SMBs, the Gig Economy and the New Workplace

Over one-third of U.S. workers are now part of the gig economy, up from 17% in the 1989 survey. Whether you call them freelancers, contractors or contingent workers, gig workers are expected to grow as a percentage of the workforce: Intuit predicts the percentage of self-employed workers to rise to 43% by 2020 (Figure 1).

slide1

What is the gig economy?

Gig workers don’t have traditionally-defined, salaried relationships with employers, or benefits such as medical insurance or a 401(k), but they do have more flexibility and autonomy. The category includes self-employed as well as temp workers, contractors, on-call workers and part-time employees, spanning industries from construction to pet care, and from professional services, such as web design and programming, to Uber and Lyft drivers.

The gig economy started to take off in the 2008 great recession, when layoffs hit hard and hiring ground to halt. Workers needed income, and many turned to contingent work to make ends meet. Many businesses brought on contract workers rather than staff employees to keep overhead down and gain flexibility to scale the workforce up or down. At the same time, new marketplaces for freelancers, such as Elance (now UpWork), Freelancer, Guru and others started providing matchmaking services to bring employers and freelancers together.

Since then, the economy overall has rebounded but the gig economy continues to grow.

The Gig Economy and SMBs

The gig economy is certainly an important factor for SMBs. Of course, “non-employer” businesses of one are gig workers. And, they are also small businesses. According to the U.S. Census Bureau, more than 22 million U.S. businesses have a single owner, but no paid employees.

In addition, SMBs rely on external workers/freelancers to perform a wide range of business functions (Figure 2).

slide2

SMBs are most likely to depend solely on gig workers to get the job done in accounting/financials, workforce management/payroll and marketing. SMBs are also most likely to use a combination of salaried employees and gig workers for these areas, along with business intelligence/analytics.

Overall, SMB plans to hire more workers in the next 12 months are robust (Figure 3), with larger SMBs more bullish on hiring than smaller ones. As shown, while plans to hire salaried employees are strongest, SMBs also expect to hire more contractors and freelancers, with   marketing, business intelligence, accounting/financials and customer service cited as the top areas.slide3

Perspective

In addition to dealing with different regulatory and compliance requirements, SMBs that hire gig workers often have to juggle workers who are frequently off-site and schedule their own hours. Gig workers are likely to have competing priorities, and lack insight into the operations, values or mission of the companies they work for. 

As discussed in SMB Group’s 2017 Top 10 SMB Technology Trends, this trend, as well as the rise of remote working (telecommuting and traveling workers), along with the influx of millennials into the workforce, highlight the changing face of the workforce and workplace.

While traditional tools such as email, file sharing and web conferencing aren’t going away, stream-based messaging and collaboration tools, cloud file sharing, conferencing, smartphones, tables and laptops can help employees and contractors collaborate to get work done more quickly and easily (Figure 4).

slide4

For instance, stream-based messaging and collaboration solutions provide a unified view and access to information across servers, clouds, apps, devices and locations. Examples include Slack, Salesforce Chatter and Quip, Microsoft Teams, Cisco Spark and RingCentral Glip. These solutions not only help facilitate collaboration between employees and contractors across physical locations, but also across digital ecosystems.

Since SMB reliance on gig workers is likely to continue to grow, now is the time for SMBs to refresh workplace culture, strategy and solutions to attract, engage and retain employees and contractors. SMBs that use figure out how to and streamline collaboration will reap productivity gains today, and the flexibility necessary to scale the workforce–whether salaried employees or contractors–up or down in the future.

For more information on SMB Group studies referenced in this post, please contact Lisa Lincoln, Director of Client Services & Business Development, SMB Group, at lisa.lincoln70@smb-gr.com.

Intuit Partner Platform: Changing the Rules of Cloud Platforms with Federated Applications

Cloud platforms, or “platforms-as-a-service” (PaaS) are quickly becoming a key channel for application developers. By writing and publishing their applications to integrate with those of a major PaaS provider, such as Salesforce.com or Microsoft, smaller developers can gain instant access to a large installed base of customers.

With so many vendors creating their own clouds, however, it’s easy for software developers to get lost in them—or potentially, locked into in a cloud. After all, it takes a lot of time and effort to write an application that conforms to the requirements of a particular cloud platform. Smaller developers, without extensive resources, have to place their bets carefully, as they may not have the resources to rewrite their applications for different environments when a new or better opportunity arises.

But recently, Intuit unveiled a new capability called “Federated Applications”, which opens up the Intuit Partner Platform to developers that have existing software-as-a-service (SaaS) applications built on other cloud platforms, programming languages or databases. Instead of having to rewrite applications from scratch, developers can use basic XML integration to configure or “federate” their solutions with key integration points, including the user interface, billing, account management and permissions, data and single sign-on to ensure that their solutions integrate with QuickBooks and other solutions on the Intuit Workplace. For example, the partner solutions that Intuit announced at its launch—Expenseware, DimDim, Setster, Rypple and Vertical Response–are built on a wide range of different platforms.

Intuit also provides a wizard to help developers create their pricing plans, and checks each application to ensure that it meets Intuit security and privacy requirements. Once the process is complete, applications are published to the Intuit Workplace, where four million small businesses and their 25 million employees that use QuickBooks can access them.

With its Federated Applications model, and tremendous presence in the small business market, Intuit is poised to change the rules for cloud computing platforms, both for small business developers and customers, as well as rival PaaS vendors. Intuit’s model makes it much easier and faster for developers to leverage existing investments and reach a new market than for PaaS competitors without this capability. In turn, millions of Intuit customers get access to one-stop shopping, account management, connected data, and single sign-on for applications in the Intuit Workplace.

Intuit’s business model represents a dramatic shift from that of the current PaaS gorilla—Salesforce.com. In the Salesforce model, every user of any AppExchange solution must also pay a platform fee to salesforce.com, whether they need to use the Salesforce solution or not—a tax that many small business customers, in particular, are unwilling to pay. In comparison, Intuit charges Workplace developers a percentage fee (typically 14% to 20%, depending on volume) when they sell their solution on the Workplace. In return, developers get a sales channel, platform services, and a friction-free route to Intuit’s large installed base.

By lowering the bar to entry to its platform so significantly, Intuit’s federated approach makes it easy for developers to place a bet on the Intuit Workplace. Intuit customers, meanwhile, can look forward to a flood of new solutions that will work with QuickBooks. At the same time, its more likely that these solutions will be available on other cloud platforms, should the customer decide to move to another accounting solution. Seems like a win-win-win for Intuit, its partners and its customers—and a challenge to PaaS competitors with more proprietary models.