Technology businesses by nature are innovative, have high-growth potential, and are experiencing a fast pace of change and fierce global competition. However, the challenges linked to decreased technology spending, industry convergence and shortage of talent are complex and often mark the difference between success and failure.
GOING IT ALONE IN A TRANSIENT ADVANTAGE ECONOMY
A step-by-step guide for tech entrepreneurs
The world has changed and the rules of doing business have altered in a way that favours the bold.
For tech entrepreneurs nurturing their latest business idea, the changes have come at exactly the right moment. The age of digital disruption is enabling individuals to challenge traditional business thinking and transform established mature markets swiftly and irrevocably.
You only have to think Uber to see how the invention of a simple app has changed the way people take taxis in the UK and around the world. Widespread consumer take up has allowed the business to grow rapidly and traditional taxi business models are becoming obsolete. The brand is making headway in other markets too.
Similar examples of disruption are everywhere. In fact, it is difficult to find a marketplace that has not yet been exposed to some form of digital disruption. In the accountancy profession, for example, a cloud-based accounting platform called Xero has replaced the need for traditional software-based systems.
Key challenges for the technology sector
Knowledge and innovation is essential for creating sustainable advantage but the UK only spends 1% of GPD on R&D, compared with Germany’s 2%. Clusters of technology companies are expected to strengthen the market through efficiencies and cross-fertilisation of innovation. Further competitive advantage will come from the consistent protection and exploitation of intellectual property, or from collaboration, consolidation or the acquisition of businesses.
Big data v Smart data
Technology businesses have spent vast amounts capturing, storing and analysing data of all kinds (“Big Data”) in order to glean potential insights into markets and consumer behaviour. However, the level of input required to glean valuable insights has often proved counter-productive. Recently, the focus has shifted to using intelligent algorithms to extract signals and patterns and thus capture more qualitative and useful data (“Smart Data”). Companies who fail to invest and move with the times on this issue may find themselves at a competitive disadvantage.
Technology skills gap
The ability to source and retain people with requisite skill sets to drive forward a fast-moving, innovation-centric business remains a problem. The common issue cited is a lack of indigenous talent, coupled with strict immigration laws, although the expansion of the Tier 1 (Exceptional Talent) visa to the tech sector is an excellent step in the right direction.
Data ‘breaches’ or ‘leaks’ can have a significant adverse affect on the reputation of a digital business. Recent US research estimated that the average cost to a company of a serious data breach was $3.5 million. The incidence and cost of cyber crime is likely to continue to rise as more business functions move online.
With the rapid rise in ‘offshoring’, the continued perception (if not the reality) is that the Asian markets can develop and maintain everything faster and cheaper.
it has never been easy to fund the long delay from having a great idea through to prototype and then commercial exploitation, and a funding gap still exists. Companies need advice in securing the right funding at the right stage, whether that be trade finance, stock finance, private equity, MBI and EIS funding, or looking at options including government and LEP innovation grants, and crowd funding.
Technology business sector advice services
We advise finance, fashion, marketing, clean tech and property-related technology businesses, in particular. We work closely to find solutions to industry issues, utilising our expertise in everything from business strategy and corporate finance, to audit and tax advice.
“Menzies provided, audit, tax and company secretarial services to SFW. Their work was always to a very high standard and we found them easy to work with. When we sold the business Menzies provided significant help during due diligence and completion activities. They were highly responsive, particularly, when we had last minute requests for assistance and were thoroughly professional. I have no hesitation in recommending them.”
Steve Elliott – Director SFW Ltd