Just back from a snowy Brussels where I was sitting on the European Employment Forum Panel and had the opportunity during the event to put the following points to the Commissioner for Employment, Social Affairs and Inclusion Laszlo Andor in response to his call for Smart, Sustainable and Inclusive action.
Putting energy into taking the EU’s path of least resistance in stimulating its economic engine of recovery. The powerhouse of economic potential is the Small Medium Enterprise sector (SME’s). There are 20 million SME’s in the EU representing 99% of businesses. The fact that nine out of ten SMEs are classed as micro enterprises with less than 10 employees is a huge asset in getting wealth generation back into the hands of the masses and driving grass roots employment. (Source: Eurostat).
Coming out of a recession it is understandable that investment is tight no more so than for the SME’s. But having done some rough figures off the back of recent research form Hosting.com in the US, which we corroborated ourselves with our own research here in the UK, there is a huge pot of gold sitting in the SME sector.
The Pot of Gold is the locked in Capital that all SME’s have committed to maintaining their IT assets. Essential IT but a maintenance burden that consumes up to 80% of IT budgets and constitutes little more than a constant fixed overhead and drain on the business.
Imagine being able to keep the essential part and offload the maintenance liability!
I did a few sums. Assuming:
According to EuroStat 9 out of 10 of the 20m SME’s in the EU are below 10 employees that would indicate that over 200,000 are above 10 employees.
If we take the 200,000 ONLY at a conservative average IT budget of Euro20,000 (and likely to be much higher in reality if a true average was calculated) and work out the maintenance component based on the research at 80% we get a value of Euro4Billion.
Euro 4 Billion that could be returned to the investment and business development accounts of SME’s if they made the evolution to a Cloud based computing model AND embodied the Business change that must occur at the same time to realise the full potential that an agile Cloud Computing IT model offers.
Euro 4 Billion, that would largely be spend within the internal market and in so doing stimulate economic activity far better than any central bank fiscal stimulation policy could.
My only warning to the sustainability of this is that SME’s are subject to the predatory actions of the Banks as they themselves fight off the spectre in the form of their own debt. No doubt if they saw SME’s releasing capital like this they would seek to claw back borrowings and screw down working capital as we have seen here in the UK.
As SME’s provide 70% private sector jobs any stimulus that triggers their economic recovery and wealth generation reaches out across the largest market sector and workforce.
So how do we deliver on the Smart, Sustainable and Inclusive benefits stated above?
This is achievable by stimulating awareness of Cloud Computing through-out the SME sector. A sector that is too busy keeping the wolf (Bank) from the door to spend a lot of time in educating itself, furthermore the IT departments of these organisations are themselves overstretched and lack the financing due to tight SME budgets to up-skill. The long and the short of this is the whole SME sector, but for a few ‘leaders’ is unaware of the potential sitting on their doorstep.
Any fisherman will know that you must throw some bread on the water to attract a harvest, as does a farmer, no crop is grown without sowing seed. So too do I put to our Venerable Commissioner the imperative for Public Investment led growth. This modest investment would seed working initiatives within SME ICT Associations and Trade organisations, robust resources, trusted in their business communities to deliver the education and co-ordinate best practice through a Cloud Computing awareness program.
A modest investment supported by the deregulation activities the EU has already promised for SME’s would see for example here in the UK with our target of transitioning jobs from a costly and bloated public sector to a productive and contributing private sector, 500,000+ jobs would be straight forward and just the start of great things.