Dot-com quickly or die slowly

KUALA LUMPUR - About 30 per cent of small and medium enterprises (SMEs) in Malaysia will have some form of Internet presence by year end, leading up to a full 50 per cent by the end of 2001, according to Skali.net, a provider of managed Internet infrastructure and dot-com services.

This projection by Skali.net, which specializes in helping corporations in the Asia-Pacific region implement their e-business strategies, is based on a marked increase in the number of Malaysian SMEs having Internet access and websites.

Budget allocations for Internet centric investment and IT spending, which previously were either non-existent or minimal amongst the SMEs, are also seeing an uptrend.

A report by research firm International Data Corp (IDC) states that IT spending in Malaysia last year totaled approximately RM6 billion, of which more than half were for e-business applications.

Skali.net noted that the race amongst SMEs to align their businesses to the e-economy is taking place with various entry-level projects, which span activities as basic as creating a website and incorporating e-mail, to that of setting up an online store-front and comprehensive end-to-end systems from hardware to on-line procurements.

While this is encouraging, says Azmi Ahmad, head of Skali.net, Malaysian companies have yet to move at the speed that will see e-business activities reach levels comparable to that of their counterparts in the US or Europe. SMEs in those countries are rapidly moving online with more than 60 percent already having Internet access and websites.

Skali.net, whose customers include local SMEs in various industries, noted that amongst the challenges faced by these businesses are lack of management and organizational structures to successfully implement e-business initiatives. Low budgets for e-commerce projects, inadequate technological manpower and insufficient knowledge about e-commerce are other barriers.

Despite these obstacles, Malaysian SMEs, which are the backbone of the economy, must realise the need to quickly "dot-com" or whither away, says Azmi. "The threat of losing out, for those still dragging their feet in converting ideas into e-business strategies, is real, although very much underestimated by Malaysian businesses.

"As it is now, companies in Malaysia are still coming to terms with the realities of doing business in the electronic marketplace, but are not adapting fast enough."

Azmi cites enhancing competitiveness, increasing productivity levels , reducing costs and extending market reach as obvious advantages that come from having a well thought out Internet strategy in conducting business.

"The Internet is the purest form of competition where businesses will have to compete and innovate on a world wide level. This will be the biggest challenge for local companies in years to come."

- Azmi Ahmad
Head, Managed Services
skali.net

The e-commerce market in the Asia-Pacific regions alone is said to be worth US$1.6 trillion by 2004 and this projection is sending signals that ignoring the Internet would be fatal to enterprises and merely adding a website to an existing business is not enough.

"Most companies must become Internet firms if they are to survive - they cannot run away from this fact and the time to dot-com is now," he reiterates.

SMEs need to be geared for this transition fast, which calls for a paradigm shift in the way they conduct business, in which the entire business needs to be redesigned around cost-saving and communications-easing properties of the net, he adds.

Organizations can reshape along one of two lines to take advantage of the Net economy. It could deploy a centralized group within the firm to take existing business online or create a spin-off group with the company to pursue new business models and market opportunities.

To determine which approach best fit their situation, companies need to evaluate factors ranging from current industry position and corporate culture to funding and e-commerce skills. Most important, the management of an enterprise must have an internet or e-commerce vision just like any traditional vision for a business.

About Skali.net
Skali.net provides "one stop to dot-com" e-services to corporations throughout Asia, together with technology infrastructure related to the Internet. Skali.net is a unit of the Skali Group, an MSC-status company headquartered in Kuala Lumpur, Malaysia.