My latest article in Business Standard:
One of the last frontiers at the intersection of business and technology are small and medium-sized enterprises (SMEs), especially those in emerging markets like India. SMEs are the largest employers in every country. Yet they are today the weak links in business value chains as their processes are still not digitised and information flows are still largely manual and paper driven.
SMEs have been slower to adopt technology than their bigger brethren. SMEs typically have low penetration of computers, limited use of business software, information that lags behind reality and websites that are not updated. In other words, there is a disconnect between business and technology usage in SMEs, leading to operational inefficiencies, lower profitability and slower growth.
Just as emerging markets can leapfrog to a higher stage with the use of the newest technologies (like India has done in telecom), so can SMEs. The dramatic and continued improvements in information technology over the past decade have resulted in commoditisation at the hardware and software level, making it affordable for emerging enterprises.
New technologies appropriately leveraged can help SMEs in modernising their operations and creating new opportunities for sustainable growth. Technology to improve operational efficiency needs to work at three levels:
IT Infrastructure: Affordable computing solutions like thin clients, server-centric computing, open-source software, remote management and mobility integration can help build the right base for 1:1 computing (one employee, one computer; one office, one server) within SMEs. Cellphones can provide real-time access to business information from anywhere and at anytime. Multiple office locations can be connected together via a virtual private network (VPN).
Collaboration and Communication: A computer for every employee can make individuals more productive. For the enterprise as a whole to be more productive requires software that makes teams work together better. Collaboration software in the form of weblogs and wikis can help in making groups work together in distilling tacit knowledge. E-mail, enterprise instant messaging (IM) and voice-over-IP (VoIP) can assist in facilitating low-cost real-time interaction among employees, partners and customers.
Business Process Automation: With a computer for every employee, SMEs can think of their business processes very differently. Information flows across the organisation can now happen in near real-time, layered on web services and service-oriented architectures. Business process standards like ebXML and RosettaNet can help in information sharing beyond enterprise boundaries.
Taken together, this provides the right technology platform for SMEs to build their business:
Technology can also help in opening up new opportunities in two ways:
Information Dissemination: One of the biggest challenges that SMEs face is getting prospective customers to know about their existence. While websites that are updated regularly are the starting point, CEO weblogs can amplify the message. A CEO weblog helps build direct communication channels to prospective partners and helps the SME to distinguish itself from others, based on its knowledge of the industry in which it is operating.
Information Access: SMEs need to use the resources available on the web more effectively. This can provide market intelligence, track the competition and identify possible business partners outside the local area. What the web and search engines have done is reduce the friction in finding information. For example, when going for a meeting, it is now possible to Google the person and company so one is much better prepared.
The right use of new technologies can help SMEs bridge the gap with their larger competitors and help make them into intelligent, real-time enterprises. Ciscos CEO John Chambers called productivity the new engine of wealth. Productive SMEs powered by new technologies can be the growth engines for their economies.
What is missing? The big enterprises have consulting organisations, IT services companies to complement their in-house IT staff to identify and deploy solutions. SMEs are handicapped by their small size and limited budgets, besides being much harder to reach. As a result, they have little help in their technology deployment. There is a need for full-service IT organisations focused on SMEs that can understand business requirements, suggest solutions, help in the implementation (based on standardised technology components) and provide outsourced management of the technology infrastructure.
This is an excellent opportunity for mid-tier Indian IT companies. If they can create the right solutions for the bottom of the enterprise pyramid, a market of three million SMEs in India and another 50 million outside India is waiting for them.