Most small and medium-sized enterprises (SMEs) in SA view technology as the heart of their business transformation efforts.
So said Desmond Nair, SAP Africa's head of ecosystem and channel, when presenting the findings of the brand's "SMEs: Equipped to Compete" survey, in Sandton, yesterday. The research was commissioned by SAP and conducted in conjunction with Oxford Economics.
The objective of the survey was to better understand how SMEs around the world are using technology to boost innovation, strengthen customer relationships, improve agility and expand their businesses.
Within SA, 44% of the SMEs surveyed have either completed, are in the process of completing, or are about to begin, a significant business transformation, the survey found.
According to the study, the majority of local SMEs believe social media will vastly transform their businesses. Commenting on this finding, Nair noted that South African SMEs believe social media allows businesses to reach a broader customer base using limited resources.
"In terms of spending, social media will see the greatest focus among South African SMEs, followed by business management software and business analytics," said Nair. For nearly half (46%) of South African SMEs, technology investments only happen when there is a clear return on investment, he pointed out.
The study showed that, despite economic uncertainty in SA, leading-edge adopters are willing to invest in solutions that help them improve operations and become more efficient.
EMEA tech adoption
Cloud computing and business analytics are expected to see the greatest increase in adoption across Europe, the Middle East and Africa (EMEA), at 37% and 35%, respectively (two percentage points higher in both cases than the global pace of adoption), the study showed. In addition, adoption rates for both technologies are highest among wholesalers in the EMEA region (at 60% and 40%, respectively).
Social media will see 25% growth across the EMEA landscape, slightly ahead of the global growth rate of 22%, the study found. Manufacturers (29%) and consumer goods firms (26%) will lead the pace, while wholesale firms lag in this category, but only slightly.
According to SAP, business management software is already in use at more than half of EMEA manufacturing firms and this industry will see the greatest increase in usage (to 67%) over three years. The retail sector is already behind in this area (at just 39% adoption) and will remain under 50% in three years.
Some 54% of SMEs in EMEA expect that mobile will be widely in use in three years. Professional services expect to see the biggest increase in mobile adoption in the region, at 23%, compared with 19% overall.
Trends and priorities
Describing the trends and priorities of local SMEs, Nair said shifting customer expectations and demand are the greatest issues affecting South African SMEs. Increasing labour costs and greater supply chain flexibility are also a concern, according to 30% of South African SMEs, he added.
The study found that South African SMEs are in some ways moving in the opposite direction to their global peers. While 24% generate no revenue outside the country today, that figure climbs to 28% in three years. At a global level, the rate is projected to decrease by 30%.
However, 31% of South African SMEs say that, within three years, they will generate 21% to 40% of their revenue globally, compared with 22% today. Some 45% of local SMEs operate solely in the country today, but this will drop to 27% in three years, and the number operating in six or more countries will rise from 16% to 39%, the study found.
Nair said the findings reflect a "quiet but powerful transformation" in the SME sector that is fundamentally changing markets for companies of all sizes in SA.
"The survey shows that SMEs around the world and across various industries are making major changes to their business models, products and go-to-market strategies," concluded Nair. "Globalisation, transformation and technology will be the hallmarks of successful companies, and, with a commitment to enter new markets and willingness to adopt technology innovations, SMEs have never been better positioned to win."
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