Piers Linney: investment maven and champion of entrepreneurship and growth businesses. He’s a non-executive director of British Business Bank, the UK government-owned development bank which has facilitated financing worth more than £12bn for small businesses. And between 2013 and 2015 he was a regular on ‘Dragons’ Den’.
Piers was also a keynote speaker at Small Business Live, part of Cisco Live 2019, where, in his trademark inspirational style, he explained his ‘Five Key Small Business Growth Factors’. At the same time, he is developing the content platform #ScaleUp across a broad range of channels to support entrepreneurs and ‘cut through the noise’.
We invited Piers to expand upon why he believes the cloud-based model for IT delivery has the potential to redefine how small businesses plan for technology-fuelled expansion...
When it comes to making IT a pivotal element in business growth, what is the key advice that small businesses should take on board?
Piers Linney: That the IT world has changed massively. Aspects of IT deployment that used to be the preserve of larger organisations are now within small businesses’ reach, thanks to subscription-based procurement of cloud IT services.
Integrated technologies like Unified Communications, digital collaboration tools, and enterprise-grade cyber security, for example, were things that only big corporates needed and indeed could afford. But now, even a start-up can access exactly the same technology – and business advice – as the world’s largest companies.
How does subscription-based procurement change the OPEX/CAPEX model for small businesses?
In several important ways. For instance, a subscription-based procurement model grows with the business. Whereas previously provisioning models might have had a minimum deployment requirement of maybe hundreds of users, with cloud, a small business can procure IT services for far fewer users – which makes it financially feasible for them to adopt.
Second, it obviates traditional CAPEX models. Back in the day, ICT purchasing decisions had to think whether an investment would continue to meet business planning needs before it reached the end of its operating lifecycle – and whether the upfront expenditure could be amortised over that period. But now technology is moving so quickly that you’ll be lucky if technology is still delivering optimum value 12-18 months after rollout. So the bought-and-owned IT argument is killed, really.
But even a cloud-based variable cost model has to have some model of ROI?
Sure, and it does. In cloud you can do exactly the same calculation, but you have to take different factors into account.
There are no owned assets to depreciate, but your subscription base may escalate over three-to-five years as your business grows. But at the same time, with standard cloud-based IT as a service, it’s evergreen, it’s always cutting-edge – so your business effectiveness is more assured.
What about situations where some CAPEX is necessary?
That’s another advantage for small businesses of having a major tech services partner. These days you have IT financing option other than bank loans. Some vendors – and Cisco does this, I understand – offer vendor financing packages that offer good rates if you use them to buy their products. Some allow you to spend a proportion of the finance on products from third-party vendors. That‘s a massive benefit.
So, all-in-all, for a small business it makes no sense to own, manage and support its ICT. Even larger enterprises are moving to cloud and software-defined infrastructure.
You have argued that small businesses also need to widen their appreciation of how IT can bring competitive advantage to business planning.
That’s right. For instance, one other key point to mention is that larger-size business partners want their small-business partners to have enterprise-class IT.
They want to minimise their risk exposure, so increasingly expect their supply chain partners who integrate with them at an IT level to have same-level of information security, including the necessary regulatory accreditations.
Can high-end tech like artificial intelligence – which many large organisations are only just getting to grips with – also benefit small businesses?
I believe that it can. People get confused about AI and associated technologies, but the key dynamic is simple – especially so for small businesses, I’d argue.
So let me put it in simple terms: Essentially, what digital technology does is create huge amounts of business data. That’s fantastic if you have IT teams who can store it, manage it, understand it. Trouble is that we humans are mostly not capable to making much sense of raw data. Fortunately, however, there’s software available that can understand it – and a lot more besides.
You say that even a small business can derive competitive insights from AI-scale data analytics?
What intelligent software allows us to do is provide the obvious insights, and present data in new ways that reveal insights we may not even have been looking for.
And because these analytics can be automated in the cloud, it does not add to a company’s human resources workload.
Exactly. So even a small coffee shop, for instance, that offers free wifi, can derive business benefit from an analysis of what its customers do. Do customers who use wifi order more coffee? What sort of devices are they using? It’s again about small firms gaining business-planning insights they could never have accessed otherwise.
This is about extracting business value from IT in ways that had not been envisaged.
Yes, but I’d like to come back to the question of how small businesses ‘envision’ their IT requirement.
Any business today is increasingly software-driven. The number of ‘touch points’ a small business has with consumers increases as that business grows. Just one touch point – a website visit, say – can be usefully revealing: who their customers are, where are they based, how many times have they visited before, what parts of the website are most visited and so on.
Data is key to success. If you can’t store it, process it, derive insights from it, then you are at a competitive disadvantage. And that applies to small coffee shop as it does to a large defence contractor.
But this is only feasible in a ‘AI-as-a-Service’ kind of model?
AI doesn’t have to be about specialist applications. AI is now scalable. It’s available ‘out of the box’, it’s becoming the norm. Customers are used to a layer of AI. And if AI can automate customer interactions, it can help reduce a small business’s human resource overhead.
You mentioned the importance of ‘envisioning’ IT for small businesses, and making it integral to their scale-up plan. Can you explain that further?
Sometimes small businesses see IT as something they ‘have to have’ to run a business, rather than as a business enabler in its own right that should be at the heart of their business planning.
With subscription-based cloud services, that old model of IT deployment is no longer relevant. Start-ups can deploy IT so that it grows with them, and that grows the business.
Typically in a small business you don’t have dedicated IT expertise such as a CTO or IT Director. But what you can do now is reach out to technology providers – like Cisco, say – that increasingly have a business advice services layer there to support small businesses customers.
Can you suggest an area of where that support can bring wins?
My experience is that small businesses sometimes still do not take cyber security seriously enough.
A surprising number of small businesses still think ‘it isn’t going to happen to us, because we’re too small to have data assets of any value to cyber criminals’. Hackers will target any organisation that could hold valuable customer data – data that small businesses are mandated by law to protect. So as your business grows, and the amount of data you hold grows with it, you have to think about your strategy for protecting that data.
Small businesses will also be targeted because they’re part of supply chain for a larger concern. They use the supply chain to get at that larger target.
How else can a global technology partner help small businesses understand more about how IT drives their opportunities to scale up?
In my Five Small Businesses Growth Factors I emphasise two areas that small businesses must have awareness of – the value of IT for skills acquisition and retention, and the importance of a well-defined IT strategy when attracting external funding. With the first, remote/flexible working is becoming the norm, even internationally. This widens their available talent pool, which obviously makes them more competitive.
If business owners don’t ensure that their people are using the latest and greatest approved technology, they run the risk that they will find them using super-risky shadow IT.
To wind up, can you summarise how choosing a larger enterprise-class technology provider enables smaller businesses to achieve their ambitions?
The gamut of technology available through cloud services from leading vendors like Cisco cost hundreds of millions to develop, and it’s being upgraded as innovations are developed. And SMBs want to limit the number of suppliers. It means they can manage their IT with fewer ‘dashboards’. Also, an established name such as Cisco also has acknowledged brand assurance.
If a small business is submitting an RFI to a bigger partner, and it requires you to state who its technology partners are, a market-leading name will be familiar and have known brand values – that’s bound to be a plus point when it comes to assuring larger partners.
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