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Big companies top of the productivity food chain, but the cloud is narrowing the gap

Productivity

​Productivity is everything in the world of business, whatever the size of the company and whatever industry it happens to be operating within.

The recent economic difficulties have affected firms all over the world, leaving many bosses with no choice but to think about better ways in which to make the most of the resources available to them.

Size should have no bearing on how productive a company can be and yet those at the head of the pack are continuing to shine brightest.

A recent survey from the Office for National Statistics (ONS) found that firms with over 50 employees had a substantially higher level of output than their smaller counterparts between 2008 and 2014.

That rise was arguably the main driving force behind figures recorded before the new year, which suggested that productivity across the UK economy had risen at its fastest rate in four years over the second quarter of 2015.

The effects of the recession have still taken their toll on the biggest companies (those employing more than 250 employees) the only group to have seen lower productivity than in 2008.

Low levels of productivity picked up by the analysis have partially been blamed on the low levels of wage growth since the financial crisis first hit eight years ago.

However, while the overall picture in UK is of an economy on the up, the country’s productivity remains behind other industrialised countries in the G7, although that could soon be about to change.

Small businesses seeing productivity surge

While smaller firms remain behind the big boys for productivity, there are signs that the gap between them and smaller businesses is beginning to narrow.  

One of the most interesting findings of the ONS research was that firms with fewer than ten workers have seen the fastest levels of growth in their productivity since 2009.

The ONS said those findings may well be due to ""changes to working patterns and practices or as a consequence of some unproductive firms ceasing trading, sometimes referred to as the 'cleansing' effect of a downturn"".

However, the answer may well lie in the technology being utilised in these organisations, with the use of the cloud proving to be a hugely important tool in helping smaller firms grow.

The benefits of the cloud have become so widely accepted that many such systems are now commonplace, extending their reach to all corners of an organisation’s operations.

Getting hold of the accounts

Having a solid accounting team is undoubtedly a key part of ensuring strong levels of productivity and it is also an area that has felt the benefits brought by the cloud.

Flexibility is a key feature, with users able to access accounting data and applications through their browser, meaning that assessing productivity is as easy as checking an email.

The idea of placing such services is nothing new, but advances in technology mean that more connections can provide bandwidth with the speed and reliability needed for high levels of performance at an increasingly affordable price.

Add that to the enhanced Wi-Fi and cellular coverage and it seems it has never been easier to access and take advantage of a cloud-based platform, consequently offering a level of flexibility that was not possible before.

Advocates of flexible have long pointed to increased productivity as its main side-effect, along with improved morale, and more cost-effective IT environments.

Cloud to become the standard

Simplicity is also a huge part of the success of cloud technology, meaning that cloud-based solutions are surely the next step in improving accounting systems for smaller firms, many of which do not have the time to sift through the complicated processes that many of their larger counterparts insist on persevering with.

Russ Fujioka, the U.S. president of Xero, the small business accounting software, claims many large firms are put off by the cloud due to the fact that the transition process is much longer.

He told Small Business Trends: “Cloud software applications are absolutely a weapon for small businesses to become more successful on a wider scale."

“The reason I say that is I came from a big business past.  Most recently I came from a venture firm, but I also ran global marketing for Dell for four years.

“That is a $62 billion company that is selling hardware for on-premise, private cloud implementations to large Fortune 1000 and Global 1000 companies. Those big companies will actually migrate to pure public cloud much slower than a small business. They have a lot of on-premise hardware and software to migrate. That legacy always holds back large businesses."

“For large companies, transitions to the cloud are hard. They’re painful,” he added.

As a result, when it comes to the adoption of cloud computing services, smaller businesses have arguably seized the initiative. The surges being made in productivity at these organisations has not only provided a solid foundation for a future where the cloud is considered the norm, but has also helped level the competitive playing field. ​