Tech, innovation key to growth, profit
Tech, innovation key to growth, profit
The article is published in The Business Times on 27 October 2015.
Adoption of social media and cloud computing are among ways that can help SMEs become a disruptive force.
FROM our travel and commute options to our vacations to the way we seek new relationships, technology has given us a breadth of choices and made access to them easier. All around us, we can see industries which have been or are in the process of being disrupted.
Perhaps what is less obvious is not how being "online" has changed retail, but rather the conceptual change behind retail which technology has made possible. Digital technology is therefore the great competitive leveller. Just as the rise of social media has changed how we interact with people, rapid advances in digital technologies are also bringing upon us changes in how we work, and gradually change our global business environment.
Access to technology, great ideas and an increasing spirit of entrepreneurship have allowed smaller and more nimble startups to help solve business problems. Therefore, as we increasingly operate in a digital economy, how companies operate in the future and the business models they deploy will also need to be more innovative and adaptive to change.
Too small for digital economy?
Small and medium enterprises (SMEs) have the huge potential to shape local economies around the globe as we see their ideas come to life today. Lifestyle choices are being radically altered with a multiplicity of new products that add convenience and fix problems in all areas of business.
SMEs grapple with a similar suite of issues that multinationals also manage. These include overpowering globalisation and newly empowered customers in emerging markets and fast-changing technologies.
Addressing these complexities requires a shift in the power dynamics of an organisation. It also requires companies to be aware of challenges with technology including enhanced product and service development, supply chain optimisation and delivering better customer service.
Although this evolution cannot happen overnight, here are some steps that can help your company achieve this state to become a disruptive force.
- Transformation as the turning point. SMEs will need to have an overview of change across their enterprise and strategy, and have a clear understanding of what needs to be changed to contribute to the strategic direction of the business.
Approaching transformation could come in the form of expanding or entering new geographic markets, creating a culture of innovation and investing in new technologies that apply best to their capabilities.
- Social media. As social media is primarily people-dominated, you will have to better leverage it to encourage employees to embrace social media and drive cost efficiencies through social media channels
- Commoditisation of technology. The greatest promise of technology is what it offers for us to "commoditise" our services. This process involves making a company's basic service offerings more accessible and affordable by massive standardisation and then using digital channels to deliver these to a wider market in ways we could not do before.
The lesson here is to build value around technology, such as focusing your technology development efforts on how to augment existing commoditised technology and to be always innovating.
- Cloud computing. Cloud computing is a core technology that has created a level playing field for SMEs by providing access to markets, capabilities and services, which previously only multinationals could afford. It helps SMEs gain a competitive advantage and integrate and streamline business processes and mobility. SMEs can also benefit from cloud-based communication services such as Voice over Internet Protocol for interaction and collaboration globally. Digital prowess provides access to a larger talent pool globally and facilitates mobility.
- Internationalisation. Having a global business mindset will allow you to learn more about other clients and markets, assessing the capacity of competitors at a global level in a particular industry.
Venture capital is integral to the growth and expansion of SMEs. A KPMG Global report revealed that Internet and mobile startups in Asia took a combined 82 per cent of funding in the region compared to 65 per cent in North America and 74 per cent in Europe. Asia's growth is promising and complex and venture capital could fill in the gaps to prevent growth from being hindered.
- Financial support. In Singapore, there is a strong support for SME financing. This includes the Business Angels Scheme and the Innovation Development Scheme introduced by the Economic Development Board and Spring Seeds and the Growth Financing Programme, both under the care of Spring.
Apart from issues with financing, SMEs often have to battle insufficient skills and technology, high transaction costs, unclear property rights and inadequate market access. You may also find it difficult to understand what support the Singapore government can offer your business.
Innovate to pause disruption
SMEs by and large need to master mobile, analytics and cloud computing to gain a competitive edge in an overcrowded industry and successfully deliver what customers are seeking.
Through adopting technology and making it fit for purpose, SMEs can boost innovation, strengthen customer interactions, improve your business' agility and competitiveness, and develop a reliable and unique relationship with your markets.
Being able to leverage technology and build innovation successfully will also help SMEs bridge the gap between venture creation and knowledge creation. This will also help you accelerate the conversion of ideas to market-ready enterprises.
Greenpac is a homegrown green packaging company that has carved a niche for itself in offering customised eco-friendly packaging. The Enterprise 50 Award winner keeps up with the growing demands of its customers through a fully integrated accounting and management system.
According to Spring Singapore, more than 600 food and beverage outlets have implemented some form of digital service solution to boost service excellence and better serve their customers.
Clearly, technology adoption has gained significant traction in Singapore. Combining the merits of both innovation and technology will allow SMEs to sharpen growth, stimulate profits, execute consistent and smart ideas and build capable and mobilised firms.
The article is contributed by Mr Chiu Wu Hong, Head of Enterprise at KPMG in Singapore. The views expressed are his own.