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Technology

ICT Enables you to Move to the Next Level

Jagat Shah
Oct 2011

Two years back, I was invited by a trade association in Punjab to talk to their members on two issues : 1. practical & quantifiable benefits of using Information Technology ( IT ). And 2. How can use of IT help them in their export market entry efforts.

I prepared well & presented my thoughts in a two hour talk to a gathering of 110 business persons from SME's. They all liked the presentation & I fielded several questions in the Q&A session.

Then I asked a few questions like :

How many of you have an email ID ? About 90% of them raised hands.

How many of you have an email ID related to your company website ? About 50% of them raised hands.

How many of you have a website ? About 50% of them raised hands.

How many of you do regular search engine optimization ( SEO ) of your website ? About 20% of them raised hands.

How many of you have received overseas business enquiries through SEO ? About 20% of them raised hands.

How many of you have electronic brochures hosted on your websites ? About 10% of them raised hands.

How many of you have received overseas orders through such web related efforts ? About 10% of them raised hands.

The declining percentages of replies rang several bells in my ears.

In the evening, I was then invited to a party and the president of the association came to pick me up from my hotel in his car. I realised that he was one of the persons who had said that do not do any SEO of their website. So while he was driving me to the party, I asked him why he was not doing any SEO ? He said it is costly & not very effective. I asked him if he has never done, how does he say that it is not effective ? He said, “that's what I was told by my industry friends”. I enquired further that why would your competitors share their success strategy with them. Why does he not try once & if it fails, he can drop it ? He said its costly. I asked him “ How much does it cost” ? He said he does not have exact idea. Then I remarked to him that the car he brought to pick me up was a Mercedes, right ? So how much did it cost ? He said Rs. 45 lakhs !

Over the last few decades, ICT has taken on a significant support role for business activities. In most cases, it has become a key enabler for competitiveness, achiever of better quality of service, lower processing costs or even better support for MIS. In some cases, ICT has been at the heart of the business model, offering new ways of doing business or even being incorporated into the very nature of the business itself. Making the right choices and investing in the right technologies, in proper domains, requires a good understanding of the opportunities offered.

On the other side, the economic environment has changed over the recent years and companies have adopted different strategies to further develop or maintain their market share or even to extend and enrich the business.

There is empirical evidence of certain combinations of business and ICT strategy achieving better scores. More importantly, it is how ICT investments by SME's are defined and the maturity of the ICT service-delivery assessed. That will influence the ultimate score. The survey confirms that SME owners who want to provide their business organizations with greater value-added services need both, to gain a better understanding of the directions the business is taking and deploy better management processes within their ICT departments.

The SME sector is the backbone of the Indian Economy and one of the prime drivers of employment. Despite their apparent success in the last couple of years, Indian SME faces many challenges: Apart from the traditional problems, they are also increasingly exposed to the cold wind of international competition. Recent events such as the international economic crisis have increased the pressure even further. Therefore, SMEs in India – as everywhere else - need to improve their competitiveness by taking a variety of measures. The use of Information and Communication Technologies (ICT) is one of the most important measures, and if successfully deployed, they can greatly help SMEs to reduce the bottlenecks to compliance and to remove hindrances to the new industrial growth.

Although Indian SMEs produce a diverse range of product from very simple to technically complex products, they are extremely vulnerable to changes in the environment (business, political and social) and are characterized by low levels of technology. With rapid changes taking place in the business and technical environment, it is critical for Indian SME's to face tough competition from their global counterparts due to liberalization, change in manufacturing strategies & business process and turbulent and uncertain market scenario. Majority of industries in this sector having low level of ICT application in their business as compared to other competing countries. Secondly, they lack the awareness of potential benefits of ICT adoption in their business. Third, they are facing various challenges particularly global challenges possibly due to lack of IT enablement in their business and administration.

In developed / developing countries all over the world, Small and Medium Enterprises (SMEs) are making investments to integrate Information and Communication Technology (ICT) into their business operations and leveraging it to sharpen their competitive edge in the international market. Today, with an ever-increasing premium on competitiveness, a wise investment in the ICT infrastructure makes a crucial difference to the bottom line of SMEs that spells success. SMEs in India are facing unprecedented challenges necessitating the need for ICT adoption in their business processes and integrating into globalize economic environment. With ICT tools, the SME sector can improve upon the way it is doing businesses currently and become more vigilant in the finer details, in its day-to-day operations and their effect on competitiveness. The ICT adoption in manufacturing sector can change the way the organizations conduct their business, which will enable them to compete in the national and international markets. The major objectives of ICT application is the cost-effective and efficient improvement in business activities.

To remain and/or increase competitive capacities, Indian SME needs to invest more heavily in ICT systems and their skills with regards to use of ICT. Though, many SME owners face the problem of bridging the gap between business and ICT tools and fail to understand clearly the positive contribution of investment in ICT to their business strategy objectives.

Main reasons for lower ICT adoption in Indian SME's are :

Penetration

In a few clusters, availability of electricity is still erratic, leading to high downtime of computers. This leads to non - adoption of ICT by SMEs, as they have to keep going back to manual systems. This is being taken care of by the infrastructure intervention of Central Government, State Governments & private sector through various projects. Broadband connectivity is also being pursued by Internet Service providers at national level.

Adoption

SMEs assume that the cost of ICT application is high. There is a need to prove that solutions are affordable vis a vis quantifiable benefits. Besides, web based ERP comes at a very low monthly subscription cost under SAAS model (software as a service).

Value of using ICT

By demonstrating success stories of implementation in areas of productivity, differentiation & innovation, it can be proved to the SMEs that ICT brings about practical benefit leading to higher profitability and competitiveness.

While writing this article, I called the same company who was not doing SEO but had a Mercedes. He told me that he is not only doing SEO for his company website but is way ahead in ICT adoption through ERP & online sales portals of his own through which he sells his products worldwide with credit card payment gateway at a much higher profit. He said his turnover in online sales portal has already surpassed his other company turnover. I asked him about my royalty fees & he said “ your ride on the Mercedes was your royalty” . India is full of entrepreneurship success stories, We just need to educate the SME owners a bit more. Jai ho…..

Mr. Jagat Shah is the Founder & Chief Mentor of Cluster Pulse & Global Network.

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