Technology essential to fuel SME growth

Malaysian Business, Jul 1, 2008 by Tyana Roberts

THE ADOPTION OF INFORMATION technology solutions and services among local SMEs remain low compared to their counterparts in other countries around the world. Despite the efforts undertaken by the Government and the private sector in the form of funding and support, a large number of SMEs remain not wholly-convinced that technology adoption can make a positive difference to their business growth. Many still believe that IT is too expensive, looking at it as a cost, rather than an investment.

AN INVESTMENT TOWARD GREATER PRODUCTIVITY

Microsoft Malaysia's director of small and midmarket solutions, Low Sin Yip says that local SMEs should realise that IT is not a cost but an investment toward greater productivity and operational efficiency.

`IT is transforming business processes and procedures, resulting in the rise of a more embedded knowledge economy for Malaysia. It augments and improves systems and infrastructure. This results in technology being a crucial component in accelerating industrial development and economic growth,' says Low.

For SMEs to realise their full potential, he adds that it is important for them to step up their efforts to embrace technology - not just to survive, but also to innovate and drive positive business outcomes.

`It is crucial for SMEs to embed technology into their core business models to stay ahead of the competition; especially when globalisation hurls them onto the same stage as enterprise-sized businesses and global organisations,' he adds.

Low highlights a study by Keystone Strategy which revealed that the role of IT is critical to revenue growth because it can enable companies to scale. For businesses that are appropriately equipped with IT, they are more effectively able to manage and accommodate the necessary increases in complexity of processes, organisational and business model that accompany business success.

In addition, Low says that SMEs can contribute even more greatly to the Malaysian economy by leveraging on technology.

More than 90% of business establishments in the country are made up of SMEs. The sector employs about 5.6 million people, contributes about 32% of gross domestic product and is considered to be the backbone of sustained economic development in Malaysia. By enhancing their technology capabilities, SMEs can be more productive and efficient, thus helping them to be more competitive and increase their contribution to the Malaysian economy.

`Needless to say, the adoption of IT translates into SMEs improving their bottom-line over time - for the SME, its owners and employees and Malaysia as a whole,' he states.

INVESTING IN THE RIGHT TOOL

While stressing the need for SMEs to absorb technology for business growth and stay relevant, Low cautions overzealousness. At the end of the day, it is not just about having the ability to buy new technology but rather it must be the right technology. Just as it is important to consider the new, emerging technologies, it must be the right technology that can be applied appropriately to cut costs and improve top line growth.

Simply put, SMEs should consider technology that is familiar and easy to use; widely used and supported; easy to integrate and connect; and innovative and continually evolving to meet customer needs.

`One of the core issues for SMEs, with so much technology around, is selecting the right product or service that will provide real business impact and help grow the business over the medium and long term. Groundbreaking technologies are all well and good but if the SME does not have the internal skills to use the system or the means to invest in it, the impact is negligible. The fact remains, technology can bring about gains in productivity and business growth, only when used intelligently.

Whatever line-of-business solutions organisations look for, it is important to evaluate options based on long-term business strategies and needs, Low says. SMEs should consider solutions such as financial, customer relationship and supply chain management that helps automate processes, make profitable decisions and accelerate growth.

Access to technology made easy

SMEs today can turn to a myriad of programmes put in place by both the Government and private sectors to accelerate their developments through the use of information technology. The Government via various agencies is working together with the private sector to lower traditional financing barriers and make IT adoption realistic, says Low Sin Yip, Microsoft Malaysia's director of small and midmarket solutions.

Some savvy Malaysian SMEs, according to him, have already taken advantage of the available resources and have embedded technology into their core business models to stay ahead of the competition.

Clear policies for accelerating the growth of SMEs have been planned through various strategies outlined in the Second Industrial Master Plan, Third Outline Perspective Plan, Eight Malaysia Plan and the Ninth Malaysia Plan. For example, last year, the Government implemented a total of 190 key programmes, involving a financial commitment of RM3.7 billion to help SMEs build competitiveness and capabilities,' Low elaborates.