SAP Southeast Asia News Center

Starting Small, Starting Now: Business Transformation for SMEs in the Never Normal

If 2021 was about adapting to the new normal necessitated by the disruptions caused by the COVID-19 pandemic, 2022 is about preparing for the “never normal”, a reality where constant change and disruption is caused by volatility in global structures.

As it seems, the ongoing pandemic is still a long way from vanishing completely from our lives. The latest Omicron strain has also marred our journey towards living in an endemic with much uncertainty.

Moreover, this era is also characterized by huge social, economic, and environmental challenges caused by tensions between global powers, climate change, and the advent of Industry 4.0.

These rapid changes are expected to intensify rather than subside.

As businesses today are confronted by the urgent need to adapt to a world of constant disruption, it is crucial that they take the appropriate steps needed to drive innovation and reinvention in a new era of growth.

This begets the question – what do they need to develop a competitive advantage and build a sustainable, intelligent business operation and drive success?

No Business Does Business Alone

Beyond the initial disruption in every crisis, we find that opportunities lie ahead for businesses that press ahead. COVID-19 has demonstrated the importance of building an intelligent enterprise and establishing strong business networks, and it has also given companies the opportunities to do so.

By collaborating with a diverse spectrum of trading partners, some companies have avoided costly disruptions. Tapping on their business networks has also enabled them to source alternative suppliers and pitch for new business opportunities abroad.

In this interconnected ecosystem, no business does business alone.

To illustrate the importance of being part of a unified business network, take the example of a company that sells appliances. This company works with a contract manufacturer who relies on a packaging and parts supplier, who in turn depends on suppliers of raw materials.

The company then ships the finished goods to distribution centers around the world, where they get shipped to distributors, retailers, or even direct to the end customers. These physical movements rely on a network of logistics service providers and carriers and a financial network to pay for everything.

An endeavour such as this requires a collective effort and shared accountability among partners to unlock new growth and innovation. This will in turn help businesses and economies to thrive. By leveraging their collective intelligence and applying past experiences to future decisions, all partners will ultimately help drive success across the board.

Furthermore, such networks are also a source of new connections and business opportunities for SMEs.

 Making Informed, Data-Driven Decisions with Technology

SAP worked with Oxford Economics to survey 400 SMEs on how they plan to prepare for the new economy.

We found that SMEs – companies with less than US$500 million revenue – are catching up on digital transformation, with more companies targeting their focus on data and specific data tools to support their long-term organizational strategy.

However, 41% of the companies surveyed reported a lack of data in decision-making, particularly with information to improve their customers’ experiences, which could be problematic as e-commerce and the increasing use of social media continually drive the customer experience.

In pursuing their business transformation, SMEs would need technology partners and solutions that would enable them to collaborate with all parties in their supply chain, including suppliers, logistics and services providers, asset operators, maintenance contractors, and so on.

With proper technological infrastructure and a business network solution in place, SMEs will be able to gain unparalleled visibility across all processes in their supply chain, respond quickly to disruption by making micro-adjustments as needed, and thus build resiliency into their business.

In fact, 61% of the companies indicated that they would like to see technology increasing the process efficiency of their operations.

In this new interconnected world, SMEs can tap on their network ecosystem to shift resources, production, and financial funds around the globe flexibly to make the best use of regulatory and location advantages while building supply chain resilience to respond quickly to disruption.

Being Ready for the Never Normal

The never normal has also accelerated several trends that SMEs need to consider in their business transformation journey. One is the need to be even more sensitive to customer-driven change.

The pandemic has shifted consumers online, which has changed how products and services are consumed, ordered, and paid for. Consequently, the ability to capture customer requirements effectively and then use those insights to drive customization and price products and services accordingly is key.

In 2021, the F&B sector has been among the key industries particularly affected by the pandemic, requiring businesses to review and pivot their business strategy – not only for survival but also to build resilience and weather future challenges.

JUMBO Group, one of Singapore’s leading multi-dining F&B brands best known for its award-winning chili crab and black pepper crab dishes, has doubled down on its focus on delivering exceptional customer dining experiences and innovation by scaling its digitalization plans, embedding a strong digital ERP core with S/4HANA Retail and SAP Customer Activity Repository solutions. This has allowed the company to standardize data and support its business end-to-end – aiming to drive efficiency and deliver relevant insights for decision making to improve the bottom line and focus on products that cater to customer preferences under the current landscape.

JUMBO’s ‘detoxifying’ dim sum afternoon tea set, launched in celebration of International Women’s Day, is one of the many innovations the company has rolled out to cater to the discerning gastronomies of local and overseas customers

Even as agility and transformation become top-of-mind for businesses, at the heart of it all lies in the skilled talent to conceptualise, drive, and accelerate this much-needed shift. Another trend that could impact digitalization efforts is the worsening IT talent crunch. With the pandemic leading to a surge in e-commerce and accelerated digitalization, the global tech talent shortage has become acute. In the same Oxford Economics study, SMEs in Southeast Asia cite challenges in finding and training the IT talent needed to execute their digital transformation.

To an extent, smart technologies can help bridge the gap by automating repetitive and tedious tasks, improving employee engagement, and supporting collaboration. But digital transformation is as much a human journey as a technological one, and these benefits can only be fully realised when everyone in an organization is fully onboard.

SMEs need to invest in upskilling, engage their employees, and help them embrace the journey towards an intelligent enterprise.

A key aspect of this is ensuring a diverse and inclusive culture also helps ensure a rich diversity of ideas and greater collaboration and openness to drive innovation and business success. This also means its products, solutions, and customer offerings integrate different perspectives to address the needs of local and global customers,  partners, and suppliers.

Embracing Sustainability

Businesses also need to consider having a sustainability strategy. The conventional thinking is that a business exists only to generate profit. However, sustainability is increasingly becoming a necessity for organizations.

Being sustainable may have fallen down the list of priorities amid the global pandemic, but it is becoming increasingly important for SMEs to embrace sustainable business practices, even as they pursue business transformation.

According to McKinsey, having a sustainability strategy allows a company to make long-term investments; a do-nothing approach can mean a more considerable loss in the future. There is also a growth opportunity here as consumers have become more discerning, and they want to support brands that share their beliefs.

Investors, too, are placing a heavier emphasis on environmental, social, and governance (ESG) criteria in their decision-making process. Furthermore, businesses are increasingly more mindful of sustainability practices along their entire supply chain, including their suppliers.

Three Attributes for Success

To adapt then and to thrive in the new normal, there are three essential qualities that SMEs should adopt:

Ultimately, in their business transformation journey, it is vital that SMEs think big – not big in terms of size, but big in terms of impact. They should take a moment to imagine what their business could look like as an intelligent enterprise. It is fine to start small.

When it comes to advanced technology, any small change can have a big impact on an SME’s business. It could be something as simple as automating their invoices, or it might be a complete digital transformation that connects business processes, streamlines the entire business to deliver exceptional end-to-end experiences, and links the company to a global business network.

The important thing is to start now.


Eileen Chua is managing director for SAP Singapore.

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