Business

Why should SMEs go digital?

Q: How will digitalisation and transformation help SMEs ensure continued profitability in times of disruption and a challenging economy?

A: Having strong business fundamentals will help companies manage challenges during uncertain times. It is therefore important that SMEs stay agile, and continue to push ahead with efforts to upgrade capabilities by embracing digitalisation and adopting automation to uplift productivity.

A 2019 study by the Ministry of Trade and Industry found that the adoption of digital tools leads to an increase in a firm’s value-add and productivity by an average of 25 per cent and 16 per cent, respectively.

Digitalisation is an ongoing business transformation journey and covers vast applications. With proper integration into the business model, SMEs can use digitalisation to familiarise with their consumers via e-commerce and digital marketing. Leveraging technology also provides them with data-driven insights that allow them to better understand and improve their business operations.

For example, chicken rice hawker Lao Hung Jia extended its business into food delivery and launched a website and mobile application for online orders in 2016. In the following months, they saw returns with the added mobile app and online orders. Revenue grew by 50 per cent in 2017, of which more than 20 per cent was derived from digital retail platforms.

Companies in the manufacturing sector are also adopting automation solutions, taking incremental steps as the sector moves towards digital manufacturing as part of Industry 4.0.

Onn Wah Precision Engineering conducted extensive research and carefully outlined a plan to be implemented over the next two to three years to steer the company into digital manufacturing. With our support, Onn Wah’s next step is to implement the Manufacturing Execution System to monitor and track data flow and active manufacturing processes.

The company plans to automate a single process, and give it some run time to iron out kinks, before moving on to other components in the production line. This will boost the factory’s capabilities and increase its productivity by about 10 to 15 per cent in the near future.

Q: How can SMEs start their digitalisation journey? Who can they turn to for advice?

A: Companies of different size, industry and type may have different objectives; the scale of deployment they have in mind may also differ. But, as a whole, SMEs who are just getting started on digitalisation can adopt simple, packaged solutions.

In the early phases of going digital, operations are less complicated so it may not be necessary to commit heavy investments to systems that are more sophisticated or high-end yet.

The Tech Depot, a centralised platform on the SME Portal, lists readily adoptable technology solutions prequalified by the Agency for Science, Technology and Research (A*Star), the Infocomm Media Development Authority (IMDA) and Enterprise Singapore.

Companies can also tap the Start Digital programme by IMDA and Enterprise Singapore, which supports SMEs taking their first steps to go digital with foundational solutions. For example, SMEs can adopt any two digital solutions out of five core business processes in human resources, accounting, inventory management and more, at no cost for the first six months. The package comes with training and advisory support from solution providers.

The Productivity Solutions Grant provides support for SMEs to adopt pre-scoped, off-the-shelf productivity solutions and technologies for various sectors. SMEs can also consider speaking to a consultant on ways to get started by approaching the Business Advisors at our SME Centres for free one-on-one business advisory and business diagnosis, as well as for help to strengthen their capabilities through workshops.


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