SMEs and IT

The Economic Times had an article yesterday which had a few quotes from me:

If you were an SME, you almost certainly managed all your business processes manually, the way it has been done very smoothly thank you very much for almost a century.

But now, it is almost safe to say that IT is becoming mandatory even for SMEs. There is a lot to gain by doing it with IT, and IT is becoming affordable.

But like every other investment, one needs to understand the ‘WHY’ and ‘HOW’ and whether ‘WHY’ is greater than the ‘HOW’ meaning whether ‘returns’ justify the ‘investments’.

How would you manage your operations differently if everybody in your organisation had a computer, is the question that Rajesh Jain, MD, Netcore, wants every SME to ask itself. It is not just the automation of flawed processes, but the potential to re-engineer every business processes and the benefits that come along that needs to be considered.

Rajesh points out that there are almost 4m SMEs in India and they employ close to 40m people. But the number of computers in the SME sector is hardly 4m. This means only one in 10 personnel in the sector has a computer.

This hinders collaborative use of IT. Rajesh strongly believes that intense deployment of information technology will help small organisations to grow business and become mid-sized organisations.

And mid-sized organisations, on their part, could deploy information technology to bring in efficiency and cut costs.

One should choose a technology that delivers required functionality at the lowest cost. SMEs should deploy CRM type applications to grow their business, advises Rajesh.

He says that ERP companies are realising that their next growth potential is in small and middle level enterprises and, hence, are tailoring their offerings to suit the SME sector. These typically cost as low as Rs 5 lakh and are certainly affordable.

Vendors, both hardware and software, are gearing up their offerings so that SMEs can spend on IT as if it is an operating expense and not a capital expense. Of course, SMEs have an option to get software developed by an independent software vendor too.

When getting customised applications developed, the focus, Rajesh advises, should be to get the information on the change happening, and not report the norm. The need is to distil information and get the right kind of information. Another good examples of keeping IT costs on the lower side is Crossroads mall and Piramyd group of stores.

Rajesh says that the vendors should gear themselves up to provide hosted IT services to SME clients. SMEs should be able to receive one bill that includes the use of hardware, software and communications.

He says that while the ASP (application service provider) model failed a few years ago, as it focused on organisations that already had IT infrastructure, there is a clear case for redeploying ASP.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.