SMEs must start expanding their horizons and start thinking global
BANGALORE, INDIA: Small and medium-sized enterprises (SMEs) play a vital role in the growth of the Indian economy.
According to the SME Chamber of India, they contribute 45 per cent of the country’s industrial output, 40 per cent of exports, produce more than 8,000 quality products for the Indian and international markets and create one million jobs every year.
Their increasingly powerful role means that today’s SMEs have greater opportunities for expansion and diversification and are no longer restricted to operating within the confines of their home market. Rather, globalization is opening up new markets for them. But with this opportunity comes challenges that SMEs must overcome if they are to become truly competitive in a global economy.
Many SMEs suffer from a siloed, non-integrated IT landscape. When systems cannot ‘talk’ to each other seamlessly this can impede productivity, flexibility and risk management as well as compromising the effectiveness of financial and corporate governance processes.
Ultimately, a fragmented IT environment makes it very difficult to fully align strategic imperatives with business operations. A solid, scalable IT platform is essential for any company to compete and win in the global marketplace. SMEs wishing to expand geographically need to support their growth ambitions with a single solution framework that is flexible and scalable enough to adapt as the needs of the business change. SMEs should also take advantage of pre-packaged, pre-configured solutions which incorporate industry best practices as standard. This will help to lower Total Cost of Ownership (TCO) and accelerate the business value delivered by such solutions; both essential factors in today's competitive climate.
One company operating in the SME space that has successfully embarked on international expansion plans is Overseas Infrastructure Alliance (India) Private Limited (OIA).
OIA designs and manages infrastructure projects in fields as diverse as energy, transportation, agriculture and IT. It has a rapidly growing number of projects in Africa and other emerging economies, and delivering them on time, on budget and to the highest quality requirements is critical to its continued success. With operations in India and Africa, OIA needed to ensure best practices in processes such as material procurement, environmental protection, and project quality, and for this it required a standard IT platform which could be up and running with the minimum of disruption.
Following a thorough evaluation, OIA selected SAP as its technology partner of choice and was able to roll out the SAP Business All-in-One solution at two locations in India and one site in Ethiopia within five months. The results were impressive. OIA is now exceeding customer expectations with the help of more efficient processes and greater visibility, managing overall costs more effectively with profit center accounting and has the ability to generate project-specific profit-and-loss statements.
In addition, the company uses back-to-back ordering at the start of projects to cut supplier lead times and ensure timely delivery of critical materials. At the job sites, access to real-time work status and system-generated alerts improves decision making and allows project leaders to address issues quickly. It also helps OIA to provide customers with the latest information on project status and projected completion dates. Overall, this prominent SME player is now better able to plan, monitor and take corrective action in all of its business operations, while at the same time pressing ahead with its commitment to cross border growth.
Global success depends on an organization’s awareness of the business requirements in each country in which it operates. To succeed, SMEs must understand and swiftly adjust to changes in local conditions. At the same time, global success depends on the counterbalance of implementing effective local processes that can feed into and collectively generate global results.
SMEs must therefore look to IT platforms that are designed to help them succeed by incorporating global and industry-led best practices as standard, meeting international legal and financial requirements, in addition to enabling them to adapt and build upon operations and business processes to meet country-specific needs.
A robust, proven and scalable IT backbone should serve as the foundation for global competitiveness, enabling SMEs to realize the potential of their creative ambitions by offering innovative products and services in an inventive and original way.
It is an acknowledged fact that SMEs have many advantages over their larger counterparts, not least the ability to act and react with greater speed and to turn an entrepreneurial idea into reality in record time.
However, often due to lack of skills or budget, they can be seen as the poor relations when it comes to technology. This certainly need not be the case. Technology is a crucial enabler of growth and the value it can deliver is significantly enhanced when implemented in an integrated and scalable fashion.
SMEs also have a considerable opportunity to take advantage of the experiences of larger enterprises who have already undertaken this journey when they choose technology partners with the right industry and geographical expertise.
In today’s reality, there is nothing to stop SMEs from reaping the benefits of globalization through close attention to local markets; how successful a strategy this is may depend on how well technology is used as the facilitator.
(The author is head of SME, SAP EMEA + India)