SME must adapt – “Digital economy” is inevitable
Globally corporations are busy in digital transformation. Some are at mature stage in this journey some are at early stage. The force multiplier is the changing nature of economies world over. Almost all country level economies are progressing with greater velocity towards a phenomenon called “digital economy”. The paradigms of Artificial intelligence, Machine learning and iOT have accelerated this transformation. No country wants to be left behind. “Digital economy is inevitable”.
India an Emerging Digital Economy
India is quickly transforming in to a mature “Digital Economy” with government having implemented many large platforms including GST, Aadhar, UPI, Gems portal etc.
Cashless economy is growing driven by Direct Benefit Transfer (DBT) and UPI led bank to bank transaction. Multiple means of Cashless payments using mobiles have come to mainstream and are growing every day.
Use of technology is growing across sectors including agriculture, healthcare, education, logistics, energy and financial services.
India has world’s 2nd largest internet user – 560 million, 43% of the total use broadband. “Digital India” is an ambitious program of Government of India with further boost the penetration of Internet in rural areas. According to a McKinsey Global report released in May 2019, India has the potential to add about 275 million internet subscribers by 2023, to reach a total of more than 835 million subscribers. Smart phones may double by 2023. As a result, overall economy will get a boost to a 3 to 5 Trillion economy by 20025.
SMEs needs to transform to “digital SME”
In contrast, there is very low penetration of information technology in SME sector of India and hence very low digital adoption. According to a Google and KPMG study (January 2017) out of 51 million SMEs contributing 37.5% of GDP and employing 117 million people, only 2% of SMEs are engaged i.e. fully digitally enabled.
SMEs can’t afford to miss the bus. Rather must rise up to contribute to the national goal set for $5 Trillion economy and be the largest contributor to “Digital Economy” in coming years.
“SMEs need to adapt to emerging “Digital Economy” and become digitally enabled –Digital SMEs grow at 2X faster rate comparatively, owing to higher efficiency, productivity and reach”
What is there to gains or lose by not being DigitalSMEs?
There are two challenges SMEs face in near to medium term.
One, with other businesses in eco-system adopting digital systems, it will become difficult to do business from all functional perspectives from marketing to retaining customer, from customer support to supply chain and from employee satisfaction to legal compliance.
The early adopters of digital solutions like cloud-based CRM, ERP, HRMS will take a clear lead in times to come. Those adopting digital cloud-based CRM will be able to map and track their Salesforce productivity and remove inefficiency. Similarly, a SME with smart HRMS having employee portal login will create a much higher satisfaction in employees
Almost all G2B (government to business) digital platforms e.g. GST will gradually require a deeper digital connect with businesses, with a principle for transparency in compliance and in return offer a lot more “ease of doing business”. These systems will also eventually offer higher value adds like easier access to finances based on verified performance on GST like platforms.
“DigitalSME” is not a one-shot implementation. It is an evolution from traditional business to a digitally enabled business. The degree of adaptability may vary, but there is a clear gain in adapting to “Digital Economy” for all size of MSMEs, be they micro, small or mid-size businesses. Earlier the realization and acceptance, better is the gain of this transition. However, it almost a necessity in times to come. Also, the new growth mantra is “Digital”. Hence, be a digitally driven efficient business, growing in the mainstream of future economy.
Disclaimer: Excelict is a professional services organization providing innovative value services to businesses. This blog is written by digitalSME team based on general awareness for benefit of audience i.e. small and medium businesses. There is no attempt intended here to duplicate efforts of other. The intention here is to create a progressive SME eco-system.