KUALA LUMPUR: Given the right business models and technology strategies, local small and medium enterprises (SMEs) can compete with the big boys in today’s challenging business environment.
According to SAP Malaysia managing director Duncan Williamson, SMEs can 'up their game' and achieve success with real time access to information, and streamline everything from finance to talent management.
"SME’s ‘upping their game’ can only be done through augmenting productivity — being more efficient in their business operations, undertaking cost cutting measures, reducing wastage, investing in energy saving equipment and embracing innovation.
“SMEs must not only think of the present but also anticipate and prepare for the next few years. They must realise that the name of the game is changing amidst liberalisation and other reforms that are taking place in the economy,” he said.
According to the Department of Statistics, SMEs account for more than a third of Malaysia’s economy and recorded stronger growth compared with the national gross domestic product (GDP) in 2016.
SMEs recorded GDP growth of 5.2 per cent compared to the national GDP of 4.2 per cent the previous year, while the SME community’s overall contribution to GDP was at 37 per cent.
At the regional level, SMEs employ more than half of the workforce across Asia-Pacific Economic Corporation countries.
“These companies play an increasingly significant role in the socio-economic development strategies of many countries. For the past three decades, the private sector has been the main driver of economic growth and poverty reduction around the world.
"By helping SMEs scale and grow, governments have been able to increase wealth generation, market access, job creation, and skills development,” said Duncan.
A IDC study found that SMEs which embraced and invested in technology reaped benefits that helped them compete globally: 81 per cent offered employees more flexibility, 74 per cent improved customer loyalty and 72 per cent increased sales and revenue.
“Within the Malaysia context, the government is building an entire ecosystem to help propel SMEs into the future.
"Digital Malaysia is a national agenda that draws from the huge opportunities created by the digital world to harness the country’s ICT capabilities. It is built upon a vibrant domestic ICT industry as well as transformative use of digital solutions by government, businesses and citizens,” said Duncan.
He said digital technology has emerged as a tool that can enable SMEs to gain a distinct advantage in regard to speed, cost and the ease of business.
It has also become a platform for them to break into therefore unachievable markets.
Duncan used the example of local company property management company Global Facilities Management Sdn Bhd (GFM) which had implemented the SAP S/4HANA Enterprise Management System to empower GFM's business users with insights to act 'in the moment'.
“The system is intelligent — going beyond automation to provide predictive suggestions. And it is integrated — not only among GFM's various departments but also with the external business environment.”
SAP S/4HANA Enterprise Management addresses functionality beyond financials, mostly in inventory management and production planning and is a fully integrated system for governance and compliance.
To cover the broad scope of requirements set forth by GFM, modules to support various functions such as finance, sales and marketing, procurement, project systems, inventory and human resource management were included to make GFM more productive and efficient as a business entity.
“The SMEs that see the openings and respond quickly are surging ahead,” said Duncan.
“The trick, however, is not to let complexity creep into the business as it grows. Take family owned businesses as an example – many are moving towards what is described as “third-generation management” and want to truly run as an international companies. They are moving quickly to digitally transform their business and get ahead in the digital economy,” he added.
“Avoiding technology to reduce complexity is certainly not an option. SMEs often get caught in the trap of using one-off IT solutions to meet short term needs. That approach quickly results in problems as more disjointed solutions are added to the mix.
"This is why many SMEs often have the misperception that digital transformation is costly and difficult to manage, or that employees will get bogged down by inefficiency," he said.
“Whether you’re a logistic company competing with disruptors or a food producer looking to reinvent to expand globally — there are enormous business opportunities and cost-savings to reap by using technology to modernise and scale their business, fuelling productivity and growth,” he said.
“There are solutions available in the market that are specifically designed, packaged, and priced for SMEs. These solutions are intended to meet specific market demands with considerations of both privacy and cost to SMEs.
“For us at SAP, we have made some of these tools available on the Cloud platform, which enables us to drastically reduce the cost of ownership to benefit SMEs. This helps them to ease their minds in terms of equipment acquisition and maintenance, while at the same time allowing them to retain ownership and storage of their private data,” he concluded.