SMEs tech spend increases but adoption still poor, says IDC
By Edwin Yapp July 3, 2012
- Tech spending for SMEs increased marginally but its general adoption still poor
- Lenovo tries to meet SMEs needs by providing specific designed machines for them
DESPITE the increase in spending over the past two years, small- and medium-sized enterprises (SMEs) generally still seem reluctant to embrace technology on a day-to-day basis, a trend that is holding back the largest segment of the working force in the country, say industry watchers.
Alan Tong, research director at IDC Asia Pacific, noted that SME information and communications (ICT) spending picked up in the past two years, according to its ICT spending data, collated as of April 2012.
In an email to Digital News Asia, Tong said, "SME spending has increased by approximately 4% from 2010 to 2011, and this increase has been recorded across four main sectors: communication, hardware, software, and services."
However, Tong (pic, left) was quick to add that for most SMEs, cost is still a key factor and one of the greatest challenges is to change their mindsets such that they would consider moving away from manual processes to adopting automation.
Tong said that for example, cloud computing for SMEs is not just about lowering total cost of ICT but they must understand how they can depend on these new services to build their business strategies on.
"SMEs' business focus is still weighed heavily in generating sales and profits on the short term. However the cost of labor is no longer inexpensive in Malaysia and the complexity in hiring foreign workers will pose a problem for these companies," Tong explained. "These factors will gradually push SMEs to consider more automation in their organizations."
Tong said there have been efforts to exerted change on SMEs’ mindset through workings with trade associations and the industry community. He added that the government could also contribute to SMEs' adoption of ICT by providing incentives for them to adopt technology and to help them to be more competitive in the global market.
"SMEs must make an effort to keep abreast with the disruptive technology such as mobility, cloud computing, analytics, and social networks if they want to stay competitive in the next few years," he said.
SMEs must take advantage
Khoo Hung Chuan, country general manager, Lenovo Malaysia, noted that revenue generated by the world's SMEs is expected to reach US$1 trillion in 2016, up from US$874 million in 2012, according to data from Gartner.
But despite the whopping spending by SMEs worldwide, many SMEs still do not know how to take advantage of the Internet and what it has to offer, Khoo said.
Lenovo classifies SMEs into three categories: Small Office, Home Office defined between one and nine employees; small-sized businesses, between 10 and 99 employees; and medium-sized businesses, between 100 and 499 employees.
Speaking to the media last week, Khoo (pic, right) cited data from the recently released Google-McKinsey report which noted that 55% of Malaysian SMEs say they do not know how to use the Internet and that 40% said that they do not need the Internet.
Khoo said the report also noted that only 20% of Malaysian SMEs use IT extensively in their daily operations; only 69% of their employees access the Internet; only 14% of SMEs have an online presence; and that SMEs only used 14% of their revenue to invest in technology.
"There are opportunities for SMEs to use IT, especially if they want to expand their markets today," he said. "But the truth is SMEs must use technology to promote their businesses but they don't."
Asked what can be done to address these challenges, Khoo said that Lenovo as a PC maker is doing its best by introducing specialized PCs and laptops designed for the SME in mind.
Noting that many SMEs are not tech savvy and just want to use their machine in a fuss-free manner, Khoo said Lenovo's range of SME machines have the right balance of functionality and budget that would suit SMEs.
"Our machines are optimized for business usage by having robust security features such as self encrypting drives, hardware password manager, fingerprint reader, and BIOS port lock," he said. "
Other features include Rapid Boot, which Lenovo claimed enables 40% faster start up time, as well as Bootshield, a feature that optimizes the machine after installing many applications onto the machine, Khoo pointed out. He added that all these features can be invoked with little or no technical knowledge.
Besides specific machines, Khoo said that Lenovo has launched educational campaigns and customer testimonies in a bid to drive better awareness amongst SMEs in the past 18 months.
"Customers were quite receptive, but adoption was still slow. We've also participated in local associations and seminars, in order to create awareness amongst their members. We will continue to plan for this in the future."