How low-code/no-code is enabling small and medium-sized businesses to wield the technology advantages of enterprise
Low-Code/No-Code (LCNC) technologies are igniting a “Cambrian” explosion of user-generated innovation. This innovation in LCNC can empower and enable small and medium-sized businesses (SMBs) to address their business needs – from innovation to operations – in an accelerated manner.
In this essay, we will dive deeper into the value of LCNC for SMBs and what this means for Software and Platforms companies.
LCNC as an SMB accelerating tech wave
We have already seen tech waves accelerate SMB business growth, which is incredibly critical to today’s economy. For example, a few years ago, SMBs that wanted to sell online had to make substantial investments in e-commerce infrastructure. Shopify changed all that. The platform enabled entrepreneurs from bakeries to clothing brands to start selling online when COVID-related lockdowns forced physical stores to close.
We believe LCNC will have an equal, if not larger, impact on SMBs. Today, there is a growing set of SMBs employing LCNC to deliver value to every facet of the business by enabling and simplifying everything from customer acquisition to back-end processes. This comes at a key moment when SMBs are looking for ways to compete and differentiate against larger companies and other SMBs.
Three factors make LCNC extremely relevant for SMBs in today’s business environment:
1. Digital maturity as a competitive necessity
Digital maturity is more important than ever, as the pandemic has pushed more businesses online.
Accenture research found that more than 70% of small businesses worldwide are accelerating digitization, and 93% of small businesses say that COVID-19 has made them more reliant on technology.
2. Challenging access to digital talent
SMBs struggle to attract digitally fluent staff, let alone developers as this talent is easily snapped up by large enterprises.
In our research, 1 in 5 SMBs we surveyed said that their LCNC platform search was driven by the scarcity of digitally fluent staff.
3. Enterprise IT solutions don’t meet SMB needs
47% of SMBs think enterprises aren’t trying to understand the challenges they face and movement towards LCNC illustrates that point.1
Many Software & Platforms companies aren’t designing solutions with SMBs in mind. Typically, they develop an enterprise or consumer product that they tweak for the SMB market vs. catering to SMBs’ business needs for IT agility, speed to market, and cost-consciousness. LCNC changed that dynamic with the potential to empower limited technology experience business users to develop enterprise-class solutions that truly meet their business needs.
Christian Rotter, founder and CEO of Crowd Capital, a social-impact investment company specializing in the secondary mortgage market, sums up how LCNC nicely matches his business interests:
While cost and time to market were large factors, the flexibility that a LCNC solution provided was a very important factor... LCNC development allows us to fail fast in a cost-effective manner and implement those lessons to meet borrowers’ demands.
Those SMBs that have embraced LCNC – align with Christian. These SMBs utilizing LCNC are well positioned to stand out among their peers and beat them in the market.
The benefits SMBs gain from using low-code/no-code:
have seen greater business agility
noted higher personal/team productivity
saw improved speed-to-market
overcame the capability limitations of SaaS / COTS solutions
SMB LCNC adoption trajectory
Although not yet widely distributed, LCNC has gained notable market traction among SMBs. Nearly half of the SMBs we surveyed stated that their business uses LCNC. We expect this trend to accelerate, as 56% of these SMBs plan to increase their weekly usage of LCNC platforms relative to other enterprise software. What’s more, 58% of the SMBs that use LCNC today expect their investment in the platform to increase. It is currently estimated that 65% of all app development will be LCNC by 2024.2
It’s clear that there’s already a lot of energy around the LCNC movement. The buzz is set to grow further. To put it into context, we expect LCNC to be as big for SMBs as cloud has been for large enterprises. Companies serving the SMB market need to start paying more attention to LCNC.
How SMBs are using LCNC
create new business rules and process controls
create new process flows to complement packaged product (SaaS / COTS) capability
create new user experiences
develop new business applications
develop new customer facing applications (Web and mobile)
Software & Platforms companies can’t afford to look away
Although LCNC has momentum, it still has some way to go before it’s an ideal fit for every SMBs’ needs.
Why? Firstly, because there are still barriers to entry for SMBs, particularly around security. We found LCNC developers often view IT security as a barrier to adoption for LCNC platforms.
Barriers to adoption of LCNC platforms:
said data security (e.g., Data could be hacked)
noted public cloud sources data availability/credibility
reported data management
said lack of data leak prevention
We’re also seeing a relatively high churn rate around LCNC usage. Approximately 20-25% of SMBs have stopped using LCNC platforms that they had previously purchased. This is primarily because LCNC platforms still have some way to go in understanding and addressing SMBs’ needs. There’s currently a disconnect between what LCNC providers see as top differentiators for their platforms, and the capabilities that SMBs value.
The shortcomings of many current LCNC platforms and the lack of LCNC capabilities in many SaaS/software applications creates a huge opportunity. SaaS providers and Software & Platforms companies have an immediate opportunity to adapt their LCNC offerings to meet the needs of SMBs. By being customer-led and building LCNC solutions tailored for SMBs, SaaS providers and Software & Platforms companies can catalyze the SMB market and unlock that energy – bringing LCNC’s value to the masses. This is an encouraging possibility, as the industry has historically faced significant challenges in serving the SMB market, due to its size, and extreme diversity. SMBs will benefit too, because they’ll finally get solutions that more precisely address their business needs. It’s a win-win.
With many smaller LCNC providers currently ahead of larger platforms in serving SMBs’ needs, major Software & Platforms companies face a choice. They can choose to pursue an SMB-centric LCNC product strategy, or they can acquire smaller LCNC platforms that target SMB customers. Either way, many Software & Platforms clients will end up investing in LCNC sooner or later.
A bright opportunity
SMBs are a powerful force within today’s economy. They contribute more than half the GDP of developed economies and provide between 60% and 70% of employment3. And LCNC is set to reshape the way that SMBs use technology. This is a space to watch.
Stay tuned for our next essay, where we’ll talk about the impact of LCNC for CIOs of large enterprises. We’ll discuss how LCNC will reshape the operating model, and impact how large enterprises deliver projects.