E-biz: Are local SMBs ready?

The unpreparedness of SMBs

Judging from the turn-out at various seminars on e-business in the city, there seems to be no lack of interest from small and medium businesses (SMBs) on this issue. IT vendors and consultants too, are constantly touting new and improved softwares for Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) tasks to SMBs.

So, is the country a truly fertile e-business grazing ground for SMBs? Not so, according to feedback from industry observers. They allude to the unpreparedness of SMBs to--using the cliche--embrace e-business. E-business is proving to be a double-edged sword to a host of local SMBs--many do not understand the technology factor and asking them to invest substantial amounts of money into something they don't quite understand is a big risk.

According to International Trade and Industry Minister Rafidah Aziz, SMBs are not venturing online because the technological aspects of doing e-business intimidates the companies involved--they just don't understand the technology.

What else can be done besides conducting training courses and seminars in expensive hotels for SMBs? Education is undoubtedly a very important area to focus on. But all the education in the world will not help the cause of propagating the advantages of e-business to SMBs if they are not truly convinced about the necessity of integrating the Internet into the business. SMBs are usually preoccoupied with the now and the present; operational and cash flow problems take precedence over "flighty" issues like e-business. The truth is, that many SMBs have the misconception that e-business will just add on another layer of problems and complications to their daily operations.

I feel another reason for the reluctance of many SMBs--many of them schooled in the old way of doing business--is that many IT vendors do not make good return on investment (ROI) projections for an e-business or e-commerce project they are touting to a SMB. The truth is, who would want to invest in something if the IT consultants cannot confidently predict when the investments could be recouped?

But ROI and technology issues aside, mindset also occupies the top rows of reasons why SMBs are shying away from e-business. One can provide all the funding and expertise that's needed but to fully understand what the technology can do and accepting it, is another matter altogether. Note that many SMBs are family-run enterprises with a long history of business activities, sometimes going back decades; it is difficult for these SMBs to change overnight.

E-Business is not just another channel to sell products and services. To fully utilize what e-business has to offer, the company has to change the way it operates. Not just by adding another channel but to change the way it sells, the way it purchases, the way it maintains its inventory and dealing with its customers; in short everything related to the business.

It's not an overnight job

A total makeover
To be an e-business entity is not an overnight venture. The thought process doesn't come from an IT manager, it has to come from the CEO. The CEO has to believe in the vision and start moving the whole company towards that vision. In order for businesses to successfully transform themselves to an e-business environment, it takes more than technology. Heavy structural changes within the organization is inevitable. One needs to make changes in the processes and culture of the organization concerned.

The entire organization has to be integrated and streamlined from the store to the call center, from the warehouse to suppliers. Every employee has to be online, sharing the latest information with employees, business partners, customers, and suppliers.

As an e-business, practically every aspect of the operations is crucial to your business and has to change. Outlined here are four reasons why one needs the Internet for a better business.

1. Technology - business technology has to be totally reinvented to facilitate smarter, more efficient operations across the entire organization.

2. Processes - using the Internet, you will drastically improve your internal and external day-to-day processes. How you connect to suppliers and customers and new business processes goes along with it. Your customer will process his or her own orders while the supplier will stock up your inventory for you, significantly changing the way you do business.

3. Structure - e-business allows you to reshape your global and administrative structures, enabling a much more efficient way of doing business at a significantly lower cost.

4. Business culture - e-business will fundamentally change the way your employees do their jobs. Perhaps the hardest change of all--rethinking business roles and responsibilities.

As far as SMBs are concerned, the government is providing the infrastructures and education but these will be useless if SMBs don't accept that they need to change their current ways and accept the new ways.

For IT vendors/consultants, they have to learn the local SMBs' peculiar methods and unique business processes and not simply "port" e-business solutions largely catered for Western companies to the local scene. This method will most likely fail. SMBs are a major contributor to the Malaysian economic growth. The quicker SMBs embrace e-business; the faster the benefits for the companies involved and the country in general.