Small and medium-sized businesses (SMBs) now recognise the need to leverage digital technologies to become more competitive in Asia Pacific, placing the channel in pole position to initiate change.
According to IDC findings, 84 per cent of SMBs in the region acknowledge transformation is required to improve internal processes and operations, with 39 per cent of companies already executing on strategic plans of action.
Meanwhile, a further 42 per cent of SMBs “are planning to start”, with top priorities during the next 18 months centred around improving revenue growth, increasing efficiency / productivity and reducing costs / expenses.
“SMBs are driven by an entrepreneurial mindset and possess the appetite to compete, grow, and succeed," said Daniel-Zoe Jimenez, associate vice president of Asia Pacific at IDC. “Growth and profitability are the primary goals of any SMB; however, when it comes to technology, these smaller businesses are generally not as progressive or innovative.
“Due to their size, they face unique challenges such as skills shortage, low technology adoption, and low process automation, as well as difficulties in accessing capital funding.”
Jimenez said that “widely available and easier to consume” digital technologies are now levelling the playing field between multinational corporations and SMBs across the region.
“The market has reached an inflection point in 2019, forcing SMBs to act,” Jimenez added. “Driven by the evolved state of digitalisation of the SMB ecosystem and the opportunity presented by digital technologies to amplify capabilities and competitiveness, SMBs must progress and evolve towards becoming ‘Future SMBs’.”
As explained by Jimenez, a ‘Future SMB’ is defined by IDC as an "ecosystem and technology-first organisation" that can amplify its presence and capabilities for "sustainable business growth, productivity and competitiveness".
Furthermore, it is "data-driven, customer-centric, highly automated" and takes an experiment-learn-iterate approach to deliver break-through solutions and create new markets.
“SMBs must take their drive to grow their business as the same impetus to digitalise,” Jimenez said. “They must recognise that their competition and ecosystem are transforming, and they must keep pace in order to survive.”
On the flip side however, IDC identified the top three challenges impacting SMBs in Asia Pacific today, amid plans to adapt a “digital-first mindset”.
The first barrier to adoption is balancing product / service quality and growth, followed by cashflow and challenges in hiring / retaining talent and improving brand awareness.
“Amidst these challenges, we are also seeing growing opportunities for SMBs,” said Celeste Narvaez, senior program manager of Asia Pacific at IDC.
“The rise of the new digital economies, such as the last mile economy (use of delivery services), the gig economy (tapping freelancers to fill in talent gaps in SMBs, and the marketplace economy (proliferation of marketplaces where SMBs can offer their products and services), will force SMBs willing to benefit from the opportunities presented by these new economies to make investments in digital technologies, and become them more competitive.
“We expect 60 per cent of SMBs in Asia Pacific will be well along in their digitalisation journey in the next three to five years.”