Why SMBs will lead the next wave of IT innovation
This decade truly belongs to SMBs as they are forcing incumbent vendors to offer customized solutions that they want, rather than being forced to adopt versions of solutions whose features they seldom use or require
“Strategy is about stretching limited resources to fit ambitious aspirations” In a country as diverse and large as India, late management guru, C K Prahlad’s quote, best captures the thought process of millions of small and medium enterprises in India that are looking to straddle the global landscape with their limited capabilities. In emerging economies like India, companies in these sectors have the highest growth potential. Statistics from independent research firms and the government show that the SMB sector employs close to 40 percent of India’s workforce. The SMB Chamber of Commerce estimates that there are about 47 million SMBs in India which contribute 45 percent of India’s industrial output and drive 40 percent of exports.
While most of these SMBs have global aspirations, many of these companies lack the necessary business processes to scale to the next level. Adoption of technology can enable these SMBs take the next big leap. We are already seeing glimpses of this transformation enabled by technology.
The impact of re- engineering business processes can be huge. For example, Kwality Dairy India, a leading dairy products company, is using a cloud-based ERP solution to forecast demand more accurately and generate more efficient production schedules — a critical factor in an industry where quality and quantity of perishable raw materials change dynamically. Religare Finvest, an SME-focused NBFC, has reduced its cost of collecting debt by 70 percent per receipt with reduced errors, by using a mobile solution.
For any SMB to succeed, the ecosystem also has to be conducive. Today, SMBs have a huge variety of technology choices coupled with an equally large number of vendors who are offering sector specific solutions. The emergence of a huge number of technology startups catering to SMBs in India also points out to a future where the adoption of technology in SMBs is bound to go up.
This decade truly belongs to SMBs as they are forcing incumbent vendors to offer customized solutions that they want, rather than being forced to adopt versions of solutions whose features they seldom use or require. We are already seeing disruptive technology models that are born out of fulfilling these unique needs of SMBs. Startup Exotel, for example, which provides virtual telephone numbers to SMBs found a space that was unoccupied and underserved. The result: its solutions have been quickly lapped up by SMBs, and Exotel has more than 400 customers today. Given the market size, we can expect a slew of innovative solutions and product offerings from technology service providers.
Today, a large percentage of the SMB market is underserved, and a number of technology startups have rightly sensed the huge opportunity in crafting affordable products and solutions. India has the technological prowess and offers the right test bed for technology service providers to power the dreams of SMBs using the wings of technology.