TECH TALK: SMEs and Technology: The Twin Traps

SMEs in emerging markets (SMEEMS) are caught in two traps: a technology trap and a marketing trap.

Here is how the technology trap works. SMEEMS spend little on technology. Therefore, they tend to not be able to use the most optimum solutions for much of their business. Personal, group and enterprise productivity is not able to benefit fully from the use of IT solutions. Hence, their growth tends to be slower. As a result, they are also unable to invest in the new technology solutions which could help put them on the fast track.

The technology trap hurts SMEEMS in another way. An application like messaging rarely works well if only a few people in the organization use it. And yet, that is precisely what happens because computers are either shared or not available to everyone in the enterprise. The result is that even the few applications used are not very effective. So, even the technology used is sub-optimal.

For SMEEMS to break out of the technology trap, the goal should be to make a connected computer available to every employee in the enterprise. For this to happen,
they need cost-effective, whole solutions which can show quick return on investments. For example, if computing (hardware and software) and Internet connectivity could be provided at a cost of Rs 700 (USD 15) per employee per month, then it may be easier for the SMEEMS to justify the investment with the reasoning that even if the productivity of their staff goes up by no more than 10% (assuming minimum salaries of Rs 7,000), then the payback is immediate.

The marketing trap comes about because SMEEMs spend limited money on marketing (ads, PR, branding) which limits their reach to potential buyers which in turn limits their new business opportunities. The products and solutions are there, what is missing is the knowledge of who it can be useful (the prospects). The options are few – build a direct sales team or set up a channel. And then, perhaps back it up with some advertising – which is very expensive. Of course, if there was enough business being generated due to the ads, it would be another story, but in most cases, that does not happen because SMEEMS typically do not indulge in repeated advertising. The result: SMEEMS face limited growth because few prospective buyers know about their solutions.

This then is the challenge before us: how can the new innovations and technologies that are being created be applied to SMEEMS to get them out of their technology and marketing traps, and on the growth path. This is at the heart of where I believe the next opportunities in technology lie. The SMEEMS comprise the invisible market of technology not only are they SMEs, but they are in located in the worlds emerging markets, far away from the rich markets of US, Western Europe and Japan.

Next week, we shall see how new technologies can help create an alternative technology and marketing platform for SMEEMS.

Next Week: SMEs and Technology (continued)

TECH TALK SMEs and Technology+T

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.