Edge Growth last week announced the findings of their latest research to a national audience of decision makers involved in Enterprise and Supplier Development (ESD), transformation, procurement and supply chain.
According to the small business development specialist, the findings of this research, now in its third year, provides vital insight into the challenges faced, with the data collected being integral to informing real impact from ESD initiatives.
Of respondents who participated in the survey, 62.8% reported having their budgets affected by the pandemic. Companies with ESD budgets of less than R2 million experienced a slight increase in ESD spend from 35% in 2019 to 41.4% in 2021.
The more worrying statistic was amongst those with an ESD budget of over R25 million, which showed a noticeable decrease from 33% in 2019 to 19% this year.
“The challenge that exists here is striking a balance between reduced budgets and a heightened need for impact in a Covid-19 world, with a forward looking ESD lens,” said Stuart Townshend, Director at Edge Growth.
Some 42.2% of those affected by COVID-19 reported having adapted their ESD approach, including the investment in and adoption of digitization and tech applications for more efficient delivery.
More partnership and collaborations and an increased focus on beneficiary economic survival and supporting their short-term cash flow needs were also identified as innovative and essential ways to adapt.
On a positive note, 2021 saw a noticeable increase in senior leadership involvement in driving transformational goals and overall ESD improvements.
According to Nabeela Vally, Business Development Manager at Edge Growth, over 75% of respondents indicated that they would still contribute to ESD initiatives, even if it was voluntary.
“This shows a true belief in the ability of ESD to drive economic growth and achieve real transformation, with the level of awareness and maturity of ESD as a practice increasing positively over the last three years,” she said.
While 77,5% of respondents reporting that they are actively measuring impact on their programmes, impact measurement remains an important development area. In fact, nearly half of all respondents were unable to give an exact indication of the number of jobs created or revenue growth for their SMEs through their ESD initiatives.
When it comes to the use of ESD Service Providers over the last 3 years, 83.7% believe that these service providers achieve better impact.
Changes and challenges
In tracking trends and themes over this past three-year period, access to market remains an ongoing challenge, with more collaboration needed amongst end users and procurement.
Surviving the pandemic economically and a focus on cash flow support were two other key changes to focus areas and ESD approach noted during this research.
In summarising these research results, Townshend concluded that there is a need for more impact from ESD and SME development initiatives, specifically within the current socio-economic context.
“ESD as an industry is maturing and innovating in many ways, but in some foundational areas it is still infantile. Some of the core focus areas going forward need to include linking ESD strategy to business strategy and commercial return on investment, and measuring and communicating results.”
Townshend said other essential pillars for improving ESD included SME selection on the back of identified areas of opportunity, including ESD objectives in scorecards and the consideration of longer-term programmes with smaller numbers of SMEs.