Small and midsized enterprises (SMEs) have become the beacon of hope for struggling economies around the world that are looking for answers to recession and massive unemployment. Encouraging entrepreneurship is increasingly recognized by governments as an effective means of procuring a range of benefits including creating jobs, increasing productivity, and competitiveness; alleviating poverty and achieving societal goals, in a sustainable way. Facilitating enterprise creation has become a universal concern.
According to the SBA Office of Advocacy, SMEs represent 99.7 percent of all employers and employ almost half of the private-labor force, in the U.S. alone. The same holds true in Europe. The European Commission says that, “the more than 20 million SMEs in the EU represent 99 percent of businesses, and are a key driver for economic growth, innovation, employment, and social integration. “ The recovery of the global economy, the future of innovation, and the sustainability of a growing global population rely on SMEs. Because SMEs are an economic growth engine, they need access to the same technology as the big players to level the playing field, to be flexible, responsive, and meet and anticipate customer needs.
Culture of innovation a strategic priority for growth
As a result, promoting innovative thinking has never been more critical to SMEs than today. Compelled by economic change and increasing global competition, SMEs are realizing the value of innovation in business longevity. In a recent SAP Global SME study with Oxford Economics, 2,300 SME senior executives were asked to assess key elements of running a successful enterprise. More than one third of SMEs stated that creating a culture of innovation is a top strategic priority in driving growth. Essentially, the study revealed that staying ahead of innovation is critical to establishing and extending a competitive advantage for SMEs, and that technology is key in innovation strategy.
Next page: The top drivers of innovation
SMEs from around the world found that they can leverage technology to more effectively boost innovation, strengthen customer relationships, improve agility, and reduce costs while expanding their business. More specifically, on a global scale, mobile and Big Data analytics were specifically named the top two drivers of innovation, followed closely by cloud computing.
There has been a major shift in consumer expectations over the last few years when it comes to technology accessibility. Consumers around the world demand high-quality, 24/7 experiences across every channel, and multi-touch points. Unsurprisingly, mobility has become a change agent as many SMEs are focusing on enterprise mobility as another key driver of innovation. Over 75 percent of SME senior executives surveyed named mobile technologies as their leading cause of innovation for their business. One in four survey respondents said mobile technology has paid off in terms of better customer service and product and service development. Retailers in particular tend to rely most on mobile technology for their strategic growth.
For example, Renew Life Canada is a Canada based digestive care SME in the wholesale distribution industry. With 40 employees, they use the SAP Business One mobile app to streamline order processes, improve forecasting of warehouse inventory, and enable efficient employee communication. “SAP’s mobility technology is changing the way we do business, allowing us to access information faster and from anywhere in the world,” said a Renew Canada representative.
Efficiency and cost reduction are obviously major components in gaining competitive advantage. This is why over half of the survey respondents named cloud computing the leading cause of innovation for their business. They understand that having a solution hosted and maintained by experts in secure data centers means they can spend more time on innovation and less on IT. Cloud is an affordable solution that, when implemented correctly, can help integrate and streamline key business processes – including financials, sales and inventory. Cloud computing delivers uniquely reliable benefits to professional services and consumer goods SMEs.
An example is Deep Ellum Brewing, a U.S. based SME in the food and beverages industry with only nine employees. They use SAP Business One Cloud to get consistent real-time data to help streamline and integrate business processes, and create a more collaborative work environment. “Small breweries don’t have a lot of capital to use for computers and software. Choosing a solution to manage our business which is in the cloud was a no-brainer,” said a Deep Ellum Brewing representative.
The ability to analyze and predict behavior is also bringing about a paradigm shift in business: organizations can move from being reactive to proactive. Business analytics creates a competitive edge across industries. Analytics can be used to provide insight into customer needs and thus provide direction for product and service development. The proof can be found with the 68 percent of respondents who cited business analytics as the leading cause of innovation for their business. Manufacturing firms for example, cite a 47 percent increase in competitive advantage through the use of “Big Data” analytics and estimate a 21 percent increase in three years. Manufacturing firms are most likely to look to business analytics for contributions to product and service development benefits than other technologies.
Next page: Analytics in India
Star Dental Centre is an example how analytics can help. A dental care SME based in India, it has 75 employees and is part of the healthcare industry. Star Dental’s vision is to become a pan-Indian institution of excellence in dentistry and dental customer care. To achieve this, they knew they needed the right ERP solution in place. “As a retail chain, finance and logistics are key components of our business. In both these domains we need to have control and effective reporting. Hence, we chose SAP Business One for SAP HANA,” said Saurabh Singh, Manager Corporate Strategy, Star Dental Centre. Through the use of analytics, they are able to get better insight into their actions, which enabled them to make better business decisions. They are now also able to provide service to their customers in a more personal way. Star Dental Centre also uses analytics to consolidate data from various clinics and use real-time analytics to monitor clinic performance. As a result, they have been able to reduce the time needed to produce management information system reports by 30 percent.
Technology for competitive advantage
Different technologies suit different industries to varying degrees. Large companies like SAP rely on an ecosystem of partners to focus on unlocking the potential of SMEs in creating economic, social, and environmental impact. Empowered with technology, SMEs can leverage a vast array of tools to establish competitive advantage and strengthen customer relationships. The extent to which SMEs can identify the right technologies to meet their specific innovations needs and effectively apply those technologies will determine how successful they will be in this ever-evolving global marketplace. Regardless, SMEs have become economic growth engines, across the globe, and it is essential that SMEs take advantage of the same innovation enabling technology as bigger companies to remain competitive and sustainable.