When Interbrand released its 2020 list of 100 Best Global Brands earlier this year, just 41 of the companies included had been on that list in 2000. In fact, many of the brands on the list didn’t even exist back then. It’s proof that brand value isn’t just about legacy, it’s also about innovation, growth and putting the needs of your customer front and centre.
The past couple of decades have seen waves of innovation like no other. With digital-native thinking and ambitious objectives, we’ve seen new organisations challenge the status quo in industries across the board. Fuelled by a determination to do better, we’ve seen early-stage businesses accelerate at a rate of knots, rapidly evolving from start-ups to “scale-ups”.
Some may say that membership to the elite scale-up club is determined by annual returns, number of employees or perhaps the amount of funding received. While these are all important indicators of future success, the common ground to entry is that these businesses, typically in the technology space, have achieved impressive expansion and are continuing on an upwards growth trajectory.
The UK alone is home to 33,860 scale-ups. Contributing £1 trillion to the UK economy annually and making up half of the SME economy, the prominence of these types of businesses is showing no sign of receding.
But it would be remiss not to acknowledge the impact Covid-19 has had on these organisations. Feedback we have received highlights the very real challenges many rising scale-ups are now facing as a result of the pandemic. Hailed as the future for so many industries and as the catalysts for change in the world, their potential now hangs in the balance of an era defined by uncertainty.
We’ve seen a record number of technology start-ups file for administration since the start of lockdown, hampering their potential of ever reaching the scale-up stage. Other reports suggest that UK scale-ups are facing a funding shortfall of up to £15 billion in 2020 as a result of the pandemic.
Building a solid foundation
The next few months, and even years, will be make or break for many of these businesses. Some may think that because scale-ups have received funding, or are beyond this initial set-up phase, they are “safe”. This couldn’t be further from the truth, and actually, now is the time to equip these businesses to continue on their path to success.
Look at how scale-ups such as Deliveroo have serviced our at-home dining needs when we were confined to our homes during lockdown, and how challenger financial services brands such as Monzo came to the support of many in financial need. These businesses are beginning to underpin the lives of many and it’s crucial to support the next chapters in their story.
We believe unlocking their potential lies in rewiring these teams from a start-up to a scale-up mindset when approaching back-office solutions. Understandably, scale-ups typically rely on more basic business tools, which have limited scope, functionality and scalability and find themselves reaching the limit of their capabilities rapidly. In many situations, these teams may still be dependent on tools such as Excel for increasingly complex tasks.
Why does that matter? We observed that a solid financial structure, the ability to expand internationally in a matter of days, end-to-end employee management and real-time visibility over business KPIs, amongst others, are the cogs in the engine room – they can either propel a business to its next stage, or seize up and stop the whole operation.
There are three key reasons why sophisticated back-end solutions are so crucial for these organisations. Firstly, while many start-up leaders think of selling the product, raising money and hiring the right people as key factors to sustain growth, they often don’t think of how the business will run when those milestones have been reached. This in-the-moment mentality is partly why they have reached the scale-up stage, but robust back-end solutions are going to be what sustains that growth.
Secondly, the need to understand what is happening within the business in real-time has never been more important. Working in environments where it can take upwards of three weeks to provide sales data makes critical fast decision-making, and therefore implementing critical business decisions, near impossible.
Lastly, looking ahead to further investment, or a potential IPO, a certain level of structure and data insight is going to be required to make a compelling business case for investors and venture capitalists. Again, something not possible without a business built on sophisticated technology foundations, which provides accurate data with clear traceability.
Powering tomorrow, today
While the merits of intelligent technology suites are clear, they have often been seen as aspirational for scale-ups. That should not be the case. At SAP, we realise we need to adapt our approach to make our world-class solutions no longer a pipe dream.
As Europe’s largest tech company, and as the inventors of enterprise resource planning (ERP), watching the challenges scale-ups are facing at this stage was a wake-up call. We need to do more to support these businesses. This is why we launched our Grow by SAP initiative – a programme designed specifically for scale-ups that provides all the essential back-office business requirements, from finance, to procurement, project management, core HR and business analytics with fast implementation schedules and minimum up-front financial risk.
Importantly, seeing reports that highlight scalability and the ability to attract talent as key reasons why European tech scale-ups are failing, we knew we needed to act now. We already have all of the solutions to solve these problems, and solving problems is what we do for our more than 440,000 existing customers in 180 countries. But it was on us to connect the dots between our products and initiatives to create a programme that truly adds value to this group of exciting organisations.
We acknowledge that scale-ups present different challenges than perhaps the typical customers of SAP. They are the businesses of tomorrow, fuelling economies and powering our lives. As such, we’re taking a collaborative approach to working together, and even looking deeply at the way we function as a business ourselves to better partner with these types of organisations. Europe has one of the most exciting scale-up communities, disrupting industries from money transfer to streaming. To ensure they continue to flourish, it is our duty to sustain their growth through offering solutions that will underpin their future success. Powering the back-end with cloud-based, automated and scalable solutions will be the key to attracting the talent and investment required to propel these businesses to achieving their potential.
By Romain Gauthier, Customer Officer, SAP EMEA North