Monday, January 09, 2017

Can Small & Medium Enterprise leverage Digital to achieve their full potential ?

The SME segment globally is the vehicle for growth contributing as high as 90% of GDP in some developing economies; they are also the largest employment generators for countries. Impact of any macro-economic activities are felt quickly by this segment especially when negative while they take some time to see an upside. Digitalization of the world and every industry has created opportunities in plenty for scale and disruption, the small and medium enterprises have mostly struggled to take advantage.

Most SMEs aspire to scale and become big enterprises; they are constrained by many factors – some within their control, some that they don’t and some that can be addressed with help. The recent brouhaha about Digital has resulted in consultants mushrooming with all kinds of services and offers. Owners shying away from the large names and mostly technology agnostic and ignorant, based on their understanding engage the consultants with mixed results; this is where good news now appears on the horizon.

Last week the CEO of a global IT superpower – Google – visited India; much covered by the media and debated on social media. Government functionaries welcomed the announcements on launches that help the majority of SMEs in their quest to derive benefits in the Digital world. The assumption is that technology availability to the masses will help reduce the gap between the technology haves – the big enterprise and the have nots – largely the SMEs; thus this step is seen as positive stimulus for the industry.

Interestingly the technology announcement also included a training program with certifications from Google, an institute and industry body. The workshops thus planned should trigger trials which will require support for sustaining the effort to keep the momentum going. SME business are typically Digital migrants and thus a big opportunity; trust deficit has been the constraint in their adoption of technology solutions and the fact that they do not have internal resources who can lead the way in their digital journey.

As an extension of the "Google My Business", the "Digital Unlocked" from Google is a big step forward. I believe that for this initiative to succeed, there needs to be a significant push towards publicizing the availability of the curriculum and benefits to the adopters especially the segment that is still not connected. Proliferation of the initiative through various channels will help the cause of democratizing the Digital India initiative. Future promise of tools should aid overcoming the starters block with simplicity and ease of use.

Current estimates that less than ten percent of SMEs are digitally enabled thus leaving a huge opportunity; the potential impact can be significant with increase in numbers and the ability to serve newer markets and customers. A report by KPMG predicts a direct correlation such that democratization of the digital platform will increase SME contribution to the GDP. They can definitely provide much needed stimulus to the economy in the currently constrained sentiment driven consumption post demonetization.

I believe that the entrepreneurial spirit will also see the rise of service providers who will master these tools and provide services to the SME sector. Over time this should have a multiplier effect on the services market with the cascading to B, C, and D class cities and towns. Availability of internet connections is slowly and steadily improving beyond the 2G speeds with the proliferation of new service providers as well as upgrades undertaken by the incumbents; we are at the cusp of a new world, let’s all become the catalyst !

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