Nick is Global Executive General Manager, Ecosystem at Xero, focused on helping small businesses and app partners grow on Xero’s platform.
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An increasing number of small businesses are working remotely, using cloud-based apps running off fully mobile devices such as smartphones and iPads. Beyond the remote-working and e-commerce trends driven by the last two years of Covid-19, there is a good reason for these trends to be expected to continue as "the new normal."
Research at my company Xero showed during Covid-19 that the top 25% of app-enabled small businesses reported annual sales growth of up to 8.7% and job uplifts of up to 4.5% when compared to non-app users. Apps are helping small businesses save time and money, hustle more efficiently and—in the context of a global pandemic—reach and engage with customers online.
Now a growing number of small businesses are taking their app usage to the next level by leveraging powerful platforms such as my own company Xero, Salesforce and Shopify to quickly and easily integrate their existing workplace processes with entire ecosystems of apps. These ecosystems don’t simply make existing processes more efficient, they enable small businesses to scale, innovate and compete in the new competitive landscape.
But first, what are ecosystems?
When we talk about ecosystems, we are referring to a collection of third-party apps that integrate into one key operating system or digital platform, such as the iPhone App Store or Salesforce AppExchange. These platforms are based in the cloud, making them accessible anytime and anywhere on mobile devices. They also give small businesses access to artificial intelligence (AI) or automation tools and other integrated tools to help them streamline their business operations and be more efficient.
Why are small businesses just getting into this now?
It may be hard to imagine this now, but AI and machine learning tools were unavailable to the mass market as recently as five years ago. Only large enterprises, governments and universities with enormous IT budgets and staff resources could implement the required coding and technology integration.
We’re well into a new era—otherwise known as the digital platform economy—in which the movement of computable algorithms to the cloud, where they can be easily accessed, has created the infrastructure on which entire platform-based markets and ecosystems operate. This has led to a democratization of enterprise-level technology like AI, which can be readily accessed by everyone through the availability of open-cloud platforms without the burden of exorbitant costs or resources.
I recently spoke with Xero partner Lola Oyelayo-Pearson, Director of UX at Shopify, who aptly describes how this platform era is shifting the focus away from the enterprise toward entrepreneurs. “Traditionally," she notes, "business solutions focused on the enterprise customer (the big multi-year contracts and lock-in). But we’ve seen a massive shift in startups, entrepreneurs and SMBs needing those dynamic solutions. Not only are they nimble and willing to experiment and innovate, there’s an ecosystem that wants to support them by offering enterprise-level solutions that are accessible, provide more choice and help them to innovate.”
How can small businesses tap into digital ecosystems?
When it comes to using technology, small businesses have two requirements.
First, they must choose options which are easy to use and carefully tailored to their specific needs. A connected platform and ecosystem able to deliver on these requirements as integrations are another central and inherent feature. These can link up multiple applications and platforms to create holistic and simple solutions for small businesses.
As a good example, We worked closely with international airline Qantas to develop a new integration that builds into Xero’s open API. Qantas now enables customers to earn frequent flyer points on app purchases via the Xero App store.
In addition, Qantas Business Rewards members can automatically have their bills fed straight into a nominated Xero account when booking a Qantas flight. It's a two-way, symbiotic relationship: Qantas are now a part of our product ecosystem, and we’re a part of theirs. Both groups of customers benefit from the ecosytem model.
Another common example in part necessitated by the pandemic and rapid shift to e-commerce is the use of ecosystems as “one-stop shops” for small business needs in specific “departments.”
I raised this with Xero partner Scott Brinker, Vice President of Platform Ecosystems at HubSpot, recently, and his insights I felt were super-relevant to this discussion.“In the B2B space," he notes, "we’re seeing a rise in the ‘revenue operations function,’ and you don’t have to have a big department to take advantage of this. It’s reframing how we connect the dots across the activities that are happening in a customer’s journey, such as marketing and sales, and then how we align this with finance, data and operations.
“The integrations between the platforms such as Shopify for e-commerce, Xero for accounting and Stripe for payments shows the way a small business runs their operations are all connected together—and this is a remarkable step forward from where things were a few years ago.”
What is the next phase of the ecosystem model?
Put simply, while small businesses have traditionally been unable to access the resources, capital and technology to effectively compete with larger ones, it doesn’t have to be that way anymore. The ecosystem platform era will hopefully end that disparity and create a more level playing field. Today, both startups and small businesses can utilize the same agility, tools, information and resources as their larger counterparts.
For small businesses to thrive, ecosystems must also thrive. That requires being open, encompassing complementary and even competing solutions and working with developers to make it easier for small businesses to benefit from a diverse tech stack.
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