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 certain industries or sectors, they tend to be good for economic growth overall. 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. SMEs don’t usually have that luxury.
Given that a data breach can affect any business—with potentially severe legal and reputational consequences—SMEs need to pay particular attention to industry best practices and seek advice from qualified experts to ensure, on the one hand, that they adequately anticipate and control risks and, on the other hand, that they get the most out of the technology available to them.
These are some of the technology risks and rewards South African SMEs need to start paying attention to:
Staying on the right side of privacy laws
South Africa beefed up its data protection laws with the introduction of the Protection of Personal Information Act (POPIA). While there are questions about the regulator’s effectiveness, businesses should not be complacent. The Act provides for serious fines that could be devastating to a small business.
In addition, a leak of customers’ private data will undermine consumer trust and tarnish a brand. In such cases, prevention is always better (and more cost-effective) than cure. SMEs should consult the relevant legal or risk experts to ensure they comply with the regulatory requirements of the Act—and that 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, the ability to work 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, especially when employees need to find alternative workspaces during load shedding. Working at the local coffee shop can be enjoyable and productive, but the combination of an unsecured Wi-Fi network and curious gazes from fellow patrons is a cybersecurity minefield.
Businesses should also consider implementing a security standard like ISO 27001 to assess and close gaps in their security. However, these are generally expensive to implement and will not be suitable for all companies.
Tools to do more with less
With rising interest rates and lower consumer demand, businesses may find themselves with less access to productive capital to spend on marketing, expanding product lines, or investing in growth more generally.
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 of their time on productive activities (such as driving new business).
Flexible cloud-based accounting tools, CRMs, inventory management, and workflow systems can save time while beefing up digital security. There is even specialised software to meet regulatory and compliance requirements.
Of course, not all tools will be suitable for every business. An SME’s investment in any software package will depend on its operational budget, the number of employees, and the complexity of the work employees do. With that caveat in mind, an investment 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 key
Insurance against cyber risks is an important part of any business’s digital strategy. Choosing the appropriate insurance product is only part of an integrated risk mitigation strategy. SMEs may not have a dedicated CTO and CFO or an in-house risk team, but they can partner with an insurer that considers the company’s entire risk landscape and advises on a holistic risk management approach.
In other words, for SMEs, 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.