Low ICT adoption partly to blame for mid-size firms' struggle

Research claims slow cloud uptake and less agile business processes hold back mid-sized firms compared to larger counterparts

Slower cloud adoption rates are stifling productivity among medium-sized businesses (MSBs), according to new research from the Centre for Economics and Business Research (CEBR).

MSBs – firms with between 50 and 249 staff – generate £1,518 per worker less than their larger counterparts every week, according to the research, which analysed official data from the European Commission (EC). The study focuses on MSBs in the UK, Netherlands and France, and was commissioned by cloud firm Cordys.

The study found MSBs are significantly less advanced in terms of their technology. It claimed that 84 per cent of large enterprises in the UK employ data-sharing solutions, while only 66 per cent of MSBs do. It added that 42 per cent of the UK's large firms sell online, compared to just 28 per cent of MSBs, and that the use of enterprise resource planning (ERP) in big firms was double that of medium-size ones – 48 per cent compared with 24 per cent respectively.

According to the report, UK MSBs saw productivity decline by 1.7 per cent more than their larger counterparts between 2001 and 2007, a much bigger gap than elsewhere in Europe.

The CEBR's senior economist Shehan Mohamed put the less-productive MSB landscape down to a variety of technology and economic factors.

"In part, the productivity gap between large enterprises and MSBs is explained by stricter lending conditions, higher supply chain costs and fiercer competition for labour, all of which tend to hit mid-sized businesses harder than their larger counterparts," he said.

"However, part of the problem can also be explained by less agile and efficient business processes in MSBs which burden them with additional costs and time-intensive processes."