SMB digitalisation may add RM99 bil to GDP

THE digitalisation of small and medium businesses (SMBs) in Malaysia could add between US$19 bil to US$24 bil (RM79 bil to RM99 bil) to the country’s GDP by 2024 and contribute to economic recovery post COVID-19, according to the 2020 Asia Pacific SMB Digital Maturity Study.

The study, commissioned by Cisco and conducted by International Data Corporation (IDC) maps out the four stages of digital maturity; Digital Indifferent, Digital Observer, Digital Challenger and Digital Native, experienced by SMBs across Asia Pacific.

The study shows that Malaysia’s SMBs have moved into the Digital Observer stage, up from Digital Indifferent in 2019. According to the study, 64% of SMBs in Malaysia are looking to digitally transform to bring new products and services to market, a huge jump from 33% last year.

In addition, 59% recognise that competition is transforming, and they must keep pace, while 43% said they are transforming due to demand from customers.

“As Malaysia continues to overcome the current situation, and consumer and business activity starts to pick up, digital transformation of SMBs will play a pivotal role in their recovery and contribute to the country’s overall economic growth,” Cisco Malaysia managing director Albert Chai said.

The results of the study show that purchasing or upgrading IT hardware (18%) is the top technology investment priority for SMBs in Malaysia, followed by purchase or upgrade of IT software (14%) and cybersecurity (11%)

However, SMBs are also facing challenges in adopting digitalisation strategies. According to respondents, shortage of digitally skilled talent is the biggest hurdle they face (21%), followed by lack of budget and or commitment from management (16%).

They are also found to be lacking the proper digital transformation roadmap that is critical to any organisation looking to drive substantial change (12%).

“While they are currently facing the biggest challenges to their operations, they also have an unprecedented opportunity to accelerate their digital transformation.” Cisco Small Business and Commercial director for ASEAN Raz Mohamad.

The study also highlights that nearly 70% of SMBs in Asia Pacific are accelerating the digitalisation of their businesses because of COVID-19.

Among the respondents, 86% say they believe digitalisation will help in developing future resilience against crises like COVID-19.

Within the region, SMBs in Singapore, Japan, and New Zealand continue to lead the Digital Observer group, with no changes in their ranking compared to 2019.

However, mainland China, Taiwan, and Thailand surpassed Korea, Hong Kong, and Malaysia, respectively. There has also been notable progress made by SMBs in Indonesia and Vietnam. – Oct 24, 2020

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