Saturday February 6, 2010
Helping small firms close the technology gap
By DALJIT DHESI
It is surprising to note that information and communications technology (ICT) is not widely used among small and medium enterprises (SMEs). SMEs, incidentally, are the country’s economic backbone and form 90% of all business in the country.
Although ICT spending by SMEs has improved, many continue to lack the skills to make full use of technology.
Various initiatives have been put in place to enhance ICT usage among them, but the adoption rate seems to be slow.
Why is this? NetApp Malaysia country manager Mano Govindaraju estimates more than half of SMEs in Malaysia have not fully embrace ICT or fully comprehend how it can be a key enabler for their business.
Their biggest hurdle is the lack of awareness and education to bridge the proverbial digital divide.
“SMEs are simply unaware of how ICT can be a key enabler of their business. The government over the years has been encouraging SMEs to stay relevant and competitive. However, they are unable to make the leap because their business is just not ready,” he notes.
Cost is also another major concern, says Govindaraju. The common misconception, he adds, is that SMEs feel that technology is a ‘non-essential’ component of their business, that they can afford to defer it.
By the time they realise they have grown large enough to warrant more investment in ICT, it becomes a challenge to manage the infrastructure, Govindaraju notes.
Epicor vice-president (sales) for Asia Bryan Tan concurs. Tan adds many SMEs view ICT investment as a cost rather than a tool that will benefit their business.
He opines that this mindset should change.
“As a person who has been in the ICT industry for more than 20 years, I feel SMEs must overcome the fear of investing in ICT by working with the right partners who are able to understand their business and at the same time, remain committed to them,” Tan says.
Epicor, he says, in terms of industry standards, has a track record of retaining 95% of its customers for the last five years.
With the right software, he says SMEs will be able to have accurate information which will in turn enable them to make quick and precise decisions. Besides reducing wastage, they can also retain people and knowledge within the organisation and be competitive locally and globally, Tan explains.
Although ICT usage has generally increased, Association of the Computer and Multimedia Industry of Malaysia (Pikom) chairman Wei Chuan Beng says it is still lacking.
“A study undertaken by the Malaysia Productivity Corp in 2008 revealed that 52.1% of SMEs do not have a person assigned to handle ICT. And this person is not even someone with ICT skills or knowledge.
“Education is key. Pikom is planning to conduct ICT Success Series Seminars across the country.
“This is targeted to kick off in June involving major cities. This will complement the efforts being undertaken by other parties such as MDeC (Multimedia Development Corp) and SME Corp.”
Wei adds that the adoption of e-commerce by SMEs to expand their businesses is also extremely low.
The Association will embark on an e-commerce campaign to help SMEs better understand the full benefits of e-commerce to their businesses and to facilitate their participation in this area.
According to Tan, SMEs with staff strength of 100 to 200 will probably be less able to adopt ICT solutions. They either do not have the right partners to implement solutions or have an issue with mindset.
SMI Association of Malaysia president Chua Tiam Wee says apart from the large investment required for ICT, there are other issues involved.
This include the investment in time and effort in learning a new technology and migrating from the old technology to the new one. Other issues are the high software licensing fee, choosing the right technology, the lack of expertise and the need to have staff to manage it. Another hurdle to overcome is the lack of trust in the information security.
Massive Internet incidents such as malware, virus, hacking, privacy attacks, online infringement leading to loss of vital and confidential information are some of the major hindrances, Chua adds.
He says the government should work closely with the SMI Association to provide loans, and IT and turnkey solution packages to help SMEs make that leap forward.
In addition, Chua adds the Government should also speed up the provision of high speed broadband coverage nationwide as it will spur and leapfrog the usage of Internet and e-commerce among SMEs.