APAC SMEs adapting well to COVID-19 business environment

Photo by Christina Morillo

SAP SE has unveiled findings for the study Digital Resilient, and Experience-driven: How Small and Midsize Organisations Can Prepare for the New Economy. The study highlights how small and midsize enterprises (SMEs) in Asia-Pacific (APAC) are uniquely positioned to adapt and thrive in the dynamic and distributed post-COVID-19 business environment.

Conducted in collaboration with Oxford Economics, the study also delved into the priorities, challenges, and digital maturity of SMEs in the Americas, Europe, and APAC. Of the total 2,000 respondents, 832 respondents were from the following APAC markets: Australia, China, India, Japan, New Zealand, Philippines, Singapore, and South Korea.

Adapting To The New World Of Work

According to the 240 that responded to the series of COVID-19 questions, APAC SMEs are well positioned to adapt to a remote working environment by taking swift actions to implement and adjust remote work arrangements for employees in response to the onset of the COVID-19 pandemic. 77% reported that they adjusted remote work arrangements for employees in response to COVID-19, as compared to respondents in Europe (75%) and the Americas (71%).

Additionally, 61% of APAC SMEs surveyed created remote work set-ups for employees during this period, while 69% invested in IT and collaboration solutions to support remote access and/or online learning. Interestingly, 10% of APAC SMEs reported that the pandemic has no impact on their ability to accommodate remote work and maintain employee productivity.

On top of supporting business continuity during this period, many APAC SMEs are also actively exploring new channels to get their products and services to customers (66%, vs. 64% in the Americas and 59% in Europe) and developing new products and service offerings (46%, vs. 40% in the Americas and 49% in Europe).

“SMEs across the region—like their counterparts around the world—have certain advantages over larger competitors in terms of agility and closeness to the customer,” said Edward Cone, Editorial Director of Thought Leadership and Technology Practice Lead at Oxford Economics.

“Yet even before the pandemic, SMEs in APAC also faced meaningful challenges in keeping up the pace of digital transformation.”

Lastly, it was revealed that COVID-19 has significantly impacted APAC SMEs’ ability to compete with larger companies within the same industry, with 45% of APAC SMEs reporting that the pandemic has had a significant effect on their operations and strategies in this area.

COVID-19 has also affected the ability to operate at full capacity (45%), the ability of the supply chains to keep up with demands (40%), and the ability to keep existing customers (40%).

Some respondents reported that they had to completely restructure business strategy and operations in these areas to mitigate the impact of the pandemic

Anticipating The Road Ahead

Prior to the COVID-19 outbreak, SMEs in the region reported being optimistic about their long-term prospects. Many APAC SMEs expect that over the next three years, their market share (62%), budget/revenue (76%), number of full-time employees (59%), and profitability (78%) will increase somewhat or substantially.

Looking ahead to the next three years, APAC SMEs are prioritising improving the customer experience (40%), growth (38%) and attracting new customers (28%). APAC SMEs believe that the key to providing high-quality customer experience lies in high-quality products and/or services (70%), fast and convenient delivery (64%) and competitive pricing (62%), with the customer-service business function bearing the most responsibility for delivering those experiences (cited by 70% of APAC respondents).

Upgrading analytics on customer data is viewed as a go-to strategy to improving customer experience: 28% already have done this across the organisation, and 52% have started to.

Staying The Course On Digital Transformation

With technology set to play an increasingly critical role in helping APAC SMEs achieve business success in the new digital environment, the study also took a closer look at digital maturity levels of these businesses across the region.

Many APAC SMEs say they have made moderate progress toward digital transformation (39%), and 21% have made substantial progress or completely transformed; within three years, 19% expect to have completely transformed.

In terms of technological adoption, HR/Talent management software is furthest along (66%), followed by Governance and Cybersecurity software (63%) and Finance and Risk management software (59%). Respondents reported that these technologies are either in use in some applications/projects or are already in use at scale.

Mobile devices and mobile business process enablement, and business management solutions (ERP software) share the top spot in terms of pilot implementation, and APAC SMEs are actively considering emerging technologies, AI/ML and Internet of Things (IoT) as their main investment priority.

Obstacles To Overcome

The road to success does, however, bring challenges. Today, APAC SMEs consider the upskilling/reskilling of the current workforce (30%), lack of coordination between different departments (29%), and inability to gain insights from data (28%) as key internal challenges. In terms of external challenges, APAC SMEs cite changing customer wants and needs (40%), competition from larger organisations (39%), and adapting to a rapidly changing marketplace (27%) as obstacles to their business success.

“Today’s new normal requires businesses to pivot and adapt with speed. SMEs in the region seem to understand that the sense of urgency to digitally transform their businesses will give them an advantage through the pandemic and beyond,” said Claus Andresen, SVP & Head of General Business (SME) and Emerging Markets Growth, Asia Pacific & Japan.

“With the adoption of an intelligent enterprise strategy, SMEs can establish a digital core that will power the entire organisation, embedding data-driven insights and decision-making processes across the business. This is crucial in enabling business agility, further strengthening the ability of SMEs to adapt to dynamic market conditions.”

“I am confident SMEs in the region will be able to emerge stronger, having forged closer bonds with customers and employees while developing innovative services and products that will put them on a strong growth trajectory as the world economy recovers,” concluded Andresen.