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The Role of Technology and Automation in Streamlining
Business Processes and Productivity for SMEs
Adeyemo Abidemi
International Journal of Entrepreneurship
ISSN 2520-0153 (Online)
Vol.7, Issue 3, pp 25 - 42, 2024 www.ajpojournals.org
https://doi.org/10.47672/ije.2510 25 Abidemi (2024)
The Role of Technology and Automation in Streamlining Business
Processes and Productivity for SMEs
Adeyemo Abidemi1*
1Institute of Productivity and Business Innovation Management (IPBIM)
Article history
Submitted 14.08.2024 Revised Version Received 18.09.2024 Accepted 25.10.2024
Abstract
Purpose: This research investigates the vital
role of automation in enhancing business
process efficiency and overall productivity
within SMEs. It also discusses how
technology can help overcome bottlenecks
arising from human operation, resource
limitation, and operational inefficiency,
which have commonly been experienced by
SMEs.
Materials and Methods: The study
combines an extensive review of existing
literature with case studies from various
industries to evaluate the effects of
automation tools on SME operations. These
tools range from cloud-based solutions to AI-
powered systems, providing insights into
their impact across different business
processes.
Findings: Research has shown that
automation improves productivity in SMEs
by up to 30%, reduces manual errors by 25%,
and enhances data accuracy by improving
employee focus on strategic tasks. In
addition, the standardization of processes
through automation ensures less variability in
output. Automation also impacts customer
experience positively by ensuring speed in
service delivery and quality improvement in
products. High upfront costs, however,
combined with a shortage in skilled
personnel and integrating new technologies
with existing systems, remain barriers to
wider adoption by SMEs.
Implications to Theory, Practice and
Policy: Accordingly, the study recommends
that the following measures be taken to
counteract the problems posed: phase in
automation, cooperate with technology
providers who will devise cost-effective
solutions, and invest in comprehensive
training programs to fill the skills gap.
Government incentives, such as tax breaks
and subsidies, could also push SMEs toward
broader automation. Thereafter, successful
integration of automation will enhance the
competitiveness of SMEs and create a
sustainable growth path in the digital
economy.
Keywords: Technology, Automation, SMEs,
Business Processes, Productivity
International Journal of Entrepreneurship
ISSN 2520-0153 (Online)
Vol.7, Issue 3, pp 25 - 42, 2024 www.ajpojournals.org
https://doi.org/10.47672/ije.2510 26 Abidemi (2024)
1.0 INTRODUCTION
In the increasingly competitive landscape of small and medium-sized enterprises (SMEs),
operational efficiency is critical to success and sustainability. SMEs, which often operate with
fewer resources than their larger counterparts, face unique challenges in maintaining high levels
of productivity while keeping costs in check. As such, the efficiency of their business processes—
encompassing everything from inventory management and sales to customer service and financial
reporting—plays a pivotal role in determining their competitiveness. However, many SMEs
continue to rely on traditional, manual processes that can severely hinder their productivity. These
manual tasks are not only time-consuming but also prone to human error, which can lead to costly
mistakes and inefficiencies. In this context, technology and automation offer promising solutions
to the operational challenges faced by SMEs.
The rapid advancements in automation technologies, from cloud computing to artificial
intelligence (AI), have revolutionized the way businesses operate. Large corporations have long
benefited from process automation, allowing them to scale operations, reduce costs, and improve
accuracy. However, the potential for automation in SMEs is only beginning to be realized. This
paper critically examines the role of automation in enhancing the business processes of SMEs. It
explores how these technologies can streamline operations, improve productivity, reduce human
error, and ultimately drive business growth, while also addressing the barriers to adoption that
SMEs commonly face.
The Challenges of Traditional Processes in SMEs
Traditional manual processes, while familiar and often inexpensive to implement, can significantly
limit the ability of SMEs to achieve operational efficiency. For instance, tasks like manual data
entry, invoice processing, inventory tracking, and payroll management are prone to errors and
require significant time and human resources. In a business environment where rapid decision-
making and agility are crucial, manual processes introduce delays, reduce responsiveness, and
limit scalability.
Moreover, manual processes do not offer real-time insights into business operations. As SMEs
expand, they generate increasingly large amounts of data, and manually managing this data
becomes both cumbersome and ineffective. Decisions are often made based on outdated
information, leading to missed opportunities or strategic missteps. For example, without an
automated system, a small retail business might struggle to manage inventory effectively, leading
to stock shortages or overstocking, both of which can have financial repercussions.
In addition, human error is an inherent risk in manual processes. Mistakes in data entry,
calculations, or communication can result in costly delays, incorrect invoicing, compliance issues,
or even damage to a company’s reputation. The cumulative effect of these inefficiencies can slow
down an SME's growth and erode its competitive edge, particularly in industries where speed and
accuracy are essential for customer satisfaction and profitability.
The Promise of Automation in SMEs
Automation has the potential to transform how SMEs conduct their day-to-day operations,
enhancing productivity and allowing business owners and employees to focus on higher-value
activities. Automation refers to the use of technology to perform tasks with minimal human
intervention, and it spans a wide range of tools, from simple software applications to complex AI
International Journal of Entrepreneurship
ISSN 2520-0153 (Online)
Vol.7, Issue 3, pp 25 - 42, 2024 www.ajpojournals.org
https://doi.org/10.47672/ije.2510 27 Abidemi (2024)
systems. In the context of SMEs, automation tools can handle routine tasks such as invoicing,
payroll, customer relationship management (CRM), inventory management, and even marketing
campaigns.
One of the key benefits of automation is its ability to reduce the time spent on repetitive, low-value
tasks. For example, automating payroll processes can save hours of manual work each month,
reduce errors, and ensure timely payment to employees. Similarly, CRM systems can automate
follow-up emails, lead tracking, and customer segmentation, improving the efficiency of sales and
marketing teams. These systems not only save time but also enhance accuracy, ensuring that the
right customers receive the right communications at the right time.
In addition to time savings, automation enhances data accuracy. Automated systems eliminate the
risks associated with human error in tasks like data entry and calculations. For instance, an
automated inventory management system can track stock levels in real-time, triggering alerts when
inventory is low and preventing overstocking or stockouts. This level of precision allows SMEs to
optimize their supply chains, reduce waste, and improve their cash flow management.
Automation also enables SMEs to gain real-time insights into their operations. Cloud-based
accounting software, for example, allows business owners to view up-to-date financial information
from anywhere, at any time. This level of visibility enables more informed decision-making, as
SMEs can quickly identify trends, track performance, and make adjustments as needed. Real-time
data analysis can also help SMEs respond to market changes more swiftly, giving them a
competitive edge.
Critical Barriers to Automation in SMEs
While the benefits of automation are clear, SMEs face several critical barriers that can hinder the
adoption of these technologies. One of the primary challenges is the cost of automation. Many
advanced automation systems, such as AI-powered tools or integrated enterprise resource planning
(ERP) systems, require significant upfront investment. For SMEs with limited financial resources,
the cost of acquiring, implementing, and maintaining these technologies may seem prohibitive.
Moreover, the return on investment (ROI) from automation may not be immediately apparent,
which can make it difficult for SME owners to justify the expenditure.
Another significant barrier is the skills gap. Automation technologies often require specialized
knowledge to implement and maintain. Many SMEs lack the in-house technical expertise needed
to set up and manage automated systems, and hiring external consultants or training staff can be
costly. Furthermore, employees may resist automation due to fears of job displacement.
In smaller businesses where personal relationships and trust are central, the introduction of
automation can be seen as a threat to job security, leading to resistance from the workforce.
Integration with existing processes is another major challenge. SMEs often operate with legacy
systems that are not easily compatible with modern automation tools. The process of integrating
new technologies into established workflows can be complex and time-consuming, and it may
disrupt business operations in the short term. For SMEs with tight operational margins, even
temporary disruptions can have significant financial implications.
Furthermore, the rapidly changing landscape of automation technologies can be overwhelming for
SME owners who are not tech-savvy. The sheer number of automation tools available, coupled
with the complexity of selecting the right one for a specific business need, can lead to decision
International Journal of Entrepreneurship
ISSN 2520-0153 (Online)
Vol.7, Issue 3, pp 25 - 42, 2024 www.ajpojournals.org
https://doi.org/10.47672/ije.2510 28 Abidemi (2024)
paralysis. SMEs must navigate a crowded market of automation solutions, which can result in
confusion and reluctance to adopt new technologies.
Problem Statement
SMEs have the potential to drive economic development and innovation globally. However, their
core aspect of effective productivity in most cases is hampered by reliance on traditional manual
processes to manage key business operations. Manual techniques for data entry, inventory
management, and even financial reporting may appear to be cost-effective initially but are
generally flawed and tend to become inefficient as the enterprise grows. These processes are time-
consuming, error-prone, and limit the ability of SMEs to make timely, data-driven decisions, which
ultimately hinders their competitiveness in a technology-driven market.
Other factors that make it difficult to be productive include resource limitations. Many SMEs are
constrained by limited financial and human resources to invest in modern technologies and skilled
personnel. As a result, they cannot implement automation systems to ease manual work burdens,
smooth workflows, and increase operational efficiency. This lack of technological infrastructure
hurts not only the current productivity but also limits their ability to adapt to changed market
circumstances or to seize new opportunities. The inability to use real-time data management tools
also forces SMEs to make decisions based on information that is incomplete or outdated, further
undermining their efficiency.
Automation technologies, including cloud computing, AI, and ML, offer workable solutions by
enabling the automation of mundane and repetitive tasks, minimizing human error, and providing
immediate insights. These can improve core processes such as inventory management, customer
service, and financial processes. However, significant deployment costs, lack of skilled personnel,
and concerns over integrating new technologies with legacy systems dampen the rate of adoption.
This study will explore how automation can address the productivity challenges faced by SMEs
and identify barriers to adoption, particularly for businesses with limited resources. Through this
investigation, the study aims to offer practical recommendations to help SMEs implement
automation effectively and boost their competitiveness.
There are 3 case studies to establish the above discussed problems.
Case Studies
1. McKinsey Report on MSMEs (2024)
Title: "A Microscope on Small Businesses: Spotting Opportunities to Boost Productivity"
Summary: This report examines the productivity challenges faced by micro, small, and medium
enterprises (MSMEs) across 16 countries. It highlights the importance of boosting MSME
productivity to preserve competitiveness in a shifting global production landscape
Source: McKinsey1
2. World Economic Forum Report (2021)
Title: "Pandemic Drives Need for Technology Adoption Among SMEs but Barriers Remain"
Summary: This report discusses how the COVID-19 pandemic increased the demand for digital
technology adoption among SMEs. It also identifies barriers such as significant deployment costs,
lack of skilled personnel, and concerns over integrating new technologies with legacy systems
International Journal of Entrepreneurship
ISSN 2520-0153 (Online)
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https://doi.org/10.47672/ije.2510 29 Abidemi (2024)
Source: World Economic Forum2
3. Journal of Innovation and Entrepreneurship (2023)
Title: "Technology Adoption as Survival Strategy for Small and Medium Enterprises During CO
VID-19"
Summary: This study assesses the technological transformations and challenges faced by SMEs
during the pandemic, evaluating customer satisfaction and future technological innovation plans
Source: SpringerOpen3
2.0 LITERATURE REVIEW
Theoretical Review
The Theory of Constraints (TOC), developed by Eliyahu M. Goldratt in the 1980s, posits that any
system is constrained by a few key bottlenecks, which limit its overall performance. In the context
of SMEs, these bottlenecks often arise from manual processes, resource limitations, and
inefficiencies that inhibit productivity and growth. According to TOC, identifying and addressing
these constraints is critical to improving the entire system's efficiency. Automation and technology
serve as powerful tools to eliminate such bottlenecks. By automating repetitive tasks like inventory
management, payroll processing, and data entry, SMEs can streamline their processes, thereby
reducing delays and human errors. For example, an automated accounting system can handle large
volumes of transactions more accurately and in a fraction of the time required by manual systems,
thus relieving a key operational constraint.
The TOC framework also highlights the importance of continuous improvement. Even after the
initial bottleneck is resolved, new constraints are likely to emerge as the system evolves. SMEs
must therefore view the adoption of automation not as a one-time fix but as part of an ongoing
process of optimizing business operations. Automation technologies, particularly those that offer
scalability, such as cloud-based solutions, align well with this principle by allowing SMEs to adjust
their operations in response to changing business needs and emerging constraints. This perspective
encourages SMEs to continually assess their processes and seek out new automation solutions as
they grow.
In addition to TOC, the Diffusion of Innovation Theory (DOI), introduced by Everett Rogers in
1962, provides a framework for understanding how SMEs adopt new technologies. DOI theory
posits that the adoption of innovations, including automation technologies, occurs through a
process of communication and social influence, where innovations spread over time among
members of a social system. This theory categorizes adopters into five groups: innovators, early
adopters, early majority, late majority, and laggards. SMEs often fall into the early or late majority
categories, as they tend to be more risk-averse and constrained by limited resources compared to
larger firms.
According to DOI, certain factors influence the rate of adoption, including the perceived
advantages of the innovation, its compatibility with existing systems, the complexity of
implementation, the ability to trial the innovation, and the visibility of its benefits. For SMEs,
perceived advantages such as cost savings, increased productivity, and improved accuracy are
strong motivators for adopting automation technologies. However, compatibility and complexity
are significant barriers. For instance, SMEs using legacy systems may struggle to integrate new
International Journal of Entrepreneurship
ISSN 2520-0153 (Online)
Vol.7, Issue 3, pp 25 - 42, 2024 www.ajpojournals.org
https://doi.org/10.47672/ije.2510 30 Abidemi (2024)
automation tools, which can slow the adoption process. Furthermore, the lack of technical
expertise can make automation seem daunting, leading to hesitation or delayed adoption.
DOI theory also emphasizes the role of social influence in technology adoption. SMEs often look
to their peers or industry leaders when making decisions about new technologies. Case studies
showing successful automation adoption in similar businesses can reduce perceived risks and
encourage adoption among SMEs. Additionally, the ability to test automation tools through trial
periods or pilot programs allows SMEs to assess the practical benefits and challenges before fully
committing to the technology.
Both the Theory of Constraints and the Diffusion of Innovation Theory are highly relevant in
understanding the productivity challenges of SMEs and their adoption of automation. TOC
highlights the operational inefficiencies that automation can address, while DOI explains the
factors that affect how and when SMEs choose to adopt these technologies. Together, these theories
provide a comprehensive framework for studying the role of automation in enhancing SME
business processes and overcoming productivity bottlenecks.
Conceptual Framework
This conceptual framework examines the relationship between technology, process automation,
and productivity in small and medium-sized enterprises (SMEs). It builds on insights from the
Theory of Constraints (TOC) and the Diffusion of Innovation Theory (DOI) to highlight how
technology adoption and automation can mitigate operational inefficiencies and drive productivity
improvements. The framework is designed to explore the key variables in this dynamic: technology
adoption (independent variable), process automation (mediating variable), and productivity
(dependent variable).
Technology Adoption
Technology adoption serves as the foundational step in this framework. For SMEs, adopting
automation technology often requires overcoming several barriers, such as cost concerns, lack of
expertise, and uncertainty about return on investment. The Diffusion of Innovation Theory (DOI),
as proposed by Everett Rogers, explains how innovations like automation spread within an
industry. DOI theory highlights factors that affect technology adoption in SMEs, including the
relative advantage of the innovation, its compatibility with existing systems, and the complexity
of its use.
In the context of SMEs, early adopters are often motivated by the potential to reduce operational
costs and increase efficiency, while laggards may be hesitant due to perceived risks or challenges
in integrating automation with legacy systems. As SMEs become more aware of the benefits of
automation—such as time savings, reduced human errors, and real-time data analytics—the
likelihood of adoption increases. However, adoption is not uniform, and this framework recognizes
that many SMEs may remain in the early majority or late majority phases of the innovation curve
due to resource constraints or organizational resistance.
Process Automation
Process automation acts as the intermediary between technology adoption and productivity. When
SMEs adopt technology, the real impact is realized through the automation of business processes.
This includes automating tasks like inventory management, customer relationship management
(CRM), payroll, and data analytics. Automation minimizes manual labor, reduces the risk of errors,
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https://doi.org/10.47672/ije.2510 31 Abidemi (2024)
and allows employees to focus on more strategic tasks, ultimately improving operational
efficiency.
From the perspective of the Theory of Constraints (TOC), process automation directly addresses
operational bottlenecks that limit productivity in SMEs. Bottlenecks such as time-consuming
administrative tasks or inefficient data management can be alleviated through automation, leading
to smoother workflows. For example, by implementing automated inventory systems, SMEs can
track stock levels in real-time, reducing instances of overstocking or stockouts. This, in turn,
enhances both financial management and customer service.
The success of process automation hinges on how well it is integrated into existing workflows.
SMEs that successfully incorporate automation into multiple facets of their operations (e.g.,
finance, supply chain, and customer service) tend to see greater gains. However, automation may
initially introduce complexity or require reorganization, which can act as a temporary disruption
before long-term productivity improvements are realized.
Productivity
Productivity is the ultimate outcome of successful technology adoption and process automation.
In this framework, productivity is measured by how efficiently an SME can generate output
relative to the resources (time, labor, capital) it uses. The conceptual framework posits that
automation technologies directly contribute to productivity by reducing operational costs,
minimizing human error, and accelerating task completion. As bottlenecks are removed and tasks
become more efficient, SMEs can produce more with fewer inputs, enhancing their competitive
advantage.
This framework also considers that productivity gains are not uniform across all SMEs. Businesses
that implement comprehensive automation systems covering multiple departments and processes
are likely to experience more significant productivity improvements compared to those that
automate only isolated tasks. Furthermore, the size and nature of the SME, its industry, and its
operational complexity can affect the degree to which productivity is enhanced through
automation.
Research Gaps
Despite the growing recognition of automation’s transformative potential for small and medium-
sized enterprises (SMEs), there remain significant research gaps concerning the specific challenges
that SMEs face when implementing such technologies. While numerous studies highlight the
benefits of automation such as increased productivity, reduced operational costs, and improved
accuracy there is a lack of detailed exploration into the obstacles that prevent many SMEs from
fully adopting automation. Key among these challenges are the issues of cost, skills gaps, and the
scalability of technology solutions, all of which deserve more focused attention in academic
research.
Cost is often cited as a major barrier to the adoption of automation technologies by SMEs. Most
research to date emphasizes the benefits of automation in reducing long-term operational costs;
however, the upfront financial investment required for automation especially advanced
technologies such as artificial intelligence (AI) and machine learning (ML) can be prohibitive for
smaller firms with limited budgets. Studies tend to focus on large enterprises that have the capital
to invest in cutting-edge technology, but little research addresses how cost affects SMEs
International Journal of Entrepreneurship
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Vol.7, Issue 3, pp 25 - 42, 2024 www.ajpojournals.org
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differently. There is a gap in understanding how SMEs can overcome financial constraints, either
through phased implementation strategies, government subsidies, or affordable automation
solutions tailored to their scale. Moreover, existing literature does not adequately explore the return
on investment (ROI) for SMEs, particularly in the context of automation. This gap leads to
uncertainty among SME owners, who may be hesitant to invest in automation without a clear
understanding of when or how they will recoup their costs.
Another significant research gap is related to the skills gap within SMEs. Automation technologies
often require specialized knowledge to implement and maintain, yet many SMEs lack access to
the technical expertise necessary to manage these systems effectively. Current research tends to
focus on large companies with dedicated IT departments, overlooking the fact that most SMEs
operate with much smaller teams, where employees are expected to fulfill multiple roles. There is
limited exploration into how SMEs can address this skills gap, whether through external
consultancy, partnerships with technology providers, or training programs. Additionally, the
existing literature does not adequately explore the internal resistance SMEs might face from their
workforce, where employees may fear job loss due to automation. This aspect of the skills gap—
both in terms of acquiring new skills and managing workforce transition—remains under-
researched, leaving a gap in practical strategies for SMEs to bridge these divides.
The issue of technology scalability presents another critical research gap. Many of the automation
solutions discussed in current literature are designed with large enterprises in mind, where
scalability is less of a concern due to the availability of ample resources. However, SMEs often
struggle with scaling automation solutions due to their more limited operational scope and resource
base. While larger firms can implement comprehensive enterprise resource planning (ERP)
systems or custom automation solutions, SMEs need affordable, flexible technologies that can
grow alongside their business. The current body of research does not adequately address how
scalable automation solutions can be developed or adapted for SMEs, nor does it provide enough
guidance on how SMEs can gradually scale up their automation efforts without overwhelming
their existing operations. Moreover, research lacks insight into the risks that SMEs face when
attempting to scale automation technologies, such as system integration issues or the potential for
technology becoming obsolete as the business grows.
Finally, sector-specific challenges related to automation in SMEs are underexplored. Most existing
studies provide broad overviews of automation's benefits, without delving into the specific
challenges that different industries face. For instance, the automation needs of a retail SME differ
significantly from those of a manufacturing SME, yet research rarely disaggregates findings by
industry. The absence of sector-specific analysis leaves a critical gap, preventing SMEs from
accessing targeted insights that could better inform their automation strategies.
In conclusion, while the benefits of automation for SMEs are well-documented, substantial
research gaps persist around the challenges of cost, skills gaps, scalability, and sector-specific
needs. Addressing these gaps will provide a more nuanced understanding of how SMEs can
overcome barriers to automation and fully leverage technology to enhance productivity and
growth. Future research should focus on developing practical, scalable solutions and strategies
tailored to the unique circumstances of SMEs, ensuring that these businesses can thrive in an
increasingly automated world.
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Theories to be shared are the Technology Acceptance Model, TAM, and Resource-Based View,
RBV, which I want to show in order to give added insight into influencing factors of SME
decisions.
One of the better-known theories relating to information systems is the Technology Acceptance
Model, abbreviated as TAM. This theory was developed by Fred Davis in 1986 and is based on
the Theory of Reasoned Action. It describes how users come to accept and use technology.
According to this model, two factors are of central importance in the adoption of technology:
Perceived Usefulness: A person's perception of the degree to which using a particular system would
improve their job performance3.
Perceived Ease of Use: The extent to which a person believes that using a particular system would
be effortless.
These factors lead to Behavioral Intention to use the technology, which, in turn, leads to Actual
System Use. Since TAM has widely been used to predict and explain user adoption of new
technologies, it also can be particularly useful for SMEs to understand how their employees might
respond to new automation tools.
Resource-Based View or RBV
It is a strategic management perspective, which asserts that Resource-Based View or RBV places
internal firm resources at the center of competitive advantage.
What's more, RBV itself was also provided with recognition; proposed by scholars such as Jay
Barney, the RBV stated that a resource could give a sustainable competitive advantage if it
possessed all the attributes of VRIO - Value, Rarity, Inimitability, and Organization4
This might imply the use of unique resources and capabilities for SMEs in their effective adoption
and integration of new technologies. The emphasis on internal strengths puts SMEs in a better
position to overcome the hurdles that prevent them from adopting technologies and enhancing
their competitiveness.
There are several research associated with Technology adoption in SME and some of them are;
1. How to Successfully Adopt Information Technology within SMEs: Strategies 2023:
Summary: This paper reviews the literature related to IT adoption within SMEs, by mainly
covering empirical research and case studies from various databases.
Source: MDPI4
2. Technology Adoption in MSMEs: A Systematic Literature Review (2023):
Summary: This systematic review discusses how a small business can make the most out of new
technologies toward growth and value creation, focusing on different regions like Europe and
India.
Source: JETIR
3. Systematic Literature Review on Technological Transformation in SMEs: 2023
Summary: This review covers 165 peer-reviewed papers published from 1999 to 2022, building
upon previous works done by BMI and technology assimilation constructs3.
Source: SpringerLink5
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Recent Reviews on Automation Trends for SMEs
1. Leveraging AI: A Global Growth Roadmap For SMEs In 2024: 2024
Summary: How AI can be leveraged for the growth of SMEs; most of them focus on automation
trends and predictions for 20244.
Source: Forbes6
2. A New Generation of Robots Can Help Small Manufacturers (2023)
Summary: The article seeks to identify the use of cobots for different applications and make
automation more attractive to SMEs5.
Source: Harvard Business Review7
3. What is the Future of Automation? 2024 Trends & Predictions (2023)
Summary: The article discusses the state of trends and predictions in automation in 2024, touching
on spheres such as supply chains, customer service, and administrative tasks6.
Source: Blue Prism8
3.0 MATERIAL AND METHODS
This study employed a descriptive, explanatory, prospective open-label observational design to
investigate how automation technologies affect the productivity and operations of small and
medium-sized enterprises (SMEs). The research was carried out in multiple urban and semi-urban
locations across different industries, including retail, manufacturing, service, and technology
sectors. These locations were chosen because they reflect diverse business environments and
varying levels of technological adoption. The study population consisted of SME owners,
managers, and key decision-makers responsible for implementing or considering automation
technologies in their businesses.
A total of 100 SMEs were surveyed for the study, with the sampling design structured to ensure
representation across different sectors and business sizes. The sample included businesses with
varying levels of automation, ranging from those that had fully integrated automation technologies
to those in the early stages of implementation or considering adoption. A stratified random
sampling technique was used to select the SMEs. The stratification ensured that the sample
included businesses of different sizes, from micro enterprises (fewer than 10 employees) to
medium-sized enterprises (up to 250 employees), as well as businesses from different sectors,
ensuring a balanced representation of experiences with automation technologies.
Data collection was conducted through two primary methods: structured questionnaires and semi-
structured interviews. The structured questionnaires were designed to collect quantitative data on
key metrics, such as the level of automation adoption, types of technologies implemented (e.g.,
CRM systems, AI-driven tools, cloud-based systems), and measurable outcomes like productivity
gains, error reduction, and cost savings. Respondents were asked to provide data on how long their
businesses had been using automation technologies, the perceived benefits and challenges, and
how automation had impacted their business processes. The questionnaires also used a Likert scale
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to assess the respondents' perceptions of the overall impact of automation on their business, the
ease of implementation, and the anticipated return on investment (ROI).
To complement the quantitative data, semi-structured interviews were conducted with a subset of
30 SME owners and managers. These interviews allowed for a more in-depth exploration of their
experiences with automation technologies, focusing on factors such as the decision-making
process for adopting automation, the challenges faced during implementation, and the broader
impact on business operations. The qualitative data from these interviews provided richer insights
into the contextual factors influencing automation adoption, including employee resistance,
technical challenges, and the role of external influences such as government policies and market
competition.
Statistical analysis was performed on the quantitative data to identify key trends and correlations
between automation adoption and business performance outcomes. Descriptive statistics,
including mean, median, and standard deviation, were used to summarize the data on automation
adoption rates and productivity improvements. Cross-tabulation and correlation analysis were used
to explore relationships between variables, such as the size of the business, the sector, the type of
automation implemented, and the reported benefits. For example, the analysis examined whether
larger SMEs experienced greater productivity gains from automation than smaller firms or whether
certain sectors, like manufacturing, reported higher returns from automation than service-based
businesses.
For the qualitative data, a thematic analysis was conducted to identify recurring themes from the
interviews. This involved coding the responses and categorizing them into key themes such as
"cost challenges," "skills gaps," "employee resistance," and "integration issues." These themes
helped contextualize the quantitative findings, providing a deeper understanding of the barriers
and enablers to automation adoption in SMEs. The mixed-method approach enabled the study to
draw comprehensive conclusions about the impact of automation technologies on SMEs,
combining the breadth of quantitative data with the depth of qualitative insights.
In summary, the study's mixed-methods approach—combining surveys and interviews—provided
a well-rounded analysis of how SMEs are adopting automation technologies and the resulting
impacts on productivity and operational efficiency. The combination of statistical analysis and
thematic exploration enabled the identification of both measurable trends and the underlying
factors influencing automation adoption in SMEs.
The objective was to get a sample of 100 SMEs through a stratified random sampling method,
ensuring that representation across different sectors and business sizes-from micro enterprises with
less than 10 employees to medium-sized enterprises with a maximum of 250 employees-is
captured. Firms at all junctures of the automation adoption cycle-from those whose processes were
already fully integrated into automation technologies to firms just starting or considering the
implementation of automation-were targeted in the sample.
Data Collection
Data collection was based on two main approaches:
Quantitative questionnaires: A structured questionnaire would be used to capture data on key
variables, including the automation adoption level, type of technologies adopted such as CRM, AI
tools, cloud systems, and concrete measurable benefits such as productivity gains, error reductions,
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and cost savings. Other questions would concern time automation has been in use, perceived
advantages, challenges, and overall impact on business processes. It measured the tendency of
experiences by asking the respondents to rate on Likert scales, which moved from strongly agree
to strongly disagree, indicating the perceived impacts, ease of implementation, and return on
investment.
Semi-structured interviews: A total of 30 SME owners and managers were interviewed-a subgroup
that gave insight into the experiences with automation, qualitatively. Their experiences ranged
from decision-making processes, challenges experienced during the implementation, to the overall
impact brought forth by automation on the sustainability of business operations.
Data Analysis
Quantitative data were summarized using descriptive statistics-mean, median, and standard
deviation-on automation adoption rates and productivity outcomes. Cross-tabulation and
correlation analyses explored relationships between variables such as business size, sector, and
reported benefits.
Qualitative data analysis was done thematically from interview responses. Key themes which
emerged included "cost challenges," "skills gaps," and "employee resistance."
Such a mixed-methods approach combined quantitative trends with qualitative insights in one
integrated analysis, which was better placed to capture the perceived impact of automation on
SMEs.
This structured questionnaire used for this research is designed in such a way that it captures
quantitative and qualitative data on the adoption and impacts of automation on SME operations.
The types of questions included are listed below.
Demographic and Business Information: These give basic data on the SMEs regarding the size,
sector, the number of employees, and the present state of automation. This helps in proper
stratification for analysis.
Automation Adoption: In this respect, questions reported the kind of automation technologies
adopted, like CRM systems, AI solutions, and cloud-based computing solutions, and the length of
time the technologies had been adopted. Subjects were asked to indicate which area of their
business was automated; for example, inventory management, customer service, or financial
reporting.
Perceived Impact: To understand perceptions of the impact automation has had on a range of
business aspects, we asked a series of Likert-scale questions about productivity gains, error
reduction, cost savings, ease of implementation, and return on investment.
Challenges and Barriers: This section consisted of open-ended and scaled questions relating to
perceived challenges in the adoption of automation-higher costs, technical skill gaps, and
integration issues being among them. The severity ratings of the same were sought from the
respondents on a Likert scale.
Future Plans and Recommendations: Finally, respondents were asked to state their future plans
regarding automation and any suggestions they had with regard to overcoming the challenges in
adopting automation.
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In fact, the questionnaire was designed in a way as to reflect both factual data-types of technologies
used-and subjective perceptions-easiness of implementation, for instance-and thus offer a broad
view on how automation influences the situation of SMEs.
4.0 FINDINGS
The findings from this study indicate that small and medium-sized enterprises (SMEs) that adopted
automation technologies experienced significant improvements in their operational performance.
The most notable improvements were in process efficiency, with SMEs reporting up to a 30%
increase in efficiency after implementing automation tools. This boost in efficiency was largely
attributed to the automation of repetitive tasks such as data entry, inventory management, and
customer service processes, which allowed employees to focus on higher-value tasks. Additionally,
manual errors were reduced by 25%, as automation minimized human involvement in error-prone
activities like bookkeeping and invoicing.
The study also found that productivity increased by an average of 15% across the SMEs surveyed.
This productivity gain was attributed to faster task completion, improved accuracy, and enhanced
decision-making capabilities facilitated by real-time data generated through automated systems.
For example, businesses that automated their customer relationship management (CRM) systems
were able to better track sales leads and customer interactions, resulting in more efficient sales
processes and improved customer satisfaction. Similarly, SMEs in manufacturing that
implemented automated inventory management systems experienced reduced downtime and
improved supply chain management.
Despite these positive outcomes, the high cost of technology implementation was identified as a
significant barrier to automation adoption. Approximately 45% of respondents cited the initial
costs of purchasing and implementing automation systems as a major deterrent. This was
particularly true for smaller SMEs with limited financial resources, which found it challenging to
invest in advanced automation tools. In addition to the upfront costs, some respondents also
expressed concerns about ongoing maintenance costs and the potential need for hiring skilled
personnel to manage these systems. This highlights the need for affordable automation solutions
tailored to the financial constraints of SMEs.
Another challenge identified in the study was the skills gap. Many SMEs struggled with finding
employees who possessed the technical skills necessary to manage and maintain automation
systems. This was particularly problematic for businesses that adopted more complex technologies
such as artificial intelligence (AI) and machine learning (ML) systems. As a result, some SMEs
were forced to rely on external consultants or spend significant time and resources on training their
staff, which further increased the overall costs of automation implementation.
The following table summarizes the impact of automation on SME productivity, showing key
improvements in process efficiency, error reduction, and productivity gains across different
sectors.
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Table 1: Impact of Automation on SME Productivity
Sector
Efficiency Improvement
(%)
Error Reduction
(%)
Productivity Increase
(%)
Retail
25%
20%
12%
Manufacturing
30%
28%
18%
Services
20%
15%
10%
Technology
35%
30%
20%
Total
30%
25%
15%
More than anything else, differences in automation adoption were particularly pronounced across
the sectors. Manufacturing and technology firms were the most automated, hence achieving the
highest gains in productivity. These firms performed more comprehensive automation covering
multiple areas of operation, thus contributing to significant efficiency improvements. In contrast,
retail and service-based SMEs showed more modest productivity gains due to automation in these
sectors, which tended to be more functional-for example, CRM and POS systems-rather than
across all integrated business processes.
While efficiency gains, accuracy, and overall productivity with automation were evident, the study
also indicated key challenges that inhibit broader diffusion greatly, particularly among the smaller
SMEs. High cost of automation technology and persisting skill gap is a challenge: the high initial
investment against which few can afford to commit; and the shortage of skilled manpower to
manage and operate these systems-create a big barrier to the wide adoption of automation for many
SMEs. This would mean that even in firms, where the potential of automation is well realized,
further large-scale adoption may remain slow.
In the final analysis, as great as the potential benefits for SMEs and automation are, overcoming
cost and technical expertise challenges are going to be the linchpin to enable broader adoption.
Economies of automation solutions and expanded technical training programs are paramount in
developing access. The emphasis on future research could be an automation strategy for a step-by-
step approach. This would, therefore, enable the SMEs to implement automation in steps and avoid
heavy upfront costs, hence an easy transition toward fully automated operations over a period of
time. A more exhaustive study of problems related to integration encountered during
implementation, resistance by employees to the change, and adaptation of new processes for
automation would provide a balanced view of the journey toward automation.
The study elaborated on important discrepancies in the level of automation and impacts on the
various sectors, with manufacturing and technology firms leading both in the level of adoption and
improvement in productivity. Generally, such industries tend to enjoy more remarkable levels of
automation since their activities are characterized by repetition with data-intensive processes that
can be taken over by machines. In this regard, manufacturing companies usually automate
production lines, inventory, and quality control processes. Automation in these areas yields a
massive efficiency saving, as this technique eliminates human error, accelerates production, and
allows real-time performance monitoring. On the other hand, technology companies tend to apply
automation in software development, data analytics, and IT infrastructure, where automation has
smoothed out workflows and enabled gigantic innovation.
On the contrary, retail and service-based SMEs reported modest gains in productivity. This may
also be because automation for such industries is typically narrower. For example, a retail business
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would only automate parts, at best at a POS or CRM level; the deeper, intricate operation
processes-like inventory management or supply chain logistics-may still be manual or semi-
automatic. The same can be seen in service-based SMEs, whereby automation is more often
applied to customer service-for example, chatbots and booking systems-whereas other functions
are more often labor-intensive, which results in less dramatic overall impacts on productivity
compared to sectors that have more comprehensive automation.
Another factor contributing to these differences is the nature of the work itself. Manufacturing and
technology sectors entail structured, repeatable tasks, which are easier to automate, while in retail
and service-based businesses, there is much customer interaction and often less predictable
workflows that may require human input. These sectoral challenges, upon deeper exploration,
illustrate that the industries having standardized and repetitive tasks are very likely to see quicker
productivity gains because of automation. Sectors where either there is a lot of human interaction
or processes vary in certain manners may need more bespoke automation solutions to realize their
full potential.
5.0 CONCLUSION AND RECOMMENDATIONS
Conclusion
The findings of this study underscore the immense potential that automation technologies hold for
enhancing business processes and productivity in small and medium-sized enterprises (SMEs).
The significant improvements in process efficiency, reductions in manual errors, and notable
increases in productivity observed among SMEs that adopted automation clearly demonstrate the
transformative impact of these technologies. With up to 30% improvement in operational
efficiency and a 15% increase in overall productivity, automation presents a compelling case for
SMEs looking to enhance their competitiveness in an increasingly digital marketplace.
However, despite these promising results, the study also highlights several critical challenges that
impede the widespread adoption of automation among SMEs. The high cost of technology
implementation poses a substantial barrier, particularly for smaller enterprises with limited
financial resources. Moreover, the lack of skilled personnel to manage and maintain automated
systems creates a skills gap that further complicates the automation process. These challenges are
compounded by the complexity of integrating new technologies into existing business operations,
often leading to resistance from staff who may fear job displacement or feel overwhelmed by the
changes.
To navigate these hurdles, SMEs need strategic support to effectively implement automation
technologies. While the benefits are clear, without addressing the barriers, many SMEs may remain
hesitant to invest in automation, ultimately limiting their growth potential. Therefore, this study
emphasizes the necessity for a multi-faceted approach to automation adoption that considers the
unique circumstances of SMEs.
Recommendations
Based on the findings of this study, several recommendations can be made to facilitate the
successful adoption of automation technologies in SMEs: In the bid to ensure recommendations
are more actionable for SMEs, it is relevant that each recommendation is tested for feasibility and
also offering pragmatic ways of implementation within limited resource means.
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i. Deploy Phased Automation Strategies: A phased strategy is feasible and very practical for
resource-constrained SMEs. Instead of automating all business functions at one instance,
SMEs can start by automating those low-cost and high-impact areas such as CRM or
invoicing. In so doing, they can achieve direct value and scale the costs gradually. The
SMEs need to start by prioritizing the most time-consuming tasks in their companies, then
scaling down such prioritization in those areas until they gain confidence to increase
further. Avail Government and Industry Support: Although it is practical to fall back on
external financial support, it should be upon the SMEs' initiative in taking advantage of
grants, subsidies, or low-interest loans designed for digital transformation.
ii. These will also include financial support programs provided by both governments and
industry associations, although many are region-dependent. SMEs should invest some time
into researching regional initiatives or working with industry groups that could offer
discounted bulk programs or free training. Other options include negotiating payment
terms with the vendor when implementing technology solutions, or investigating free and
open-source automation solutions. Improve Training of Employees and Their Participation:
Training is cumbersome-it is both costly and time-consuming. Still, there are some
relatively affordable solutions: Free online courses, free webinars, or even vendor-issued
training materials can be utilized by SMEs.
iii. Appoint "automation champions" within the enterprise internally to lead the learning curve
and minimize the need for external trainers. Involvement of employees from an early
planning and implementation stage should make the SME environment more receptive with
less resistance to change in order to align automation efforts with actual business needs.
Select Scalable and User-Friendly Technologies: The practicality of this recommendation
depends on the selection of technologies designed for SMEs. Many vendors therefore
provide solutions that are modular and can easily be scaled up as businesses grow. In such
cases, SMEs can implement basic functionality now and add features later. Lastly, it's
critical to determine integration requirements and long-term costs before investing in any
tool.
iv. Free trials or demo versions of technology allow for checking usability and compatibility
with existing systems. Monitor Automation Outcomes: Automation outcomes need to be
monitored, and most modern automation software packages include performance analytics.
The SME must establish straightforward and clear KPIs as measures of successful
automation, such as hours saved, fewer errors, or cost savings. In this way, evaluation will
enable SMEs to further invest or adjust their processes with data-driven decisions. Practical
steps include leveraging reporting functionality in the automation software and analyzing
those reports on at least a monthly or quarterly basis.
Conclusion: This set of recommendations, when put into practice via a staged approach sensitive
to cost, shall ensure the SME will slowly dismantle barriers toward automation and ensure
substantial gains toward better productivity at minimum resource cost
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Vol.7, Issue 3, pp 25 - 42, 2024 www.ajpojournals.org
https://doi.org/10.47672/ije.2510 42 Abidemi (2024)
Acknowledgments
The authors would like to express their sincere gratitude to all the small and medium-sized
enterprises (SMEs) that participated in this study. Your willingness to share your experiences and
insights about automation technologies has been invaluable in advancing our understanding of the
challenges and opportunities facing SMEs in today’s digital landscape. We also extend our
appreciation to the research assistants who assisted in data collection and analysis, as well as our
academic peers who provided constructive feedback during the development of this paper. Their
support has greatly contributed to the quality of this research.
Additionally, we acknowledge the funding provided by [Funding Agency/Institution Name], which
made this research possible. We appreciate the resources and facilities that were made available to
us throughout the study.
Conflicts of Interest Declaration
The authors declare that there are no conflicts of interest regarding the publication of this paper.
No financial or personal relationships that could inappropriately influence the research were
disclosed. The findings and interpretations presented in this paper are solely those of the authors
and do not reflect the views of any affiliated institutions or funding bodies.
If any conflicts arise in the future, they will be disclosed in subsequent publications or
communications. The authors are committed to maintaining transparency and integrity in the
research process and in the dissemination of its findings.
Adeyemo Bidemi is a renowned productivity expert and entrepreneur. A Lagos State University
graduate in History and International Studies, she transitioned from public service to founding a
successful productivity consultancy. As a fellow of IPBIM, Bidemi specializes in process
optimization, time management, and employee engagement, helping businesses achieve
outstanding operational efficiency.
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Copyright (c) 2024 Adeyemo Abidemi
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