Cloud technology enables SMEs to punch way above their weight

Photo credit: Asa Rodger.

Traditionally, technology adoption was a top-down affair, with the largest companies being able to afford the most sophisticated (and therefore expensive) technologies. Sophisticated technology was a very specialized and custom business, accessible only to the largest of companies, naturally leading to small volumes and high prices. SMEs had to wait until technologies came down the cost curve and became affordable to them. This put them at a structural disadvantage.

But not anymore. Consumerization of technology has turned this entire logic on its head. Today, the most sophisticated technologies come to the mass market consumer first. The best example is the smartphone, backed by the cloud.

What is driving consumerization? One essential factor is what I call data-enriched product design, which is the idea that more technology and product development is driven by data from customer adoption. This is most obvious in areas like machine learning and artificial intelligence, which get better as we have more data. This is also true, however, in areas such as user interfaces.

The more data we have on how customers experience a product, the better our designs could become.

The more data we have on how customers experience a product, the better our designs could become. This naturally dictates the quest for more users, which dictates lower price points often starting with a price of zero.

This compelling logic has made cloud-based software applications extremely accessible and affordable to the smallest of businesses. The Zoho suite is founded on this logic, which has helped us in user acquisition and product development.

From the SME perspective, the implication of this trend is profound. They do not have to settle for yesterday’s technology coming down the cost curve and now have access to the latest and the very best right now. Large, mature enterprises have to contend with decades of legacy systems, which puts them at a disadvantage in terms of technology adoption. This gives SMEs a powerful competitive advantage, leveling the playing field. Large enterprises still have an edge in terms of credit access and availability, but cloud-based finance technologies may start to level the playing field in that area as well.

On the market side, cloud technology also enables SMEs to project a vastly larger footprint than their size would indicate. Today, it is possible for a small business in a small town in India to sell and service globally something that was very difficult—if not impossible—to do just 10 years ago.

The age of the cloud-driven SME is here.

This is an opinion piece.