Simon Raik-Allen, MYOB's chief technology officer, says Australian SMEs have caught the ‘innovation bug' and are being seen as serious investors in the technology space.

The MYOB Business Monitor, now in its sixth year, is a bi-annual national survey of more than 1000 SME business owners.

“SMEs see that technology can help them do business more efficiently and service their customers better,” Raik-Allen explains. “In the last 12 months, 31% had acquired new computer hardware or software and 26% had acquired new machinery and equipment,” he says.

“And at a time when knowledge is recognised as the key to Australia's future prosperity, it's great to see SMEs investing in acquiring knowledge (22%) and employee training (17%),” Raik-Allen adds.

“We need to keep adding to our collective skills base to remain relevant and competitive, especially when the Business Monitor showed SME confidence in the economy is uncertain for the next 12 months.

According to the survey, implementing new business or management techniques (16%) rounded out the top five areas for innovation investment.

The top barriers to innovation facing SMEs were revealed to be:

• Cost to develop or introduce 28%
• Government regulation 23%
• Lack of R-D funding 14%
• Lack of marketing expertise 14%
• Access to investment 12%

“The good news is that the Turnbull Government has placed innovation at the centre of its policy platform, including addressing regulatory barriers around start-ups and encouraging investment in R-D,” Raik-Allen explains.

“Noting that access to investment was a barrier for some, another significant finding was that 55% of operators had not sourced any capital or finance in the last 12 months, showing that most SMEs are self-reliant when it comes to capital cash,” he says.

“Of the 40% that had, 18% had used one of the Big 4 banks, with family and friends and credit card companies being the next largest source of finance at 7% each,” says Raik-Allen.

“Investors were a source for just 5%, and home equity helped out 3%.

“We could see this mix start to change with the entry into the Australian market of specialised small business lenders like MYOB partner On Deck Australia,” he adds.

The study also looked at how SMEs were conducting themselves online.

Raik-Allen noted that while the number of cloud users are growing, a significant proportion of SMEs are yet to embrace cloud computing.

“This Business Monitor found that 40% of SMEs are doing at least some of their business in the cloud, which shows that many are still sticking with tried and true methods and missing out on the significant time savings and simplification of process made possible by working with cloud based solutions,” Raik-Allen says.

“Based on MYOB's own record growth in cloud customers, we can expect the shift to the cloud to continue.

Raik-Allen says SMEs are more likely to use other cloud-based applications such as social media to help build their businesses.

“Social media is used by just over a third of respondents – retail and hospitality led the pack with 50% using social while just 24% of construction and trades were utilising this medium,” Raik-Allen explains.

“With Australians being massive users of social, this could be an area of focus for businesses looking to unlock a wider customer base,” he says.

“Of those that did have a social site, 30% said it generated more leads or customer enquiries.