Businesses in the East of England have mixed feelings on the impact of technology

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According to research by the regional chartered accountancy practice, Price Bailey, business leaders in the East of England have identified some areas of technology as having massive potential for their future development.

However, at the same time, those same leaders have outlined significant concerns about the impact of technology and the uncertainty it brings, which could be stifling crucial investment.

Technology has revolutionised the way business is done. It has driven and facilitated consumer activity for many years now, influencing the products sold, how customers compare prices and deals and determining how and when goods and services reach the end-user.

While several new players and market disrupters have emerged in recent years, there are ways existing businesses can thrive in an era of disruption. Indeed many have adapted well.

In a recent article on ‘Technology’s double-edged sword’, Price Bailey partner Jamie Gladstone discusses how technology is opening up opportunities for growth and increased profits for these businesses.

Figures from their research paper ‘Inside the Minds of Business Leaders’ showed that technology was something of a double-edged sword for many businesses, with leaders recognising both the opportunities it offered and the threats it contained, with some viewing it as a dangerous disruptor that is cutting profit margins to the bone.

The report draws on the survey responses of 400 lead decision-makers at owner-managed firms across London and East Anglia, all with reported sales above £1million. Fewer than one in five of those responding to the survey were from businesses in the tech or hi-tech sectors, with others from a range of 10 other sectors including property, healthcare, manufacturing, professional services, and retail, distribution and logistics.

And while most business leaders (77 per cent) expected their firm's financial position to improve over the next 12 months, that optimism was tempered by the rising threat of technological disruption, viewed as the main barrier preventing business growth by 76 per cent of respondents – pushing Brexit into second place.

The research digs deeper into those responses, revealing that it's clear that business leaders are identifying some areas of technology as having significant potential for their future development. For example, cloud services and online sales were viewed as positive opportunities by 80 per cent and 74 per cent of business leaders respectively, while artificial intelligence (AI) – often thought of as an emerging technology – was already in use by more than two-thirds of respondents.

It’s not clear what type of AI they are using, but this is most likely to be smart learning software – such as a ‘chatbot’ – which can automate online customer interactions. Automation (67 per cent) and outsourcing (62 per cent) were also cited as major opportunities for improving businesses over the next three years.

However, there were significant concerns about how social media marketing by new or existing competitors could damage companies – 73 per cent saw it as a potential threat to their business, while only 42 per cent viewed social media marketing as an opportunity. And almost two-thirds of firms (64 per cent) predicted that fierce competition deriving from technology would hit profitability within three years, with 72 per cent seeing outsourcing and 67 per cent seeing AI as threats.

Commenting on the research, Jamie goes on to say: “It’s no surprise then that technology emerged in the survey ahead of either politics or economics as the strongest agent of change – both good and bad. The key question is what businesses can do to stay ahead of the curve, or at least, keep up with it?

“One important message was the continuing need to invest in people. Business leaders don’t to be technology experts themselves, but they do need to employ those with the necessary skills to maximise the opportunities that technology brings. That may mean identifying and recruiting new talent or training existing staff to use the technology available.

“Investing in the technology itself should be a given, although some business leaders clearly seem to be reluctant to push ahead into areas they don’t know well. The reality is that while new technology can offer alternative ways of operating, driving efficiencies and reaching more customers, ignoring that potential could see businesses punished for their complacency, as tech-savvy new entrants up to speed with more effective ways of working threaten the technological laggards.

“It looks likely that those best able to invest wisely in technology to realise process and business efficiencies will outperform when it comes to future growth and profits. Higher growth businesses are likely to be those whose investment best enables them to wield technology, rather than become victims of it.”

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