THERE is no denying that digitalisation is key to the survival of SMEs in this day and age.
Small businesses across the country had felt the hard impact of Covid-19 and the ensuing movement control order (MCO) because many of them couldn’t get online and work remotely.
They witnessed their sales dwindling and margins shrinking and many had to make the tough decision of cutting down staff or rolling down their shutters over the last few months.
Even so, not every company is convinced that digital is the way forward for them. There is still a notable hesitation among some circles of SMEs to take the leap and embrace digital.
“Unfortunately, even after months of hardship through the MCO, there are SMEs that still do not believe digitalisation is a necessity.
“To properly address this issue, we need to look into two key factors. First we must consider that while many SMEs now understand the impact of MCO to their bottom line, many still do not understand the benefits of digitalisation and even more do not quite understand how to go about digitalising their business.
“Secondly, there was and still is a perceived lack of necessity in terms of digitalisation which also manifested itself in the form of a lack of urgency.
“Prior to the pandemic, many simply felt that digitalisation was not a necessary step for their business. Perhaps as a family-run business that had thrived on sales from neighbouring residents only, they do not see the need to bring their business online, ” shares Amanda Chin (pic), chief executive officer of digital solutions provider Revenue Monster.
For sure, there are other hurdles that small businesses contend with when it comes to digitalisation.
The digital sphere is so vast and ever changing that SMEs can be forgiven for not being able to fully grasp what the prospects of going digital are. If understanding the benefits is a difficult task, Chin says understanding how to effectively transition a business to digital could prove to be virtually impossible without the right guidance.
Some of their key concerns include understanding aspects of the business that can benefit from going digital, whether to fully digitise these aspects or adopt a hybrid approach, the cost and downtime needed to incorporate new processes and putting a finger to how their transition to digital will impact their customers – which would include other companies.
But Chin notes that the main barrier for SMEs remains in changing their mindset to believe in and embrace digitalisation with open arms.
“With technological advances and affordable pricing already in place, plus the fact that consumers have already gone digital, the true barrier for SMEs in going digital is their mindset to seek for a digital change, ” she says.
One key aspect to ensure continued digitalisation, says Chin, is education. Awareness building about the importance and benefits of digitalising businesses needs to be a priority to get more SMEs onboard the bandwagon.
“There is a need to engage with more SMEs to increase knowledge sharing in terms of digitalisation, particularly so in smaller market segments. This is where more industry and government support can be useful.
“For instance, while immensely fragmented, hawkers and micro businesses represent a huge segment that is ripe for digitalisation. More emphasis must be placed in reaching out to and educating this vital segment, especially in the current climate. This fragmented community can only be brought together through government support, ” she says.
Government bodies and agencies are primed to implement large scale outreach initiatives that tap into their data bank of info on rural businesses to deliver impactful campaigns that can meaningfully raise awareness, she adds.
While education is key, facilitative policies can also make a difference.
On this front, Chin recommends a look into mandatory contactless practices. Similar to those that require a fire extinguisher in all premises, there should be an equal push for all businesses to be fully equipped for contactless transactions.
This could be further facilitated by funding programmes from government entities. For example, initiatives to subsidise technology subscription costs for up to one-year could be beneficial for businesses.
The SME Digitalisation Grant and Penjana initiatives have already given the industry a much needed boost, but more of such initiatives would help keep the momentum going forward.
However, it is worth noting that take up for some programmes has been a little slow, which may indicate continued reluctance by SMEs to either digitalise or to utilise the aid available.
Take the SME Digitalisation Grant, for example, which is a collaborative effort between Bank Simpanan Nasional, SME Bank and Malaysia Digital Economy Corporation. A total of RM500mil have been allocated to the grant to help SMEs adopt technology enhancement in their business operations such as the installation of electronic point-of-sales system, payroll, digital marketing, accounting as well as remote working system.
Applicants can enjoy a grant of up to 50% or a maximum of RM5,000 of the total invoice amount.
According to SME Bank, as at Oct 21, it has received 1,141 inquiries on the grant and has approved 148 applications worth RM606,488.48.
Building the ecosystem
While awareness and funding are key, what is also important in helping businesses digitalise is enabling a holistic digital ecosystem. The industry and the government must also ensure that the right infrastructure is in place.
Stable and fast Internet across the country will be a cornerstone to the successful digitalisation of the nation.
“Also, solution providers like us will need to start listening to what’s on the ground, what are their woes and continue to evolve. For instance, while digitalising today is fairly straightforward, many businesses still remain intimidated by the process.
“The industry must strive towards providing solutions that not only address real world business problems but do so in an even more simplified and streamlined manner to overcome this challenge.
“The industry also must not limit itself in the types of services they push when it comes to digitalisation. There is much more than just cashless transactions and the reality is businesses are looking to leverage on every possible digital avenue to grow their business.
“Whether it is in the form of loyalty or rewards services, the industry must be open to adapting to the needs and wants of businesses.
“Revenue Monster recognises the vital importance of SMEs transitioning to digital during this timeframe to ensure business survivability. We believe our approach of comprehensive solutions all under one roof will greatly ease the digitalisation process for many SMEs that may very well be completely unfamiliar with the process, ” notes Chin.
With trends changing rapidly, some businesses will naturally fall through the cracks, especially those that cannot cope or have failed to adapt to the changes in the market. But for those that persevere through their digitalisation efforts, Chin predicts that they will be part of a new vibrant SME landscape in the future.
“One constant that we will see in the next five years is that the SMEs that survive and thrive are going to be the ones that have wholly embraced digitalisation.
“We will see increased competition with SME products and services being offered at even more affordable prices and at better value. As Software-as-a-Service (SaaS) becomes more user friendly, accessibility is going to grow exponentially, enabling users with less technical know-how to fully leverage on the system without the need for major technical implementation.
“Therefore, we will see even more business owners from non-technical, rural or older generation backgrounds utilising DIY digitalisation tools and services, for example, to set up their own online store, ” she says.
Chin also thinks SaaS services will become more connected and integrated, creating a more harmonious ecosystem that better integrates the digital and physical aspects of business to empower SMEs with more accurate and actionable insights that will be crucial to sustain business growth.
“Greater access, control and information afforded by evolving SaaS and digitalisation solutions will give rise to more savvy and clued-in business owners at all levels. Ultimately, I believe this can pave the way for greater partnerships between SMEs and solutions providers to give birth to new intuitive blue ocean solutions that open up new market verticals and revenue streams, ” she adds.