Small and medium-sized enterprises (SMEs) face five major barriers when it comes to adopting new technology. These challenges can reduce revenue by up to 15% and leave businesses struggling to stay competitive. Here’s a quick breakdown:
- High Costs: Upfront investments, maintenance, and training are expensive. Many SMEs lack the budget to implement new tools.
- Skill Gaps: 79% of employers report skill shortages, especially in tech and AI, making it hard to use advanced systems effectively.
- Employee Resistance: Fear of job loss, lack of training, and unclear communication lead to pushback during tech rollouts.
- Security Risks: Over half of cyberattacks target SMEs, and 60% of affected businesses shut down within six months.
- Compatibility Issues: Outdated systems often clash with new technology, causing disruptions and unexpected costs.
Quick Overview of Solutions:
- Spread costs with phased implementation or cloud-based tools.
- Invest in affordable training platforms like Coursera or Udemy.
- Communicate clearly to reduce employee resistance.
- Strengthen cybersecurity with basic measures like firewalls and backups.
- Conduct compatibility assessments before upgrading systems.
These barriers are tough, but with the right strategies, SMEs can overcome them and thrive in today’s digital world.
Barriers to implementation of technology in businesses and how to overcome them
1. High Costs and Budget Limits
For small and medium-sized enterprises (SMEs), managing finances is often a significant challenge, especially when adopting new technology. These businesses face three main expenses: upfront investments, ongoing maintenance, and employee training.
Morgan Leucat, Director IT Sales at Konica Minolta, highlights the issue:
"Costs and effort for IT have increased in most companies. At the same time, many SMEs do not have the internal IT resources that are available to bigger companies".
To ease these financial pressures, many SMEs turn to cloud-based solutions. These replace hefty upfront costs with manageable, recurring fees. Training costs can also be reduced through smart strategies. For example, Orange™ introduced a knowledge management system that cut agent training time in half while maintaining high-quality service for its 256 million customers.
Here are some practical ways SMEs can navigate budget limitations:
- Phased Implementation: Spread out investments over time to reduce financial strain.
- Cloud Services: Use subscription-based models to lower capital expenses.
- Cross-Training: Equip employees with skills across technical roles to maximize internal resources.
- Knowledge Base Development: Create centralized training materials to streamline learning.
- External Funding: Explore grants and loans to help offset initial costs.
2. Missing Technical Skills
Small and medium-sized enterprises (SMEs) often struggle with a gap in technical skills when adopting new technologies. Research shows that 79% of employers report skill shortages, with technology (38%) and artificial intelligence (33%) being the most pressing areas. These gaps are evident in limited internal expertise and a lack of proper employee training.
Among SMEs, concerns about keeping up with technological advancements vary by size. For businesses with 10–49 employees, 30% worry about falling behind, while this number rises to 35% for companies with 50–249 employees.
"By leveraging digital technologies, small businesses can innovate faster than their larger counterparts, responding to market changes with agility and creativity. This can lead to a significant competitive advantage, positioning SMEs as leaders in their respective markets."
Despite these opportunities, fewer than one in three SME employees received training in the past year, and 76% of employees under 35 feel that skill gaps are holding back their career growth.
"However, it’s essential to approach AI implementation strategically. AI adoption should align with overall business objectives and the tests and trials should be clearly communicated to your employees to ensure that they understand what is being tested and how it fits with the bigger picture."
Cost-Effective Training Solutions
Affordable training options can help SMEs close the technical skills gap. For example, the Verizon Small Business Digital Ready program provided over $1 million in funding and hosted more than 200 events in 2024. Programs like this align with broader strategies for digital transformation.
Here are a few training platforms and their starting costs:
| Platform | Starting Cost |
|---|---|
| Coursera | $29.99/course |
| LinkedIn Learning | Free first month |
| Udemy | $10/class |
| Alison | Free |
(Data sourced from)
Employee Training Preferences
To address these challenges, 25% of employees are looking for technology/IT training, while 21% want to learn about AI. For SMEs seeking more structured guidance on digital transformation and technology adoption, advisory services like Growth Shuttle (https://growthshuttle.com) can provide tailored support.
3. Employee Pushback
Resistance from employees is a major reason why up to two-thirds of change management efforts fail in small and medium-sized enterprises (SMEs). This resistance can show up as outright opposition or subtle disengagement, both of which can derail the adoption of new technologies.
Understanding Employee Concerns
A 2024 report by Whatfix revealed that 33% of employees received less than an hour of training during software rollouts. Meanwhile, Gartner found that 63% of employees stop using technology they find irrelevant, emphasizing the importance of showing how these tools fit into their daily routines. Without proper training, skill gaps widen, and resistance to change grows.
"Everyone thinks technology will get rid of their jobs. Usually technology makes our working lives easier and better. Think positively about change." – Chris Skinner, CEO of the Finanser
Common Resistance Factors
Employees often push back against changes for a variety of reasons. Here’s a breakdown of common concerns and their impacts:
| Factor | Concerns | Impact |
|---|---|---|
| Job Security | Fear of automation replacing roles | Lower adoption rates |
| Competency | Anxiety about learning new skills | Slower implementation |
| Work Disruption | Worries about productivity loss | Increased resistance |
| Loss of Control | Fear of reduced autonomy | Active opposition |
Addressing Resistance Effectively
Getting employees involved early in the process can improve success rates by 15%. Clear communication and strong support systems are essential for technology projects to succeed.
SMEs also need to address deeper psychological barriers. Fear of the unknown, office politics, and worries about losing support all contribute to resistance. Acknowledging these concerns is a critical first step in managing change effectively.
Building Employee Buy-in
To reduce resistance and encourage participation, SMEs should focus on these strategies:
- Clear Communication: Keep employees informed about the progress and benefits of the change.
- Comprehensive Training: Provide training tailored to different roles and learning styles.
- Support Systems: Set up helpdesks and Q&A sessions to offer ongoing assistance.
- Employee Involvement: Include team members in decision-making to foster a sense of ownership.
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4. Security Risks
Security concerns remain a major barrier for adopting new technologies, especially for small and medium-sized enterprises (SMEs). Over half of all cyberattacks target SMEs, and the consequences can be devastating – 60% of SMEs shut down within six months of a data breach.
Key Security Challenges
Digital transformation has made SMEs more vulnerable. The shift to cloud infrastructure and remote work has widened the attack surface, exposing businesses to more risks. Additionally, SMEs often play a critical role in supply chains, which can make them an attractive target for cybercriminals looking to exploit weak links.
The Financial Toll of Security Breaches
Security breaches hit SMEs particularly hard. In 2021, 82% of ransomware attacks were aimed at companies with fewer than 1,000 employees. Shockingly, more than a quarter of SMEs that handle customer credit cards have no cybersecurity measures in place.
Limited Resources, Bigger Risks
For many SMEs, resource constraints amplify security risks. Here are a few statistics that highlight the problem:
- 42% of SMB leaders struggle to fully understand the scope of cyberattacks.
- 40% report a lack of skilled security staff as a major obstacle.
- 90% of IT staff admit they’re paying less attention to security alerts than in previous years.
These challenges make it clear that SMEs need to prioritize basic security practices to protect their businesses.
Key Security Practices
-
Infrastructure Security
Strengthen your defenses with encrypted Wi-Fi, regular software updates, and firewalls to guard against common threats. -
Data Protection
Regular backups, data encryption, and access controls are essential for safeguarding sensitive information. This is especially critical since 61% of SMEs reported being targeted by cyberattacks in 2021. -
Employee Training
Human error is a leading cause of security breaches, making employee training a must. As Ian Fantozzi, CEO of Beazley Digital, explains:"We will work with brokers to offer training to SME clients to raise awareness of the threats and to provide advice around increased cyber security and risk management."
5. Old System Compatibility Issues
For small and medium-sized enterprises (SMEs), integrating new technology with older systems can be a major hurdle. Trying to modernize while still relying on outdated infrastructure often leads to disruptions and unplanned expenses. Just like costs and skill shortages, compatibility problems can derail operations if not handled properly.
The Outdated Infrastructure Challenge
Many SMEs face the pressing issue of outdated infrastructure. Common problems include:
- Network limitations: Older networks may not support the demands of newer applications.
- Software incompatibility: Legacy software often doesn’t work with modern APIs.
- Hardware constraints: Aging equipment can hold back system performance.
Real-World Integration Challenges
Consider a company that upgraded its security system to include AI-powered video analytics. The plan hit a roadblock when their coaxial cable setup couldn’t handle the required data throughput. This forced them into a costly and time-consuming infrastructure upgrade.
Impact on Business Operations
When systems don’t work together, businesses face several issues:
- Data migration risks: Moving data from old to new systems can lead to loss or corruption.
- Workflow disruptions: Misaligned systems cause inefficiencies and lower productivity.
- Unexpected costs: Integration often ends up costing more than anticipated.
To avoid these pitfalls, SMEs need effective strategies for managing compatibility challenges.
Practical Solutions
Here are some ways SMEs can address legacy system issues during digital transformation:
- Hybrid cloud integration: Hybrid cloud setups allow businesses to connect old systems with new technology, preserving essential applications while migrating to modern platforms.
- Phased implementation: Gradual rollouts help tackle compatibility problems early on.
- Compatibility assessments: Conducting detailed evaluations of software dependencies, hardware interfaces, network protocols, API compatibility, and operating system requirements can prevent surprises.
- Expert advisory services: Working with specialists can provide tailored solutions. For instance, firms like Growth Shuttle (https://growthshuttle.com) offer guidance for SMEs navigating these challenges.
The Role of Open Source
Open-source platforms can also help bridge compatibility gaps. They provide:
- Flexibility for integration
- Strong community support
- Lower implementation costs
- Reduced dependence on specific vendors
Solutions for Technology Adoption Barriers
Addressing barriers to technology adoption requires a clear and actionable plan. Here’s how small and medium-sized enterprises (SMEs) can navigate these challenges:
Affordable Implementation Options
Start with solutions that fit your budget and can grow with your business. For instance, cloud-based tools like Xero offer flexible pricing and easy integration. SMEs can automate financial processes with monthly subscription plans, keeping costs predictable and manageable.
Strengthening Digital Skills
Invest in employee training to build the expertise needed to fully utilize new technologies. This ensures your team can make the most of the tools you implement.
Managing Organizational Change
Adopting new technology isn’t just about tools – it’s about people. Clear communication and regular updates are key. For example, during COVID-19, Emirates Airlines ensured smooth operations by maintaining transparency and keeping employees informed.
Leveraging Expert Advice
If in-house expertise is limited, consider external advisors. Companies like Growth Shuttle offer tailored plans to guide SMEs through their digital transformation:
| Advisory Plan | Monthly Cost | Features |
|---|---|---|
| Direction | $600 | Strategy calls and actionable plans |
| Strategy | $1,800 | Implementation support and brand representation |
| Growth | $7,500 | Weekly guidance with support across departments |
Strengthening Security
Protect your systems with basic measures like firewalls and antivirus software to guard against potential threats.
Tracking Progress
Measure success by looking at improvements in productivity, cost reductions, adoption rates, and customer satisfaction. Small, consistent steps can build momentum and set the stage for long-term growth.
Tips for Practical Implementation
Start with tasks that can deliver quick results. Pilot programs are a great way to test new technologies and refine processes. For example, in 2017, the Abu Dhabi National Oil Company (ADNOC) saved costs and improved operations by establishing clear communication channels and offering robust support during their digital transformation.
These approaches can help SMEs overcome common barriers to technology adoption.
Conclusion
Small and medium-sized enterprises (SMEs) play a crucial role in driving economic growth, but many face steep challenges when it comes to adopting new technology. These barriers can cut revenue by nearly 15%, and 67% of SMEs are already battling to stay afloat in today’s competitive market.
The gap between businesses that embrace innovation and those that lag behind continues to grow. Companies that successfully adopt technology often see revenue gains of about 14.8%, yet a quarter of SMEs still struggle to meet technological demands. On average, small businesses invest $35,000 in innovation over three years, proving that overcoming these hurdles can lead to notable returns.
"Technology is at the heart of economic growth", says Indermit S. Gill, Vice President of Equitable Growth, Finance, and Institutions.
For SMEs, adopting technology isn’t just a nice-to-have – it’s essential for staying competitive. Addressing key issues like high costs, lack of technical skills, employee pushback, security concerns, and system compatibility can help these businesses thrive. Leaders looking to speed up their digital transformation may find expert services like Growth Shuttle (https://growthshuttle.com) helpful in navigating this journey.
