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Cloud, programming skills gap impedes SMEs’ digital initiatives

Read time 3min 40sec

Although digital adoption is accelerating among South African small businesses, more than two-thirds (67%) admit to struggling to source the right tech talent required to implement their digital strategies.

This is according to the fourth annual State of Small Business reportby global small business platform Xero, in partnership with World Wide Worx. The research is based on responses from 400 small business owners and 200 accountants in SA.

According to the report, virtually every small business in South Africa has adopted some form of technology they now rely on, with 97% saying they invested in new technologies in 2019.

Adoption of cloud accounting technology leapt from 13% in 2017 to 61% in 2020, indicating that more than half of small businesses can now manage their finances remotely.

Over half (53%) of businesses found that adopting technology resulted in ‘somewhat big’ or ‘big’ increases to their profitability. Despite this, many small businesses said they don’t have the right skills to support their digital shift.

When asked which skills gaps existed in their team, the biggest were in cloud computing (39%), programming and app development (33%), digital product management (12%), digital project management (10%), and digital design (9%).

To try and close the gap, a little more than half (55%) said they had invested in improving cloud and tech skills over the last year.

Despite challenges with finding the right tech talent, only 14% planned to upskill their existing team members to help close tech skills gaps.

“It’s great to see small businesses embracing digital tools, but investing in technology is only the first step,” comments Colin Timmis, country manager at Xero South Africa and professional accountant.

“Many small businesses don’t yet have the skills to match. We need a greater focus from government and technology firms on closing this gap and help small businesses develop the right skills to build back faster and stronger from this COVID-19 crisis.”

Timmis advises companies struggling to hire external talent, to rather focus on upskilling tech champions in their current teams.

“Even if your budget is modest, look at what skills you currently have in your organisation that can be built on, make use of free online training and ask for help,” he adds.

Redirected budgets

Before the lockdown, 61% of small companies said they planned to allocate a portion of their budget to tech training. However, as many SMEs had to make difficult staffing decisions during the lockdown, much of this money will have been redirected.

While 2020 has been an unprecedented year for all sectors, it’s been a particularly tough time for small businesses as SA’s national economy was already in recession before the impact of COVID-19, notes Xero.

The country’s unemployment rate was at an all-time high, and the current crisis and impact of lockdown has only worsened the situation for SMEs. Some of the other major concerns and challenges facing small business owners, according to the survey, were lack of government support (32%), load-shedding (32%) and political uncertainty (16%).

"The research shows quite clearly that all businesses are becoming, to a greater or lesser extent, technology-driven,” says Arthur Goldstuck, technology analyst and founder of World Wide Worx.

“The cloud is now at the heart of almost every business, which explains why cloud computing skills represent the single biggest skills gap across all SMEs. We've already seen more than half of SMEs investing in cloud and tech skills. With the digital revolution that occurred as a result of COVID-19 and remote working, this trend will only accelerate."

IT skills in South Africa and the rest of Africa are becoming increasingly hard to find.

The 2019edition of the South African ICT Skills Survey, carried out by the Joburg Centre for Software Engineering, in partnership with the Institute of Information Technology Professionals South Africa, found that despite the hype around the fourth industrial revolution in SA, there remains a chronic shortage of all types of ICT skills required to help local organisations succeed in the digital economy.

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