How SMBs in Australia are adapting to the pandemic

Technology has been a saving grace for small and medium businesses in Australia through the pandemic – as they sought business continuity, cost savings and flexibility to survive challenging conditions. A new Analysys Mason report presents the segment’s pandemic response.

Around 450 small and medium businesses (SMBs) were surveyed across Australia at the turn of the year, for an overview of how this crucial economic segment has been coping with unprecedented disruption.

Consumer spending and investment activity dried up, as did revenues. For around 40% of SMBs, the natural response was to cut costs and preserve cash flow. That said, the majority took a more nuanced approach to business continuity – with around 65% adapting their operating models to meet new conditions. Nearly 40% did so without even cutting their cost base. 

This is the crux of the SMB response – drawn from a vast range of business measures that emerged in the Analysys Mason survey. The first agenda point for most was to safeguard employees – providing them with protective equipment and crafting tracking systems for health and safety.

Those cutting costs chose to close physical branches or locations – in some cases permanently – while others were forced to furlough employees or lay them off altogether. Government support schemes – for businesses and employees alike – came in handy during the thick of the economic crisis. 

Then there are a range of other measures that don’t involve savings. Companies that didn’t already have virtual working options put some in place, and the rest expanded their existing ‘work-from-home’ channels. Many changed their delivery models for customers, in line with new preferences and considerations.

A red thread across all these actions is the use of advanced technology. Many health and safety tracing systems rely on location-based apps, for instance, while digital platforms enable all virtual working and online delivery activity. The result is a broad-based increase in technology spending – largely concentrated on collaboration tools such as Zoom, Slack and other workflow management solutions.

Cloud computing, infrastructure, connectivity and cybersecurity were other key focus areas. According Analysys Mason research director Tom Rebbeck, many Australian SMBs lack the internal capacity to manage these transformations – pushing them to lean on external support. 

“Increased adoption of cloud services and work from home has made the IT environment more complex to manage. SMBs are looking for external help to manage these new workloads, and our survey shows that demand for managed services has increased across companies of all sizes.”

“This demand is expected to continue to increase as SMBs migrate to the cloud and move away from on-premise-based solutions.” Indeed, recent reports suggest that Australian businesses have realised the merits of working virtually – savings, flexibility, etc – and are reluctant to go back to previous models. Many are considering hybrid arrangements, working from office only some days in a week. 

These are some of the myriad changes sweeping through Australia’s business environment. More tech investment and a higher reliance on digital advisors will likely be hallmarks of the new normal – as businesses adapt to a change in conditions, operating models and expectations.