Banking and mobile communications behind SME competitiveness

The study breaks competitiveness for SMEs down into four elements identified through academic research, namely ability to increase profits, to increase turnover, to reduce costs and to win and retain clients.

According to Arthur Goldstuck, principal researcher for the survey, the rankings change dramatically for each of these factors, but in every case, only between 2% and 5% of respondents regard either government small business financial support programmes or business advice from government agencies as having a high or very high impact. Between 86% and 92% believe these initiatives have had a low or very low impact on their competitiveness.

"By contrast, 47% of respondents polled to date believe that mobile communications have had a high or very high impact on their ability to win and retain clients; 36% see online banking as having a high or very high impact on this factor, while 34% see a relationship with their bank having this kind of impact," he says.

Success of new channels

Nikki Kearns, director of business banking at Standard Bank, says banks have, in recent years, focused on delivering a range of services that support SME initiatives. "It is pleasing to note that SME decision-makers recognise the contribution of banking services to competitiveness. This is a reflection of the success of new channels such as online banking, as well as efforts by banks to improve their level of involvement with business owners."

Continuing, Goldstuck says Internet access and IT systems each rank marginally lower at 33% high or very high impact.

Andrew Krause, Oracle applications director, says SMEs tend to use easily implemented and maintained business systems. "The SME looks for rapid value creation from technology - that means affordability and ease of deployment are key."

Meanwhile, BEE status comes far behind, at only 16% high or very high impact, adding that this figure is significant in the context of relatively slow uptake of BEE initiatives among SMEs.

Says Goldstuck, "It is notable, however, that BEE still comes in well ahead if independent professional business advice, which sees a mere 9% of respondents so far crediting it with high or very high impact on ability to win and retain clients."

Cost reduction

Examining the impact on cost reduction, top rankings are dramatically reversed, with mobile communications falling to a 29% high or very high impact, and online banking services shooting up to 44%. "The relationship with the bank maintains a similar ranking, at 35%, as do IT systems and Internet access at 32%. BEE Status also retains its 16% high or very high impact rating, while independent professional business advice remains at 9%," he says.

In impact on sales and turnover, every one of these factors saw less than a quarter of respondents so far rating them high or very high, with mobile communications marginally leading the field at 23%, followed by online banking at 20%, relationship with the bank at 19%, IT systems at 18%, and Internet access at 17%.

Close match

"The final measure of competitiveness - ability to improve profitability - saw a close match in factor ratings to those for sales and turnover, with one or two percentage point differences, suggesting a close link in the minds of SME decision-makers between the two measures," says Goldstuck.

"Once again, while BEE ranks low, at 10% high or very high impact on this measure, it compares favourably with traditionally high impact areas like IT systems and banking, and even with relatively new high impact areas like Internet access and online banking."

The final findings of SME Survey 2006 will be published at the end of September 2006. For more information, go to www.smesurvey.co.za.