Cisco study: P1.36T GDP growth seen
SMB digital maturity critical post-COVID
The 2020 Asia Pacific SMB (small and medium businesses) Digital Maturity Study showed that the digitalization of the sector could add $28 billion (P1.36 trillion) to the country’s gross domestic product (GDP) by 2024. The thrust can also help in the Philippines’ post-coronavirus pandemic recovery.
Commissioned by Cisco and conducted by the International Data Corporation (IDC), the study mapped out four stages of digital maturity, namely, Digital Indifferent; Digital Observer; Digital Challenger and Digital Native experienced by SMB across Asia Pacific.
Analytics is the top technology investment priority, followed by cloud technologies and IT infrastructure software upgrade.
Businesses that are more digitally mature enjoy higher benefits in revenues and productivity compared to those that are indifferent to the digitalization of industries.
Now on its second year, the study showed that the SMB in the Philippines are moving closer to the Digital Observer stage, although 73 percent are still in the first stage of being Digital Indifferent.
It was discovered that local SMB are prioritizing improved customer experience and service delivery as the main drivers for digitalization.
Specifically, 26 percent of SMB were found aiming to improve customer experience, 22 percent were trying to improve service delivery, and 19 percent were focused on improving marketing and sales.
These are positive and significant developments, given that SMB account for 99.6 percent of all businesses, 62 percent of the country’s total employment and contribute 36 percent to overall GDP.
The resilience, agility, and digital transformation capabilities of SMB will play a pivotal role in the country’s post-COVID-19 economic recovery, the researchers behind the study said.
“The SMB sector has been among the hardest hit by the COVID-19 pandemic. However, the country’s SMB have shown great resilience, and have leveraged technology to continue to operate and serve their customers during the period,” Karrie Ilagan, managing director for Cisco Philippines, said.
“As the Philippines continues to overcome the current situation, and consumer and business activity starts to pick up, digital transformation of SMBs will play a pivotal role in their recovery and contribute to the country’s overall economic growth,” she added.
The results of the study showed that Analytics (18 percent) is the top technology investment priority for SMB in the Philippines, followed by Cloud Technologies (15 percent) and purchasing or upgrade of IT infrastructure software (11 percent).
However, various SMB are also facing challenges in adopting digitalization strategies. According to respondents, lack of budget or commitment from management (15 percent) is the biggest hurdle they face, followed by shortage of skills (14 percent).
Many also experience cultural resistance to change (12 percent) as digitization of products and services require a substantial shift from long-standing practices.
“SMB are the backbone of ASEAN economies, accounting for over 85 percent of total business establishments and making up the main contributions to private sector employment in the region,” said Raz Mohamad, director Small Business and Commercial for ASEAN at Cisco.
“For SMB to fully leverage technology, all stakeholders need to play a role. The government is already taking the lead and has introduced a range of measures to help Philippine SMB on their digital journey,” he added.
The 2020 Asia Pacific SMB Digital Maturity Study gathered and analyzed data from over 1,400 SMB across 14 markets in APAC to assess the challenges and opportunities the companies face in their digital transformation journey.
The 14 markets are Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, Taiwan and Vietnam.