The importance of small and medium businesses (SMB) to the economy is readily recognized, as is the need for them to undergo digital transformation in order to stay competitive. We reached out to Cisco’s Bidhan Roy, Head of Small Business for APJC at Cisco, to discuss how SMB can best undertake this necessary, but often daunting step. We also heard from Poh Shih Yin, Director of Seng Hua Hng Foodstuff Pte Ltd, a company who partnered with Cisco for their digitalization process. She generously shared with us both the benefits and challenges they encountered on their journey.
Digital Transformation: a “painful” necessity?
As Bidhan reminds us, “according to the Asian Development Bank, SMBs account for more than 98 percent of all enterprises and make up about 60 percent of the national labor markets in the region. In Singapore alone, they account for half a trillion dollars of the GDP.”
The digital transformation, according to Bidhan, promises many things: a more level playing field with larger competitors, the ability to scale across borders, greater efficiency and better customer experience. It can also help with employee retention, relieving them from mundane, administrative tasks to focus on more value added functions: particularly valuable in SMBs where employees often cover multiple remits.
However, Bidhan cautions that SMB leaders should be prudent in their digital transformation, looking at it as “a gradual journey consisting of many small steps, instead of one giant leap.”
He advises leaders not to be “intimidated by the word ‘transformation’ – while the phrase suggests something radical and pricey, the reality is that digital transformation can be both incremental, and focus on simple, well-researched solutions that need not cost the world.”
Targeting relevant areas for digitalization
The need to digitalize was recognized by Seng Hua Hng Foodstuff, who saw it as a means to encourage their growth and address the issues they share in common with many SMBs in Singapore: “aging workforce, human resource crunch, rising costs“.
In a move echoing Bidhan’s advice, rather than making drastic changes at all levels, they reviewed their processes and assessed the crucial areas where digitalization could alleviate their problems, or help them better manage their business.
In particular, taking note of the need for a more robust and agile planning and making process as they grew, they converted all their paper records into “a digitized system that would allow us to have correct real time information for all our business needs.” In the longer term, the company is exploring using artificial intelligence for “more accurate forecasting of our sales demand, and better resource planning in our production, translating into higher revenue and better profitability.”
Digitalization for the long term
Beyond making day-to-day operations more efficient, digitalization plays a part in a company’s long term strategy. Bidhan Roy advises that “the [business] leader should have a clear vision of what they want for the future of their business, and work in increments towards achieving that goal.” He or she should consider the core strategy of the business and how digitalization effectively addresses the needs of their employees, clients, vendors and partners.
Seng Hua Hng Foodstuff currently uses digitalization to achieve greater efficiency and do more with the same resources. This agility is key for their internationalization plans. The company also considered how their transformation makes them more attractive to the next generation of talent.
“Many young people now like to join start-ups and technology companies. Food manufacturing is considered as traditional business. We believe that as we digitalize our business, we can also attract younger employees who want to learn and grow in a progressive work environment,” said Shih Yin.
Overcoming challenges moving forward
Yet despite the importance for SMBs to digitalize in order to stay competitive – perhaps “more important for smaller organisations than larger ones,” as Bidhan Roy suggests – it is not always smooth sailing. He emphasizes the need for strong leadership who “are not only responsible for setting a great vision and strategy, but for helping to operationalize it in order to achieve the best outcomes.”
He elaborates that “they are willing to be accountable for the success of projects, and will admit when things aren’t going to plan so the team can quickly move on to Plan B. And they’ll explore alternative options in order to find win-win situations. After all, when SMB resources are so limited, it is important to get it right as quickly as possible.”
At Seng Hua Hng, Shih Yin describes, the leadership comes from a core management team who drives change and communicates to middle management, who are quick to adapt. For the company, the challenges usually involve the rank and file employees and older employees who are more fearful of change. Shih Yin feels this is “understandable”.
“They have been doing the same thing for a long time, and do not see the need for change. With digitalization, employees across all functions and ranks are impacted,” she explains.
The company’s approach is to overcome these issues through patience and understanding, making sure that no employee is left behind:
“We have to first explain to them the need for change, and train them on usage. There will be teething issues which we have to overcome with them, and a lot of patience and explanation is required. When they see the positive results, they are convinced, and will be receptive to the changes required,” she says.
“However, the truth is that there will be some older employees which will not be able to keep up as they are illiterate and unable to operate these digital devices. For these cases, we will have to make changes to their roles, and keep them in functions where their experience matters,” she adds.
Digital transformation, although supported by various government schemes and facilitated by established providers, can still feel a daunting task. A realistic focus on the most pressing business concerns helps it become more manageable.
At the same time, thoughtful consideration about the people impacted both inside and outside the company goes a long way towards addressing the concerns of those resistant to change.