses were on social media; by 2019, that figure had risen to almost 60%. By contrast, email appears to be falling out of favour for some - perhaps demonstrating concerns around post-GDPR emailing activities. Just 38% of our survey respondents rely on email marketing, down from 55% in 2016.

Small businesses are resilient. There are plenty of opportunities out there for them and although they have challenges ahead, there are plenty of reasons for being optimistic.

Sven Spollen-Behrens

Director, Small Firms Association

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Caution and
concern increase

In comparison to previous years, concern about the prevailing conditions is much more noticeable in 2019. One in six businesses in our survey say they are concerned – that’s a considerable jump from 4% in 2018.

In line with this development, the number of businesses describing themselves as optimistic about the current business climate has fallen back dramatically. In 2018, one in three businesses were optimistic; today, it’s just over one in eight.

Just over half of the businesses we surveyed describe themselves as cautiously optimistic – a trend broadly in line with 2016, 2017 and 2018.

Bracing
for Brexit

Brexit casts a large shadow over the business landscape and we added specific questions to this year’s survey to gauge Irish SMEs’ attitudes to the UK’s departure from the EU.

91% of our respondents expressed some degree of concern about Brexit and only 9% were not concerned. 23% were slightly concerned; 39% said they were moderately concerned; 24% were “very concerned”, and 5% “extremely concerned”.

The biggest area of Brexit-related worry concerns the cost of doing business. In our survey, two-thirds of respondents feel there will be a negative impact in this area. A slightly lower amount believe Brexit could affect sales and profitability. Perhaps surprisingly, a small minority of business leaders believe Brexit will have a positive impact, mostly around their ability to hire staff who may be leaving the UK.

So how is this feeling translating into action? Just over a quarter of the companies we surveyed intend to push ahead with new activities like diversifying the business or entering new markets. Three out of ten, however, are holding off on launching products until the full impact of Brexit is clearer.

20% of businesses plan to invest in digital transformation programmes. That means deep-rooted change to business processes using digital technology.

Padraig Sheerin

Head of SME, Three

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It pays to
invest in technology

Almost six out of ten SMEs in Ireland (58%) say technology plays a key role in shaping strategy and driving success. This trend has remained broadly consistent since 2016.

For 28% of the businesses in our survey, it’s a case of keeping a watching brief on tech trends, and making investments when necessary to retain customers, save money, protect data or keep employees satisfied. Slightly more companies are taking this approach this year than last year. This could indicate their expectations of technology are changing, or it could be a response to the array of choice for buyers in a crowded tech market.

Taken overall, most businesses in Ireland are positively disposed to technology, whether that’s for making big changes or just reacting to developments. Our survey shows that negative attitudes to tech, such as thinking of it only as a cost, or having no impact on business success, languish in low single digits.

When analysed by industry sector, technology’s importance to the business shows wide variation. Companies in finance, pharma and aviation all rate it highly. The highest proportion of respondents who said technology is not important to business success were in retail and construction.

"Technology plays a central role in our business"

If you're an effective business leader, you must recognise that technology is evolving at pace and embrace every opportunity to use technology to deliver memorable experiences to your clients.

Technology drives the efficiency of Sonica's complete service offerings. For example, iOS- and Android-enabled viewers allow us to easily navigate models on-site in real time. Our commitment to continue to invest in and adopt new technologies ensures we can deliver on the promises we make our clients from day one.

- Donnacha Neary, Managing Director, Sonica

Focus on why

Our survey doesn’t just ask what technologies businesses are implementing, but what for.

We uncover where businesses are planning to make significant investment in the year ahead. Around four out of ten of the businesses we surveyed said they will spend to improve business operations and infrastructure and on marketing and sales programmes. Interestingly, marketing and sales investment is up this year compared to 2018 and 2017.

Slightly over one third will improve collaboration with customers, employees or partners using tools such as engagement programmes; this category has held relatively steady since our first survey in 2016. This year’s figure was down slightly on 2018, and has returned to 2017 levels which themselves were marginally below 2016 figures. This year, almost 40% intend to focus on improving customer experience and this is showing an upward trend compared to previous years.

There were some new categories for this year’s survey and they delivered some interesting findings. One in five businesses plan to invest in digital transformation initiatives and three out of ten will hire new staff.

The slight reduction in spending on business systems and collaboration could indicate that companies are sweating the assets they invested in a year ago or more; alternatively, it may also be a sign that many Irish SMEs are further along the road to technology maturity.

CX appeal

Many data points in this year’s survey point to a growing willingness among Irish SMEs to deal with customers on their terms and in a way they want. This is in line with a broader international trends in business towards prioritising customer experience (CX).

Newly added for the 2019/2020 report, the category of improving customer care has emerged as a leading reason for investing in new business telephony systems. 55% of our respondents rated it as the most important factor when investigating a new business phone system, ahead of increasing productivity, reducing risk and reducing cost, which each scored below 50%.

Elsewhere in our survey, 59% of businesses now interact with their customers on social media, and 41% use a customer relationship management (CRM) system. And as we saw in the previous section, the number of businesses investing in improving customer experience has risen since 2017.

It will be interesting to watch whether CX will feature just as strongly in the strategies and investment plans for Irish businesses in the years ahead.

0%

Rate CX as the most important aspect when considering a new phone system

0%

Interact with customers via social media

0%

Plan to invest to improve CX

Almost 40% of customers this year have said that they’re going to focus on improving customer experience.

Ciara O’Reilly

Portfolio Manager, Three

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We want to continue doing innovative things for our customers in terms of their experience. We have what we call a couple of key touch points – such as the Dalata bed, the bathroom experience, technology at check-in and high-quality Wi-Fi – and if we deliver on those, we satisfy our guests. Every month, we report our customer satisfaction in all our hotels, and we reward the general managers based on customer perception of their hotel.

- Pat McCann, CEO, Dalata Group

Ahead in the clouds

In 2019, cloud adoption is continuing its upward trajectory among Irish SMEs.

Whether it’s file storage and sharing solutions, hosted telephony applications, meeting and collaboration tools, or call and messaging apps, Irish SMEs’ use of these services is consistently up on the adoption rates we tracked in our previous surveys.

Almost three quarters of businesses in our survey now use tools like Google Drive, DropBox, and OneDrive for storing and sharing files; a jump of almost 10% over 2017.

Just over a third have adopted a cloud telephony platform such as Skype for Business or hosted solutions from providers like Cisco or Avaya. That’s more than doubled in the space of two years; in 2017 adoption rates hovered around 15%.

Messaging tools like Skype and WhatsApp are now found in more than six out of ten businesses in our survey. That’s a slight gain on last year but a noticeable jump from 2017 where just four out of ten businesses used these apps.

When broken down by sector, the industries embracing the cloud most for file storage and sharing were: marketing and advertising, education, technology, sport, leisure and tourism. Over fourth-fifths of respondents in each category use cloud technology. Close behind were construction and engineering, finance, services, pharmaceuticals and healthcare. However, cloud adoption was lower in sectors like energy and utilities, or food and hospitality, where 60% of respondents said they used it. In agriculture and retail, adoption rates were lower still, at 55% of companies.

Our survey shows that almost 75% of companies have moved their file and storage services to the cloud; likewise, the move to cloud telephony has doubled over the last two years.

Karl McDermott

Head of 3Connected Solutions & IoT, Three

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All-pervasive
technology

From this year’s responses and past reports, it’s possible to build a picture of just how much technology permeates business.

The surveys show steady adoption of websites, email marketing, and digital advertising. One in four businesses sell online; suggesting there’s still the potential to do so much more. A new category added for the 2019/2020 report gave an interesting result: 15% of respondents have their own mobile app.

It seems some SMEs have chosen to forge ahead with investing in, and enthusiastically adopting, technologies; for others, our survey suggests there’s still opportunity to catch up and gain ground on the competition.

Staying in touch

The phone system is a key building block for any business, and our survey looks at the reasons for investing in an upgraded system.

For this year’s survey, we added a new option of ‘improving customer care’ as a factor to consider in a new telephony system. And it immediately outranked the other three reasons of lowering costs, reducing risk and improving productivity. In fact, those three reasons were all slightly lower compared to previous years. This suggests that Irish SMEs don’t just see a technology like telephony as a way to remove costs from the business, but as a way to deliver better quality of service to customers and suppliers.

Almost all of the respondents (92%) consider the mobile as either ‘essential’ (76%) or ‘important’ (16%), a trend that’s in line with previous years.

Conclusion:
glass half full?

Judging by the results of this year’s report, businesses in Ireland are all about realism, with a dash of optimism.

Attitudes to technology remain largely positive, but with a slight trend towards tactical spending to solve a specific issue in the business. Tellingly, the same percentage of businesses will invest in preparing for Brexit (20%) as in digital transformation.

But with productivity and collaboration also featuring in our survey, it’s clear that many businesses see technology as a way to help them do business better, by empowering staff and enabling greater efficiency. So whatever the future holds, they plan to be ready. Let’s raise a glass to them.

The Irish Business Mindset Survey was conducted during July - September 2019. There were 734 responses, representing a sample size of around 0.2% of an estimated 250,000 businesses in Ireland.

Where do you go from here?

Talk to an SME technology expert now on 1800 330 303

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