ICT THE LIFEBLOOD OF SMEs

The place of ICT in SME development cannot be overemphasized. SME development in this global economy definitely depends on using ict tools to achieve maximum impact. Before we go deeper into the discussions, let us attempt to define the both terms.

DEFINITION:Information and Communication Technology

It is the study or business of developing and using technology to process information and aid communications. ICT is an acronym for information communications technology. It is concerned with the storage, retrieval, manipulation, transmission or receipt of digital data. The data is transferred or communicated to people over long distances via electronic means. It also deals with any communication device or application, encompassing: radio, television, cellular phones, computer and network hardware and software, satellite systems and so on, as well as the various services and applications associated with them, such as videoconferencing and distance learning.

DEFINITION: Small Medium Enterprises

Small and medium enterprises (SMEs) or small and medium-sized businesses (SMBs) are companies whose personnel numbers fall below certain limits. The abbreviation "SME" is used in the European Union and by international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO). Small enterprises outnumber large companies by a wide margin and also employ many more people. SMEs are also said to be responsible for driving innovation and competition in many economic sectors.

Every country has its own definition of what is considered a small and medium-sized enterprise. In the United States, there is no distinct way to identify SME; typically it depends on the industry in which the company competes.

In the European Union, a small-sized enterprise is a company with fewer than 50 employees, while a medium-sized enterprise is one with fewer than 250 employees.

Canada uses the term SME to refer to businesses with fewer than 500 employees, while classifying firms with 500 or more employees as "large" businesses.

Breaking down the SME definition, Industry Canada defines a small business as one that has fewer than 100 employees (if the business is a goods-producing business) or fewer than 50 employees (if the business is a service-based business). A firm that has more employees than these cut-offs but fewer than 500 employees is classified as a medium-sized business.

IMPACT OF ICT IN SME DEVELOPMENT

ICT has impacted the way SMEs do business worldwide. Basically what ICT does is to make business processes easier through streamlined and unified communication systems.  Let us take a look at a few of these areas;

COMPANY PROFILE DEVELOPMENT

A standard company profile includes information on the company so that readers and other interested parties can learn more about the company. A company profile explains how the company was started, when it was started, who started the company. The company profile also serves to communicate what the vision of the company is, as well as what the company mission statement is. This helps consumers to determine whether or not they want to support the business.

The first place a company’s profile should be seen is online. This way other stake holders can make corrections printing on paper.

BRANDING

As we all know the formula for branding is Paper design + Logo design + Web design = Branding.

Having a website in this ICT age is the second most important aspect of  branding only after logo design, you can do for your business. Any business that doesn’t have a website does not appear serious to customers and thereby loses credibility for this. This also goes a long way in limiting the prospects of such a business. You will also agree with me that you are usually more at home with a company that has a www address than those without.

PACKAGING

The way you package your website goes a long way to determine how packaged your business is. You should have an interactive website that can aid interaction between you and the client or customer. For example some websites are able to respond to e-mails on your behalf, immediately the customer or user sends in a request. As he receives a response while he is still online gives him or her impression that the company is responsive.

MARKETING

Marketing – The role of ICTs in marketing cannot be over emphasized. With the role Facebook and other social media are playing in marketing today, it will be clearly insensitive not to be online to market your product.

ORDER TAKING

After you have done marketing and attracted customers to your products and then to the site, with an adequately interactive site, you can take orders from customers and send acknowledgements to their e mail addresses as the order is received.

FEEDBACK FROM CUSTOMERS

RECEIVING feedback from customers is one area that any serious business must focus its energy on. This is because marketing oriented companies will always do better than sales oriented companies. Getting feedback from customers helps companies to know which areas they need improvement and which areas to re-engineer in the business.

ONLINE TECHNICAL SUPPORT

A lot of companies offer round the clock online technical support for customers. This is very essential as creating a blog of frequently asked questions and answers from the professional goes a long way in helping customers solve similar issues.

ICT AND SME COMPETITIVENESS

Flexibility is considered to be a major source of competitiveness for SMEs compared to larger enterprises. The use of ICT could now on the one hand increase the competitiveness of SMEs as they enable the creation of more flexible links with trading partners because of faster and more reliable communication channels. On the other hand ICTs could help bigger enterprises to increase their flexibility through a restructuring of the organization which will enable them to adapt quicker to changing conditions. Therefore the competitive advantage of SMEs could also decline.

 In general SMEs rely much more on informal information systems than larger enterprises. To get the relevant information that is needed for a rational decision is not costless especially as in SMEs usually there is only one decision maker –the owner/manager–who’s personal resources (time, knowledge, and capabilities) are restricted. However SMEs have the advantage of smaller internal coordination costs, as all decisions are made by one or few people.

With the use of ICTs transaction costs could be lowered and therefore the economies of scale in business can be reduced. This will enable SMEs not only to stick to local markets but to expand regionally and internationally. On the other hand many SMEs that are located in rural areas serve the local niche market and are protected against competition from bigger enterprises because of high transport and communication costs. Therefore ICTs might also increase competition for these enterprises, so they either have to become more productive or to close down. There are hardly any studies that analyse the effect of ICTs on small enterprises in developing countries, partly due to data problems. 

Findings for Indian manufacturing SMEs show that enterprises that use more advanced forms of ICTs have on average a higher labour productivity and a higher growth rate. In a survey of 59 electric and electronic manufacturing Indian SMEs mainly employing less than 50 people, it was observed that there were higher profit margins, skill intensity and export and import intensities for firms using IT. There is also some evidence that export performance of SMEs is related to ICT adoption. However it is not the investment in the technology alone but the combination with other technologies and especially relevant skills that make ICT work.

A more qualitative study stresses the different information and ICT needs for different types of SMEs. They conclude that smaller SMEs with little working capital (which they characterise as survivalists and trundles) rely mainly on informal information from known sources where personal relations and trust plays a major role. For these enterprises ICTs are of minor relevance and only telephone can help to increase access to this kind of information. As phones can help to extend social and business networks and in some cases substitute for journeys and business intermediaries access to telephone services should be given priority. However, for bigger SMEs that are growth oriented, belong to the formal sector, are export oriented etc. information becomes more important and therefore more advanced ICTs can be helpful for building business linkages.

This goes a long way to tell you that from start to finish your ICT strategy has to be built up. So u can see that tailoring your ICT needs according to your daily processes is key in designing your ICT systems. Please always use a professional to aid in designing and implementing your ICT systems. Thank you.

For Enquiries Contact Austin on 08030991029