Enterprise
Digital wave changing SMEs’ mindsets
Calyn Yap 
Technology is no longer the domain of the back office but is an enabler for success, which SMEs are increasingly aware of
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DISRUPTION is the norm in today’s business world, but forward-looking SMEs are leveraging technology to handle the challenge.

By adopting Cloud-based solutions for finance, reporting and other business functions for example, the company can be better-prepared for disruption when it hits and is able to take advantage of new opportunities with better operational capabilities.

Cuckoo International (Mal) Sdn Bhd, known for its home appliances for healthy living such as water purifiers and rice cookers, is one such example.

Established three years ago in October 2014, the company’s sales rose by 17 times in Malaysia between June 2015 and last year, with 128 stores opened during its first 18 months.

Tan says technology is the linchpin of the business strategy to enable speed-to-market and it’s what has contributed to their growth for the past three years

Its management division director Benny Tan says it made the switch as it wants the Cloud  to be the base foundation for its business to grow in the future.

Cloud computing allows enterprises to store and process data either in a privately-owned Cloud, or on a third-party server located in a data centre, making data-accessing mechanisms more efficient and reliable.

“Every second you have to make a decision and information has to be readily available. It’s a fact that people use phones to run businesses and they’re on 24 hours a day now.

“Everything’s on our phones, so there’s no digital transformation if the technology doesn’t allow data to be sent to the phone to enable decision-making,” he says, adding the company uses Oracle’s Fusion ERP Cloud.

Specifically, it currently uses the finance aspects such as the accounting capabilities. For Cuckoo International, technology is the linchpin of its business strategy to enable speed-to-market and it’s what has contributed to its rapid growth the past three years.

“Speed is one of our important strategies. We emphasise on it – how fast we can respond to customers, say if there are any complaints that come in. For us, technology is not only for the IT department, accounting or admin functions. It’s what moves us forward.”

Another core benefit that led to the decision to move to the Cloud was centralisation and leveraging shared resources.

 

Adoption across departments

Oracle Corp Malaysia Sdn Bhd Malaysia application head and Asean human capital management head Bernard Solomon says technology is no longer the domain of the back office but is an enabler for success, something which SMEs are increasingly aware of.

While technology improves efficiency and growth, it becomes a challenge to upskill talent to analyse and make use of the data, says Solomon

“I feel the new generation of SMEs realise they can’t do it the way their forefathers have done it. The mindset has changed and they’re looking for people and technology that can get results with that change,” he says.

SMEs are still interested in the outcome, but what has changed is the way in which they are conducting business.

Many mom-and-pop enterprises tended to grow their business, typically confined to their geographical locations, by setting targets and working to achieve them in the past. Today, however, growth becomes the main driving force for them, which is why they look towards digital transformation.

In the age of technology and information where there are no such boundaries, digital transformation in a nutshell is all about making information available at any time, Solomon says.

The only question is if SMEs are ready for it, in the sense that there will be a shift towards the digital organisation where systems and applications at both the front and back offices are digitised.

“In the new world, data becomes more important. In the old way [of doing business], you look at the outcome, which is closing the sale. How you got there is not important.

“But today, you need to understand that the collection of data is as important as the outcome of closing the sale,” he explains.

 

Going global

It has been said that technology levels the playing field for SMEs to compete on par with larger companies.

Solomon explains that apart from giving them the capabilities which were once the exclusive domain of corporates, technologies such as Cloud enable its SME customers access to best practices applied across all systems.

“With the seven years we’ve had building our [Cloud] solution, it’s an easier means of knowledge transfer that provides SMEs a good framework to start with,” he says.

Cuckoo International’s Tan adds innovation is the biggest benefit going into Cloud in terms of technology and best practices, as it continuously evolves. This means that whenever upgrades are released, every customer can benefit from it.

Moreover, SMEs are increasingly looking outside Malaysia to expand their business and they are using technology to do it. Due to its borderless nature, it is easier for smaller companies seeking expansion overseas to work with partners that have already done so and have a presence in the market.

 

Regional expansion

As Cuckoo International is already looking to expand in the region, most notably in Indonesia, he says Cloud adoption enables the company to be flexible and work with partners to penetrate new markets.

“With Cloud being global, it’s flexible as it allows us to make changes and suits our needs. It also gives us cost-savings in the long run if we look at the pros and cons. It goes back to the hard investment required, for example the issue of security if we do it ourselves,” he explains.

On the path to digital transformation, SMEs have to adopt more than just technology. It requires a change in business processes and operations as well.

Tan says more important than the technology itself is how SMEs adapt to it. For Solomon, digital transformation is also about talent within an organisation and what differentiates one from the other is when talent is put at the centre of the equation.

“While technology improves efficiency and growth, it becomes a challenge to upskill talent to analyse and make use of the data. Today, HR [human resources] and finance are no longer in the back office but have to sit in the boardroom to make decisions,” he concludes.

SMEs need to think big

ALTHOUGH small and medium enterprises (SMEs) have no large operations, their mindset has to be big to understand the importance of leveraging technology for future growth, says Cuckoo International (Mal) Sdn Bhd management division director Benny Tan.

As big-thinking SMEs grow in importance, global corporations are increasingly seeing SMEs as a big market. Oracle Corp Malaysia Sdn Bhd Malaysia applications head and Asean human capital management head Bernard Solomon says it addresses the SME market the same way it does other target markets.

“The old mindset was that SMEs were smaller entities and thus given a smaller portion of the pie, but that’s absolutely out of the window now. They’re no different from bigger companies; they want to grow and make money. They look for partners that can allow them to achieve that,” he says.

The only difference is the way the solutions are consumed, which he explains, “You start with whatever you want and grow with whatever you need at a later stage. The SME market requires that flexibility,” Solomon says.

In line with its strategy, Oracle has a division that’s customer success-oriented. Doing so ensures an element of support that a sales-oriented approach would lack.

Oracle has had a presence in Malaysia for more than 20 years.



This article first appeared in Focus Malaysia Issue 259.