Small and medium-sized businesses that invest in digital technologies are more competitive: BDC study
- In 2021, 91% of Canadian small and medium-sized enterprises (SMEs) invested in technology with an average investment of approximatively $118,000.
- Despite an increase in investments, it seems only one in 20 businesses use digital technologies effectively. There is still a long way to go, as only over half of businesses (60%) have a website and one-third (34%) analyze customer data.
- Indigenous- and youth-owned businesses, technology and retail businesses and large SMEs are more likely to be digitally advanced, whereas a majority of women-owned businesses are more likely to show a digital delay.
- Digitally advanced businesses perform better: they grow faster, are better able to adapt to a changing environment, get the financing they need, and are more likely to export.
- Digital maturity is unevenly distributed across industries; the retail sector went completely digital during the COVID-19 pandemic, while the construction and services to individual sectors had the least investment in 2021.
May 10, 2022, Montreal — Canada’s small and medium-sized businesses are making significant investments in digital technologies, with nine out of 10 (91%) investing an average of $118,000 in 2021, says a new BDC study released today.
Entitled, “Seize the Technological Advantage: Why Digitally Mature Companies Perform Better”, the study finds that digitally mature businesses show much higher growth than others and invest more in digital technologies, which they understand will provide them with benefits. The study finds that the key to digital success is good planning, as 99% of digitally advanced businesses have a digital plan.
“The most digitally advanced companies use technology, not only to improve or support their current business, but also to solve their problems differently,” says Pierre Cléroux, BDC’s Vice President, Research and Chief Economist. Cléroux points out that businesses no longer have to invest as much in high-end computer equipment to benefit from digital possibilities. As a result, BDC has updated the methodology used in 2018 to measure a company’s digital maturity.
The study finds that a digital divide is emerging among Canadian businesses. Many companies are slow to digitize, and, as a result, they find it harder to finance their growth projects that would allow them to get started on their digital shift. In fact, it is estimated that only one in 20 businesses use digital technologies effectively.
The report highlights the main challenges of digitization: cost (42%); cybersecurity (32%); uncertain benefits (27%) and technology integration (27%). It emphasizes one distinguishing characteristic of digitally advanced businesses: the digital plan. Almost all advanced businesses have created a digital plan that details their technology vision for the coming years. The study offers 6 tips to a successful technology acquisition:
- Create a plan: Having a plan enables you to focus your efforts and stay ahead of the curve as the company’s technology needs become more important.
- Build a team to guide you through the phases of a technology purchase, such as finding the right vendor or asking the right questions.
- Take the time to prepare: Avoid mistakes or surprises by talking to peers within their sector, listening to company demos and testing tools.
- Communicate your expectations to the vendor and with the different parties that will be using the system.
- Prepare an integration plan with milestone dates: An integration plan helps set the pace for the various steps that need to be completed along the way.
- Start now! It’s the one thing all digitally advanced business owners agree they would have done differently. They all see the benefits of the technology and believe they would have profited sooner from the system had they started earlier.
The Government of Canada’s Digital Adoption Program (CDAP) offers support to businesses who want to adopt digital technologies to remain competitive. This program offers a grant to help develop a digital plan with experts and a 0% loan of up to $100,000 to facilitate the acquisition of new technology. Entrepreneurs can also visit BDC's Advisory Services to talk to a specialist or explore BDC’s Technology financing for more support.
BDC updated the 2018 study by surveying more than 1,500 Canadian small and medium-sized businesses between November 12 and December 3, 2021, on digital maturity. BDC defines digital maturity as a combination of digital intensity and digital culture. Digital intensity measures the use of digital technologies in a company’s operations, such as customer experience and data and analytics. Digital culture measures a company’s ability to make changes to increase its digital maturity and includes such things as leadership, strategy, and the retention of a skilled workforce.
BDC is the bank for Canadian entrepreneurs. It provides access to financing, as well as advisory services to help Canadian businesses grow and succeed. Its investment arm, BDC Capital, offers a wide range of risk capital solutions. For more information, visit bdc.ca.