The rapid growth of the internet and digital technology has significantly changed the rules, as well as risks, of every aspect of running a successful organisation. Technological advances have given rise to e-commerce, which has redefined existing business models and contributed to business globalisation.
The importance of small-and-medium sized enterprises (SMEs) is clear; they account for almost 35.9% of Malaysia’s GDP and 65.5% of the total workforce. They are also a huge source of competition and innovation, have a much wider geographic footprint than large enterprises, and provide better income distribution.
Malaysia aspires to be one of the global digital hubs with the recent launch of Digital Free Trade Zone and SMEs are the key to ensuring that digitisation spreads faster across the region. Yet many face a number of common challenges in seizing the opportunities provided by digitisation, none more so than the access to, and financing of the latest technologies.
Whilst the new generation start-ups are fairly advanced in maximising the potential of digitisation, the same cannot be said about the rest of the SMEs in Malaysia. According to IDC Malaysia, adopting ICT for their business operations isn’t a priority for over 70% of Malaysian SMEs. To make matters worse, SMEs in Malaysia are also lagging behind their counterparts in the region, with countries like Singapore, Vietnam and Indonesia already recording much higher ICT adoption rates. In the digital economy, they won’t just be competing with local SMEs but those from abroad as well. So, the time is ticking for these companies to either embrace the inevitable change or face being left behind.
Tech giant Cisco sees these companies as future disruptors and has doubled down their efforts on the SME business scene. To help Malaysian SMEs take advantage of the vast opportunities offered by digitisation, Cisco has launched Cisco START, a new initiative that provides SMEs and midmarket businesses with access to a suite of simple, secure and smart enterprise-class technologies, specifically tailored to their business size and priced to match. More specifically it offers:
· The right-sized, right-priced solutions wherever they are on their digital journey
· Enhanced operations, services and processes to reduce overheads and Total Cost of Ownership (TCO)
· Improved workforce productivity and innovation to meet the increased demands of today and the evolving opportunities of tomorrow
Speaking at the industry panel discussion dubbed, ‘START Digitising: A Call for Malaysian SMEs to Reap the Full Potential of Digitisation’, Cisco Malaysia’s Managing Director Albert Chai said, “65 percent of Malaysia’s population only contributes 35 percent to the nation’s economy. Why are we behind countries such as Singapore and Indonesia in terms of GDP per employee basis? This boils down to how companies utilise tech to achieve productivity. Ultimately, every company is first and foremost a tech company with expertise in different areas including education, retail, and manufacturing. Without embracing and adopting technology, there is no business model for these companies.”
Also present at the panel discussion to share their views on the subject, Spencer Yeoh, National Assistant Secretary General, SME Association of Malaysia and Kevin Tai, Risk Director for Funding Societies. According to Spencer, the majority of the Malaysian SMEs today are still for the most part hardware-centric. They don’t see the value of content and it’s difficult for them to quantify the intangible value of investing in something like software or an e-marketplace platform. Since the majority of the SME Association members are above the age of 50, one of the biggest challenges is their lack of tech-savviness and all the new technology represents a major paradigm shift for them.
“The association has a big responsibility to educate them so that they will not be phased out in this economic change. SMEs [need to] realise the importance of digitisation. For them, it is either start or die. The digital economy is bringing about a world without borders. They must adopt ICT to survive if they want to be able to compete with businesses across the world” Spencer added, “If SMEs want to start their digitisation journey, our advice to them is to not undertake big investments straightaway. Begin with small steps by starting with cloud adoption, then they can expand their investment as they grow.”
Many Malaysian SMEs do have a presence on social media, but only use such technology for the most basic facilities. They aren’t making full use of the technological innovations that are available to them; to run backend processes or leverage analytics to boost productivity and revenue, for example. Kevin Tai had this to say about the issue. “It is important for SMEs to understand their business model and see where they can leverage technology to improve business operations. They should not resist change but think of a way of incorporating technological advances into their business model.”
He then added that for companies wishing to take a step towards digitisation, there are many options currently available to them in terms of funding. All they need is the right knowledge, proper planning and a sound business model. “Costs should not be a hindrance as there are a lot of avenues for financing out there. SMEs need to explore and educate themselves on the opportunities out there, ranging from government initiatives to entities like Funding Societies that fills the gap in financing.”
So the technology is there, the benefits are clear and the financial support is also available for the SMEs to start digitising. Perhaps for many of them the perceived problems are bigger than the actual technical challenges. But regardless, the digital disruption is already underway and any effort to resist the tide of technological progress will only prove to be an exercise in futility.