Are APAC SMEs adapting well to the new business landscape?

Comparatively, we are slightly ahead of other regions. APAC SMEs are adjusting to the new business landscape, according to recent global study.

Between 27 February 2020 and 30 April 2020, a study of how small- and medium-sized enterprises (SME) around the world are adapting to the post-COVID-19 business environment was conducted by Oxford Economics and commissioned by enterprise software company SAP.

Of the total 2,000 respondents worldwide, 832 respondents were from the following Asia Pacific (APAC) region markets: Australia, China, India, Japan, New Zealand, Philippines, Singapore, and South Korea. A section detailing answers from 240 respondents on the impact of the COVID-19 pandemic was also added to the survey mid-fieldwork.

According to the 240 that responded to the series of COVID-19 questions, APAC SMEs were well positioned to adapt to a remote-working environment: 77% reported that they adjusted remote-work arrangements for employees in response to COVID-19, as compared to respondents in Europe (75%) and the Americas (71%).

Additionally, 61% of APAC SMEs surveyed created remote-work set-ups for employees during this period. Additionally, 10% of APAC SMEs reported that the pandemic had no impact on their ability to accommodate remote-work and maintain employee productivity. Finally, the report noted that 66% of APAC SMEs innovated by exploring new channels to get products to customers, and 46% focused on developing new products and services to respond to the evolving situation.

APAC SMEs’ digital transformation

With the now widely-recognized need to ramp up digitalization to meet the new global market demands, a majority of APAC SMEs have made moderate (39%) or minimal progress (34%) in their efforts. Only 5% claimed to have undergone complete digitalization, according to the statistics.

Also, in the next three years, a majority of APAC SMEs aimed to make moderate (42%), substantial (37%) or total completion (18%) of digital transformation initiatives.

Also notable in APAC:

• Over 55% of SMEs cited 24/7 service availability and cybersecurity as the biggest IT challenge ahead.
  
• 37% of SMEs were planning AI/ML/IoT investments; 26% were already implementing pilot projects, while 6% were already using these technologies at scale.
  
• 36% of SMEs were investing in automation projects (36%), and 11% were already using it at scale.
  
• 56% saw customer service as the top business function requiring major or substantial investment in terms of automation and digital processes. Separately, 48% of respondents considered enterprise management and operations as the function requiring digitalization.
  
• 44% saw increased process efficiency (by reducing errors, risks and costs) as the top benefit of automation and digital technologies.
  
• 43% saw increased productivity through transformation and intelligence-process automation as the top benefit of digitalization.

No smooth sailing ahead

The road to survival and success will not be smooth, it seems. The study indicates that APAC SMEs considered the upskilling/reskilling of the current workforce (30%), lack of coordination between different departments (29%), and the inability to gain insights from data (28%) as key internal challenges.

In terms of external challenges, APAC SMEs cited changing customer wants and needs (40%), competition from larger organizations (39%), and adapting to a rapidly-changing marketplace (27%) as obstacles.

Said Claus Andresen, SVP & Head of General Business (SME) and Emerging Markets Growth, Asia Pacific & Japan, SAP: “SMEs in the region seem to understand that the sense of urgency to digitally-transform their businesses will give them an advantage through the pandemic and beyond. With the adoption of an intelligent enterprise strategy, SMEs can establish a digital core that will power the entire organization, embedding data-driven insights and decision-making processes across the business. This is crucial in enabling business agility, further strengthening the ability of SMEs to adapt to dynamic market conditions.”

Andresen said he was am confident that SMEs that have forged closer bonds with customers and employees while developing innovative services and products, will be able to emerge stronger. “That will put them on a strong growth trajectory as the world economy recovers,” he concluded.