Tech: SMEs should prioritise collaborations and upskilling efforts in digitalisation journey - MIDA | Malaysian Investment Development Authority
contrastBtngrayscaleBtn oku-icon


plusBtn crossBtn minusBtn


This site
is mobile


Tech: SMEs should prioritise collaborations and upskilling efforts in digitalisation journey

Tech: SMEs should prioritise collaborations and upskilling efforts in digitalisation journey

23 Dec 2020

While awaiting further details on digitalisation funding from the government, small and medium enterprises (SMEs) are encouraged to start planning their digitalisation journey and foster collaborations with partners in the public and private sectors. It was announced in Budget 2021 that the government — through state-owned financier Bank Pembangunan Malaysia Bhd (BPMB) — will provide RM1 billion to the Industrial Digitalisation Transformation Scheme to boost digitalisation activities. The fund is said to be available until Dec 31, 2023.

Furthermore, additional funds amounting to RM150 million in support of automation and modernisation will be provided under the SME Digitalisation Grant Scheme and the Automation Grant, with eligibility for these grants being relaxed for micro SMEs and start-ups that have been operating for at least six months.

These are big numbers, but from the SMEs’ perspective, the funds are not easily attainable, or plainly out of reach, as there is little available detail on execution and implementation of the said digitalisation aid.

Such funding for SMEs already exists, some of which is disbursed through government agencies like Malaysia Digital Economy Corp (MDEC) by way of the SME Business Digitalisation and Smart Automation grants, but more clarity is needed with regard to other funds. For example, the extent of the utilisation of the RM3 billion Digital Transformation Fund announced in Budget 2019, remains unclear. More importantly, how will businesses tap these digitalisation funds as part of the national digitalisation agenda?

When reached for comment, a spokesperson at MDEC said the Ministry of Finance had yet to provide an update on the matter.

Public and private sector collaboration

“[For now], we stress that SMEs should reimagine how digitisation can propel their business recovery, transform their business and accelerate growth,” says Microsoft Malaysia small medium and corporate group director Azizah Ali.

IBM Malaysia managing director Catherine Lian concurs, urging SMEs to foster partnerships to ensure business recovery and resilience.

“The need for partnership and collaboration between the public and private sector is crucial to make a better future for digital Malaysia and accelerate us towards the era of IR 4.0,” says Lian.

IBM Malaysia has a running collaboration with Malaysian fintech software solutions company MADX Panel for the implementation of cloud solutions to improve digital services for the latter’s micro, small and medium-size enterprise clients across the country. The partnership enables MADX Panel to enhance its digital capabilities and continue developing innovative products and services for its clients at a competitive cost.

Cloud solutions generally give SMEs access to the necessary capacity, security and services to keep their operations running. By implementing advanced technologies, SMEs can then tackle challenges that demand minimum disruption to business operations, delivery of mission-critical operations and new ways of working.

“SMEs also need to look at partnerships that ensure they are equipped with the necessary skills of the future. There are already some smart partnerships between industry, government and academia to fuel the pipeline. We will need new kinds of collaborations involving federal and state governments, public school systems, community colleges and private businesses across industries,” says Lian.

The key, she says, is for SMEs to start reskilling for a world in which every company is cloud-based, and automation and artificial intelligence (AI) will drive future modernisation.

Addressing skill gaps

According to IBM Malaysia, hybrid cloud and AI are the two dominant forces driving digital transformation.

“Gaps in skills need to be addressed in order to accelerate digital transformation for businesses to create a competitive advantage for sustainable growth in the future,” stresses Lian.

“The challenge is in reskilling and upskilling the organisation for digitalisation. For a business that has yet to adopt it, we believe cloud-based infrastructure is the key to organisational transformation,” she adds.

She shares her observation of financial institutions, government-linked companies (GLCs) and conglomerates as the early adopters of cloud-based infrastructure, many enquiring about their next steps in driving digitalisation transformation for human resources, procurement, finance and supply chain.

“The emphasis should be placed on upskilling and creating a ‘digital first’ workforce. If you look at the various initiatives on which IBM has embarked, we have covered from IR 4.0 and manufacturing processes to a local city council, and finally GLCs and SMEs to run the cloud-enabled infrastructure. All these require local talent and specific skillsets,” shares Lian.

She points out that innovative technology like AI will continue to augment human jobs, not replace them, which is why every worker in Malaysia will need to prepare for upskilling of the technical and aptitude for technology solutions to stay competitive.

SMEs’ first steps forward

According to the SMB Scalability Index 2020 by Microsoft and Forrester Consulting, SMEs aspire to scale up speedily but are typically hampered by a short-term mindset; out of the 74% wishing to prioritise customer acquisition, 60% fail to embrace the digital transformation required for customer engagement.

“While the words ‘digitisation’ and ‘technology’ may be broad and confusing at times for SMEs,” says Azizah, “the core guiding principles for SMEs are to empower their employees to be more efficient working remotely, reach and engage their customers better, lower operational cost and increase efficiency as well as push for product innovation. Within these principles, SMEs can prioritise and narrow down their investment to start with the one with the highest impact.”

According to her, pay-per-use cloud-based solutions “cost relatively [less] yet have a high impact” and can enable the functions of a hybrid secured workplace to empower employees while keeping operational costs manageable.

“SMEs need to increase enterprise and ecosystem visibility, direct scarce resources to areas where they would have the greatest impact while building flexibility and insight into business processes to respond to change rapidly. In other words, ‘do more with less’. SMEs should be quite agile with tech adoption and decision-making since they don’t have the conventional issues typical of their enterprise counterparts,” says Lian.

She advises SMEs to focus on two key things — strengthening the company infrastructure and enabling business transformation.

SMEs that have been investing in the transformation of their business models, she observes, are quicker to adapt to evolving business conditions, navigate uncertainty and become more resilient.

On skill enhancement, Bank Negara Malaysia has reported that 54% of jobs in Malaysia face a high likelihood of being automated in the next 10 to 20 years, with most jobs requiring new information and communications technology (ICT) skillsets within the next decade. These technology-driven trends will create an evident shift in the skills demanded.

“While there are more challenges to consider such as cybersecurity, organisational culture and resources, there are many forms of support SMEs can receive to make their digitalisation process smoother,” she adds.

For upskilling, SMEs are urged to leverage technology giants like Microsoft Malaysia for their knowledge-sharing sessions.

In June, the company launched a global skills initiative aimed at upskilling 25 million people with digital skills by way of existing and new resources from LinkedIn, GitHub and Microsoft.

“SMEs can certainly leverage free online technical learnings as well as low-cost certification to upskill their resources to support their digital journey,” says Azizah.

New norm digitalisation for SMEs

According to research by Microsoft Malaysia, it discovered that while 80% of business leaders across all industries intend to accelerate digital transformation, SMEs generally tended to be slower to adopt new technologies, preferring to adhere to their legacy applications and solutions.

In the new normal, however, SMEs have been forced to be more open-minded and display a higher sense of urgency in their digitisation journey.

“Given the new norm, the top priorities for SMEs should be, for one, how employees can be empowered with the right tools and information for remote work and agile execution,” Azizah says.

“Second, comprehensive training as well as industry-focused engagements will support SMEs’ business continuity and resilience plans. We encourage SMEs to accelerate their digitisation journey either in a bite-size manner or holistically in order to speed up their business recovery and propel the growth by leveraging on cloud innovation. These two pillars will allow SMEs to drive business continuity on a short-term basis while expanding the plan of adoption for mid-term business resilience,” she adds.

Meanwhile, in these trying times, SMEs will no doubt be waiting for details on how to access the Industrial Digitalisation Transformation Scheme.

Source: The Edge Markets