Following a Memorandum of Understanding (MoU) between SME Corp Malaysia and Huawei Technologies (M) Sdn Bhd signed in November 2017, a study involving 2,033 SMEs representing multiple sectors including services, agriculture, construction and Manufacturing was conducted in June 2018 to assess the drivers and barriers of digital transformation among Malaysian Small and Medium Enterprises (SMEs). The study was administered by the International Data Corporation (IDC), together with a consortium of universities in the country, and was conducted as part of the government’s effort to propel for digitization and Industry 4.0 (IR 4.0) adoption among Malaysian SMEs.
The study which has been turned into a whitepaper titled ‘Accelerating Malaysian Digital SMEs: Escaping the Computerization Trap’ published in mid-December 2018, and revealed that more than half of the surveyed SMEs invested in technology to expand their businesses or develop competitive advantages, hence being classified as having an ICT leader mindset. Another 30% were found to have ICT follower mindset. They invested in technology to improve efficiency, while the remaining 20% were classified ICT laggard mindset because they were cautious when it came to investing in ICT. There are gaps in terms of business usage and unexploited potential of ICT among the SMEs in Malaysia identified from the study.
The study highlighted the ‘computerization trap’. Nearly all SMEs in Malaysia have computing capabilities and internet connectivity, in which they use either a smart device or a personal computer. However, SMEs often end up getting trapped with limited business usage of these tools, only using them merely for social media and personal consumption of digital content. According to the paper, for an SME to truly benefit from ICT, they need to start using such tools to drive more businesses through e-commerce as well as driving more productivity through the use of software that improves their business processes. The study also revealed that there is significant increase in productivity when SMEs adopt digitization tools, such as Enterprise Resource Planning (ERP), supply chain management and customer relationship management, gaining up to 60% gain in their productivity. SMEs with social media and e-commerce engagement are also seeing 26% to 27% improvement in their productivity.
The top five challenges for Malaysian SMEs to shift into digitization include financing (49%), employee skill set (48%), technology (48%), business planning and strategy (46%) and networking (40%). The government has announced a total of MYR 7.12 billion (USD 1.73 billion) in Budget 2019 to support various initiatives for Malaysian SMEs, which should provide support required by the SMEs.
(Sources: The Star; SME Corp Malaysia; Huawei Malaysia)
