Ladies and Gentlemen,
About a week or two ago, I had a debate on a WhatsApp group about whether especially the lower end of small and medium industries, as well as micro enterprises are financially, technically and have the conceptual appreciation to be able to adopt information and communications technology (ICT) based business applications and solutions such as point of sale and inventory management, order processing and invoicing systems, supply chain management systems, enterprise resource planing and management systems and so forth, whether installed on their computer or cloud-based and operated through a web browser or a client application on their computer over the Internet.
Malaysia's government agency, the Small and Medium Industries Development Corporation (SME Corp or SMIDEC) defines micro-enterprises, small and medium manufacturers, services and in other sectors by annual turnover or number of employee in the infographic below:-
The members of this WhatsApp group are mostly comprised of well educated and highly experienced professionals, senior management and business owners, including some who provide such systems and cloud-based services to their client.
Having looked at the website of one of these person's company which provides such systems and services, I see that most of its customers are either the Malaysian units of multinationals, large Malaysian corporations or large retail, convenience store chains, pharmacy chains and so forth but includes no small businesses such as sundry shops, independent hardware stores, minimarkets, kopitiams, Mamak restaurants, banana leaf restaurants and so forth, even though almost all of these now have a point of sale terminal cum cash register on their counters, especially after these were required for GST (Goods and Services Tax) recording and reporting when GST went into effect on 1 April 2015 and was replaced with the SST (Sales and Services Tax) from 1 September 2018, after GST was repealed.
I have oftentimes asked, multinational suppliers of business and enterprise management software such as SAP and Oracle which industry sectors are their major customers in Malaysia and from their replies, almost all of them are Malaysian units of multinationals, large Malaysian corporations, utilities companies, telecommunications companies, large retail chains, banks and financial services companies, government bodies and so forth but no small businesses, and this supplier's customer base is consistent with what others have told me.
The owner of that company argued that instead of the old notion that ICT being an enabler of business, instead ICT is the business today, and this philosophy applies to all businesses from multinational and corporate giants down to food hawkers and stall owners in pasar malam (flea markets).
From my own personal experience of a small business, its owner does not even know how to check the company's own e-mail or track a courier shipment online, fill in a survey form, check its phone bill online on a smartphone, let alone understand, appreciate, or operate slightly more complex ICT applications and systems related to the business.
Admittedly, some kopitiams, Mamak and banana leaf restaurants, as well as some food hawkers have taken advantage of food delivery services such as Foodpanda, Grab Food and so forth and I have seen one of them in my neighbourhood which operates a hand-held terminal provided them by Foodpanda which prints out the orders as they are received, however whilst I believe that medium sized industries have the capacity and capability to take advantage of ICT in their business, however I believe that many small industries and micro-enterprises will not be able to, especially those in the smaller cities,towns and villages across Malaysia.
Then on 31 October 2020, Malaysia Now published an article, Time to go digital, SMEs told, which quoted Emir Research research analyst Sofea Azahar thus:-
"As long as businesses fully utilise these incentives that are driven by technology, alternatives for SMEs' survival remain present," Sofea told MalaysiaNow.
But such a journey is easier said than done.
Among the obstacles to going digital is a lack of what Sofea refers to as "digital-savvy talents".
She also spoke of a lack of motivation for companies to automate their business processes.
My comment: Precisely what I have argued in my IT Scheiss blog many times before.
The article goes on:-
But there are other factors beyond a company's control such as digital infrastructure gaps between states and a difference in awareness about embracing the digital economy.
Crossing these hurdles may be difficult, especially given that the country's skilled workforce accounts for just 27.5% with semi-skilled workers comprising the bulk at 60.1%.
However, it is not impossible.
"To fully embrace digitalisation, these indicators call for the upskilling and reskilling of talents through education," Sofea said, noting a drop in the number of students choosing science, technology, engineering and mathematics subjects in schools."
My comment: With all due respect to Sofea and Emir Research. I've heard the words "upskilling" and "reskilling" mentioned countless times before from government ministers, government officials, senior corporate managers, management consultants and so forth during my 26 years career if writing about the ICT industry and in perspective, I have seen very little evidence of that in reality after all these years.
Instead I see more and more people, both young and old being increasingly savvy at using their smartphones for frivolous activities such as casual messaging, posting and forwarding useless political crap, for casual social media access and other unproductive activities, yet have difficulty or unable to write a simple letter using a word processor on a PC or even a manual typewriter if it would save their lives.
Well now with the survival of businesses due to this business and economy-crippling COVID-19 pandemic which as seen airlines, department stores and businesses close down, I am afraid that many especially small businesses and micro-enterprises which cannot make use of alternative business channels online such as e-commerce have a bleak future.
On the other hand, this does not mean that those businesses which have survived the pandemic by going online, will not revert to more traditional business channels once the pandemic has passed but that is a topic for another blog post.
Also, why are fewer Malaysian students opting for the tougher science, technology, engineering and maths (STEM) courses?
Meanwhile, reproduced in full below is the full Malaysia Now article:-
Time to go digital, SMEs told
It may be difficult but it will be worth it, struggling businesses told.
Amanda Suriya
Oct 31, 2020 9:00 AM
While Malaysians have been quick to embrace technology and all things digital from internet banking to online grocery shopping in the wake of the Covid-19 pandemic, moving entire businesses in the same direction is proving to be more difficult, even for small-scale entities like SMEs.
Office life has gone remote with #WorkFromHome now part of the new norm, yet the shift has only highlighted how some SMEs were ill-equipped for the plunge from the physical to the virtual. Close to 70% of SMEs reported a 50% drop in business during the first movement control order (MCO).
Some had existing digital channels in place to support their brick-and-mortar presence.
But not all were able to pivot as quickly as they needed to, especially given the sporadic nature of subsequent MCOs.
For some, this was due to a lack of funds. Unlike larger corporations which often have financial buffers in place, many SMEs have cash flow reserves that will not see them past three months.
Others such as furniture shops, barbers, and spas depend on in-store customers.
Whatever the reason, the onset of the pandemic has shown all too clearly the difference that going digital makes for SMEs.
"Consumer behaviour is impacting local businesses as people opt for simpler and faster processes via e-commerce," Azlan Zainal Abidin, the chief enterprise business officer at a mobile telecommunications conglomerate, told MalaysiaNow.
"At this juncture, going digital isn't just about growth anymore – it's also about survivability and the sustainability of the business."
Small but powerful
At 98.5%, SMEs form the bulk of business establishments in the country, according to Emir Research research analyst Sofea Azahar.
"SMEs contribute 38.3% to the national GDP," she added.
"The survivability of these businesses is crucial to economic recovery, in order to maintain the expansion shown in previous years."
This is something the government has been mindful of since the pandemic hit Malaysian shores early this year. In the months following the first lockdown which saw nearly all business activity suspended to curb the spread of Covid-19, billions were channelled under the Penjana economic rescue package to help SMEs recover.
With financial support in place, Azlan and Sofea said, SMEs would benefit from adopting tools such as cloud-based electronic point-of-sale systems or digital marketing solutions, especially as restrictions on movements continue in areas across the country.
"As long as businesses fully utilise these incentives that are driven by technology, alternatives for SMEs' survival remain present," Sofea told MalaysiaNow.
But such a journey is easier said than done.
Among the obstacles to going digital is a lack of what Sofea refers to as "digital-savvy talents".
She also spoke of a lack of motivation for companies to automate their business processes.
But there are other factors beyond a company's control such as digital infrastructure gaps between states and a difference in awareness about embracing the digital economy.
Crossing these hurdles may be difficult, especially given that the country's skilled workforce accounts for just 27.5% with semi-skilled workers comprising the bulk at 60.1%.
However, it is not impossible.
"To fully embrace digitalisation, these indicators call for the upskilling and reskilling of talents through education," Sofea said, noting a drop in the number of students choosing science, technology, engineering and mathematics subjects in schools.
Will it be worth it? She says yes, and not just for SMEs.
"Leveraging technology will create opportunities for Malaysians in general," she said – as long as they are equipped with the skill sets needed to ensure a smooth digital transition.
Thanks to Malaysia Now and Emir Research, I can confidently say that I have been vindicated.
Yours trully
IT SCHEISS
