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Small and medium-sized businesses (SMBs) in the UK are ramping up technology investment despite challenging macroeconomic conditions, according to Barclays.
A study from the financial services giant found that 64% of London-based SMBs are allocating over half of their annual revenue to technology investment.
Nearly half (43%) of firms polled said they were taking these decisions in an effort to future proof their company, enhance productivity, and weather current economic difficulties.
This trend is reflected across the country, Barclays said, with 45% of firms nationwide seeking to modernize their tech stack and streamline operations.
Key areas highlighted by SMBs included a surge in spending for data analytics and artificial intelligence (AI) tools.
Many firms are now considering integrating analytics and AI tools within their daily operations, viewing them as a means to “counter rising costs and climbing interest rates by increasing productivity”.
UK retailers specifically have grown bullish on tech investment and adoption of emerging technologies, with 66% stating they are “open to embracing new technology”.
Almost a fifth (18%) of SMBs in the retail sector said they have invested in data analytics while 12% revealed they have made investments in AI and machine learning.
Nearly half (41%) revealed they have also established dedicated technology teams in a bid to explore and implement new tools.
A leading factor in this, Barclays noted, was that firms are being forced to contend with evolving consumer spending trends.
“Retailers are turning to technology to keep up with the demands of high-street shoppers, with recent Barclays research finding that seven out of 10 consumers use the internet to inform how they shop and make savings,” Barclays said.
“Future proof” investments
Josh Boer, director at tech consultancy VeUP said the research highlights a promising trend that small businesses are eager to invest in emerging technologies, despite well-documented budgetary constraints.
“It’s encouraging to see SMBs put tech investment at the very heart of their business strategy, particularly against the backdrop of stubborn inflation and soaring interest rates,” he said.
“By prioritizing investment in tech, the next generation of SMBs can grow rapidly, creating jobs and boosting the value of UK PLC.”
Colin O’Flaherty, head of SME at Barclaycard Payments, echoed Boer’s comments, noting that SMBs in the retail sector are exemplifying this current tech investment approach.
“Retail SMBs in particular have displayed a remarkable agility in adapting to evolving consumer behaviors by adopting emerging technologies – setting the stage for a brighter year ahead,” O’Flaherty said.
Tech spending during strained macroeconomic conditions has been a quandary for businesses of all sizes over the past year. Faced with the choice between cutting back on spending or accelerating investment, many businesses have chosen the latter option.
This proactive spending approach has been highlighted by analysts as a way for businesses to take short-term financial hits with an eye on delivering longer term benefits.
Earlier this year, Gartner predicted an increase in IT spending across 2023 in spite of troubling economic conditions and claims of a looming recession.
Speaking to ITPro at the time, John-David Lovelock, distinguished VP analyst at Gartner said that some IT leaders view challenging conditions as a prime opportunity to build “new, more resilient revenue streams” and differentiate themselves from competitors.
Lovelock warned that those who adopt a more conservative approach to tech spending could risk falling behind industry counterparts and encountering greater long-term challenges.
“The split between the companies that will invest heavily in IT and those that don’t is going to be higher this year than ever,” he said. “
The polarization in the market between the ‘IT buyers’ and the ‘IT hesistants’ is going to get wider than we’ve seen in an awfully long time.”
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