The risks and rewards of technology for South African SMMEs

Technology can be a mixed blessing. Many professionals are already worried that artificial intelligence will make their jobs redundant. And let’s not forget the devastating effects of social media on local news production. On the other hand, innovation has historically led to net gains in job growth. While new technologies inevitably disrupt specific industries or sectors, they benefit economic growth. For small and medium-sized businesses, seizing the opportunities of innovative new technologies while avoiding the pitfalls is a perennial challenge. Large firms have Chief Technology Officers and teams of IT specialists and external technology providers. SMMEs don’t usually have that luxury.?These are some of the technology risks and rewards South African SMMEs need to start paying attention to:

Staying on the right side of privacy laws

South Africa improved its data protection laws by introducing the Protection of Personal Information Act (POPIA). While there are questions about its effectiveness, businesses should comply. The Act provides severe fines that could devastate a small business. In addition, if customers’ private data is leaked, that will undermine consumer trust and tarnish a brand. In such cases, prevention is always better (and more cost-effective) than cure. SMMEs should consult the relevant legal or risk experts to ensure they comply with the Act's regulatory requirements and ensure their technology is up to standard to prevent embarrassing data leaks.

Hidden risks of remote working?

Work from home seems set to stay, whether in hybrid form or fully remote. While it may annoy some managers, working remotely can be a great source of resilience, enabling business continuity even in extreme conditions (as we saw during COVID-related lockdowns).?However, remote work also introduces new risks. Sharing client data via unencrypted documents or spreadsheets leaves companies vulnerable to interception.?And ‘work from home’ isn’t always literally true due to loadshedding employees seeking alternative workspaces that are potential cybersecurity minefields. In these circumstances, securing your networks depends on a combination of appropriate security tools – such as secure workflow software and firewalls – and adequate cybersecurity awareness training across the organisation.

Tools to do more with less

With rising interest rates and lower consumer demand, businesses may need more access to productive capital to spend on marketing, expanding product lines or investing in growth.?In this climate, finding new efficiencies is an important stabilisation strategy. Technology can play a critical role by automating time-consuming functions and freeing employees to spend more time on productive activities (such as driving new business).?Flexible cloud-based accounting tools, CRMs, inventory management, and workflow systems can save time and improve digital security. There is even specialised software to meet regulatory and compliance requirements.?

Of course, only some tools will be suitable for some businesses. An SMME’s investment in a given software package will depend on its operational budget, the number of employees, and the complexity of employees’ work. With that caveat in mind, investing in technology can result in resilience and cash flow benefits in the medium and long term – and create a stronger foundation for growth when the economy picks up.

Holistic risk partnerships are essential

Insurance against cyber risks is important to any business’s digital strategy. But, choosing the appropriate insurance product is only part of an integrated risk mitigation strategy. SMMEs may not have a dedicated CTO and CFO or an in-house risk team, but they can partner with an insurer who considers the company’s risk landscape and advises on a holistic risk management approach. In other words, for SMMEs in particular, meaningful collaboration with a risk partner is one of the most effective ways to manage costs, mitigate risk and position themselves for future growth.