Digital transformation could safeguard the future of SMEs

We are living through the fourth industrial revolution. It is a revolution that entrenches the use of digital technologies to connect the world’s devices and peoples. Any business that wants to guarantee its future needs to adopt and adapt or die.?

How can small and medium enterprises use the emerging digital landscape to their advantage? This was the question explored by the Blaze with Telkom Business Conference, in partnership with Business Day .?

Makgosi Mabaso , Managing Executive for Consumer and Business Broadband Solutions at Telkom Business ZA emphasised that in her keynote address, digital transformation offers SMEs capability to leapfrog to compete with corporates and larger enterprises, by expanding access to markets, different types of funding opportunities and opportunities to acquire new skills.??

The panel discussions that followed provided further insights on the context, opportunities, challenges, and solutions available for SMEs to bridge the technology gap and ride the wave of 4IR into a successful future.?

Digital technology is changing the face of small business?

Change is afoot, and SMEs can’t deny the reality because technology is changing the face of small business in a big way, according to Machaka Mosehana , Director of Centre for Entrepreneurship at the Johannesburg Business School (JBS) .???

Machaka explained how the COVID19 was a good example of the pressure on SMEs to digitally transform because the pandemic compelled small businesses and corporations to automate which required businesses to adopt remote working and digitizing strategies. Unfortunately, many SMEs failed to adapt and to pivot during that challenging time.??

“So, we had to look at ourselves as professors of practice and even the incubation spaces and accelerators, how is it that all the interventions that we have done didn’t prepare our own small and medium enterprises to face this volatile and ambiguous environment that they found themselves in. Such that most of the businesses, because they couldn’t pivot, and because they couldn’t adopt digital technologies at the time, they shriveled and faded”, Machaka reflected.?

Part of the challenge with equipping SMEs appropriately lies in access to the relevant technologies to bridge the technology divide.??

Thabiso Mongane , Client Relations Officer at 4IRI - 4th Industrial Revolution Incubator , noted that most technologies are protected by intellectual property laws, including patents, which make the cost of acquiring these technologies exorbitant for cash strapped small businesses, and so more open-source options need to be availed to assist SMEs to access innovation and digital transformation.??

If open-source technologies were ubiquitous, it would be easier for SMEs to adopt and use digital technologies in their businesses at a fraction of the current cost.??

However, cost is no longer prohibitive because technology is now sold as services that businesses can subscribe to, they no longer need to invest in expensive hardware.?

Karen Luyt , Expert Solution Architect at Business & Digital Advisory, BCX , observed that sometimes SMEs don’t think they need digital when they consider their product and service offering. However, digital transformation is also about improving the way SMEs work and so they need to consider how it is that digital technology can assist with the administration of their businesses and bring greater efficiencies.??

?Theory versus practice?

Tshepo M , Head of Business, Innovation and Entrepreneurship at SADC Youth Forum, noted that experiences in the SADC region show that young entrepreneurs can compete with large corporations by incorporating artificial intelligence into their businesses, because 4IR is democratizing access to information and expertise.??

It's one thing to have access to technologies and a whole other matter to know how to use it. Skills and expertise can also become a hurdle for SMEs who want to innovate and take advantage of 4IR.?

“SMEs are always faced with the challenge of adopting new technologies and the expertise to use those technologies… There is a huge skills gap in the country, and that’s represented by the structural state of unemployment where there is a huge demand for specific in-demand skilled jobs – cyber security, web development – but our labour force is just not in the position to take up those job opportunities”, explained Kgololo Lekoma from Product and Sales at CREDIPPLE .?

Machaka proposed that to address this failure, universities must revisit their training modalities by decolonizing how they impart knowledge and creating learning environments that enable SMEs to translate what they are learning to their immediate contexts.??

But SMEs don’t have to see the skills gap as a barrier. According to Strini Mandri , Head of Medium Business and Diversified Sales at Telkom Business, instead of trying to hire skilled talent, SMEs can leverage on other businesses that provide 4IR related expertise as their core business.??

A comprehensive approach to bridging the digital divide is needed?

Nevertheless, bridging the digital divide does not only lie in what SMEs are doing and can do. There are structural concerns, particularly the availability of adequate infrastructure.?

It is mostly the larger privately owned entities that are actively investing in infrastructure, as a result, decisions on whether and where to invest in infrastructure, is influenced largely by the profit imperative rather than social outcomes.??

“If you’ve got a commercial outcome versus a social outcome, there has bound to be conflict”, reiterated Lunga Siyo , CEO of Telkom Consumer and Small Business. Therefore, the government needs to co-invest and partner with the private sector to address this challenge.?

Making a business case for digital transformation in SMEs?

For SMEs and corporates to see the value of adopting new technologies, it is important to demonstrate that they can be used to address their challenges and positively contribute to their bottom line.??

Hepsy Cingo Mkhungo , Co-Founder and Director at One Linkage highlighted that SMEs are tired of being empowered and trained through the enterprise support and development programmes and then not be given access to opportunities and markets where they can grow as going concerns. Digital transformation needs to respond to this challenge.?

Additionally, SMEs want to know how adopting digital technologies will improve their capacity to deliver on their purpose for existing. Like all businesses, SMEs provide products and services to solve specific problems faced by their customers.??

To bridge the digital divide, Siyo emphasized because SMEs exist to sell their products and services to consumers the approach to digital transformation needs to address the need to connect SMEs to tech savvy consumers to sustain their businesses into the future.??

To watch the Blaze with Telkom Business Conference, click here.??

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