With the rapid advances in technology, there has never been a better time for your private company to take advantage of the tangible and intangible benefits it offers to drive efficiency and increase productivity. Since the 2008 market crash, Saskatchewan’s technology sector has grown dramatically. The provincial government estimates that it adds $2 billion to the provincial gross domestic product, equating to around 2.5 per cent of the province’s overall economy.
EY’s most recent Global Capital Confidence Barometer, a report that gauges corporate confidence in the economic outlook, found that predictions of an economic downturn may be shaking the confidence of market watchers, but private middle-market companies appear undaunted.
Private companies see both global and domestic economic growth in the coming year, with their revenue growth projections more than doubling from 2018. Despite their optimism, however, private companies are aware of the potential challenges that lie ahead.
Although one in three cites a slowdown in economic activity as a key risk, private companies appear more concerned about geopolitical uncertainty, tariffs and supply chain disruption, with 46 per cent seeing these as key risks in 2019 versus 22 per cent in 2018.
Private companies can address these challenges and build resilience by leveraging technology to make their business more efficient, using technology for HR activities and capitalizing on cybersecurity for risk management.
Using technology to make the business more efficient
Successful private business owners will tell you one of their main goals is to make their business more efficient. Almost all (96 per cent) of private company executives in the EY survey say their organizations will be making significant investments in technology in the coming year.
Artificial intelligence (AI) has become a buzzword over the past few years. Whether it’s analyzing huge amounts of data or automating basic tasks, AI can level the playing field and allow small businesses to compete with large corporations. Medium/larger private companies can often use AI to increase personalization of their product and service offerings, as well as improve customer services. Using AI to understand geography and a customer’s typical behaviour and values can allow your private company to tailor content and products/services for each individual to better engage customers and develop a personalization strategy. For instance, your private company can track previous purchases or which products and pages customers have viewed and use that information to offer specific special offers.
Most respondents (70 per cent) in EY’s Global Capital Confidence Barometer say they will be developing their AI capabilities in house, partly to address compatibility with legacy systems as a means of gaining a competitive advantage.
Using technology to support HR activities
Talented employees are the backbone of any successful company. Private company executives are taking advantage of technology to add flexibility to their talent agenda and to capitalize on the gig economy to address talent gaps.
In Canada, there’s a higher priority on hiring more contractors (20 per cent) than full-time staff (6 per cent). One in four private business owners says they will use technology, AI and automation in their talent strategies—four times higher than in 2018. For instance, Statistics Canada reports that out of 9,300 jobs added in Saskatchewan from June 2018 to June 2019, 4,200 of those were part-time jobs.
Technology can also assist in automating administrative tasks that are often repetitive, mundane and time consuming. Human resource management systems can streamline processes in the employee lifecycle for key HR activities, and organize employee payroll, benefits and training. Implementing these systems doesn’t have to be time consuming or costly and can improve your bottom line by freeing up valuable human resources.
Using cybersecurity for risk management
Now is a time when cyberattacks are not a question of if, but when. Attacks are doubling each year as criminals become more persistent and sophisticated in their activities. As governments are becoming more aware of the risks, they are demanding and implementing legislation requiring businesses to become more secure. For instance, the Canadian Digital Privacy Act of 2015, requires all Canadian businesses to report any cybersecurity breach immediately.
The notion of being 100% secure is unrealistic, but modernizing and transforming your strategy to adapt to the cyber world today is not. The percentage of private companies investing in technology for risk management, such as cybersecurity, more than doubled from 7 per cent in 2018 to 18 per cent in 2019. There is a misconception that only large corporations are targeted with cyberattacks because most small businesses do not even realize they have been hit. As attacks are becoming more complex, small businesses often lack the resources to properly protect themselves against cyberattacks as they often rely on older solutions and software.
Over the next 12 months, I anticipate ongoing investments in new and emerging technologies that will help private companies remain agile and responsive to key global and organizational risks. Private companies can address technology challenges and build resilience by putting technology to use to make their businesses more efficient, using technology for HR activities and using cybersecurity for risk management.
If you don’t use technology to transform your business, will it make you obsolete? To learn more, contact me today, or find your local business advisor at ey.com/ca/private