Why aren’t all UK SMEs making the most of digital technology?

The evidence is clear – using digital technology to its full potential can make your business much more productive and profitable.  

The Digital Adoption: Rapid Evidence Review (2024), which was commissioned by the Department for Business and Trade (DBT), found that using cloud computing, CRM (customer relationship management) systems and ERP (enterprise resource planning) software can boost an SME’s productivity by 7%-18% per technology.  

That’s an incredible increase, one that is affordable and achievable. It could also make a huge difference to every SME’s bottom line – so why are so many UK SMEs failing to tech themselves to new levels of success? 

UK SMEs lagging behind

The DBT’s SME Digital Adoption Taskforce: final report (2025) found that despite the UK’s world-class tech sector, UK SMEs lag behind those in other G7 countries when it comes to uptake of mass digital technologies, tools and AI. They have lower digital adoption rates than those in Germany, the USA, South Korea and elsewhere.  

Moreover, the DTB review found that UK SMEs trail larger UK businesses, which are more ready, willing and able to embrace technology and exploit it to its full potential. So, what key challenges do UK SMEs face regarding technology adoption? 

SME barriers to adoption

Cost is always a key consideration, of course, especially at a time when UK businesses are having to pay much more for most things. Research suggests that many business owners (especially those with fewer than 10 employees) are frequently put off by the perceived upfront costs of adopting new digital technology, with many unclear about the return on investment it can bring.  

Resistance to change is also a factor, with some SME owners and managers preferring to stick with their existing systems, even though they know better options exist. Interestingly, SMEs are believed to be more open to change when key decision-makers have been in their role for a shorter time.  

Time and cost savings

Adopting a new digital technology can cost much less than some SME leaders imagine, while the often immediate, productivity-boosting, cost-saving results can bring a considerable return on investment.

SME leaders are notoriously time poor. They usually have more than enough on their plates already, without having to worry about the additional demands of adopting new technology, which some see as an unnecessary extra hassle they can do without. But, in truth, adopting new technology can be simple enough and save them and their people lots of time, which can be used to add more value to the business. 

Supporting UK SMEs 

Many UK SME leaders are not fully aware of the significant productivity gains digital solutions can deliver. Lack of digital skills and know-how can be another barrier to technology adoption. And many SME leaders are highly risk averse, while some aren’t as digitally literate as others. As a result, they can lack confidence in their own ability to choose and implement digital solutions successfully.  

There are more than 5.5m SMEs in the UK, making up 99.8 per cent of the total UK business population. They provide jobs for 16.6m people (60% of the total UK workforce) and generate £2.8 trillion of annual turnover (52% of the total). Quite rightly, they are referred to as the engine of the UK economy. Even a 1% productivity uplift across UK SMEs could add £94bn a year to UK GDP. That’s a huge amount of money.

Classic win-win

Quite clearly, many UK SMEs need targeted support, so they can make far better use of digital tools, such as CRM systems, ERP software, e-commerce and other potentially game-changing solutions. Not only could it have a significant impact on their success and longevity, but it could also benefit the UK economy greatly. It’s a classic win-win – one we all should support.