by | John Galligan & Dr. Dzaharudin Mansor
THE CLOUD AND SMES: FUELLING THE ENGINES FOR SUSTAINABLE GROWTH
Even as uncertainty looms over the global economy, Asia Pacific remains poised for continued economic growth.
Key to this has been the performance and positioning of small and medium-sized enterprises (SMEs) that represent over 95% of businesses in most APEC economies and often generate well over half of all employment and anywhere from 30-60% of GDP. In Malaysia, SMEs are estimated to comprise 99% of total businesses and provide 56% employment, ultimately contributing to 31% of GDP and 19% of exports. Interestingly, the SME segment outpaced GDP from 2004 to 2009, and was relatively resilient to economic down turns. These facts have been recognised in the 10th Malaysia Plan (2011-2015) where there is strong emphasis on developing the small business ecosystem. In fact SMEs are seen as an important driver for the economy, and Malaysia targets to boost growth from an average of 6.3% to about 8.0%. However, to unleash the untapped potential of SMEs in Malaysia, there is a need to transform these entities to be more competitive and resilient to the changing business environment. Information Communications Technology (ICT) is often seen as a tool to enable such transformation. In the past, the cost of implementing and maintaining the required ICT solutions to effectively support the business needs of a progressive SME companies has been a major obstacle. Cloud computing is seen as a potential solution to this problem, and this turning point in the ICT industry could not have happened at a better time for Malaysia.
However impressive the numbers, the vast majority of SMEs are undercapitalized, underdeveloped and underserved when it comes to the technology tools and human expertise needed to run their businesses. Most technology vendors tend to forget that technology tools are just that – tools. Most SMEs do not have IT departments with specialists who know how to operate these tools. And anything that takes them away from their core focus is costing them revenue. With cloud computing the game has changed, offering SMEs the opportunity to leverage enterprise-level applications and development platforms without the associated upfront capital expenditure or complex IT roll-out. Cloud-based CRM, resource management and HR applications drive greater efficiency in basic company functions at prices that are infinitely more manageable to SMEs with tighter finances and cash flows, can often be turned on and off as they are required, and are increasingly intuitive to use and integrate into business needs. Applications hosted in the cloud can help to ensure business continuity and prevent massive data loss in the event of disasters, a lesson we have been reminded of several times in recent months. The utility-based model of cloud computing is another boon for SMEs, not only for cost control, but because it allows them to work with services on a smaller scale first before ramping up into full deployment, significantly lowering the barrier to entry for cloud services.
Closing the Gap
While the potential for cloud computing is evident, recent research commissioned by Microsoft shows that there is some way to go to ensure that the cloud is being leveraged by SMEs in the region. The Microsoft sponsored Springboard Survey reveals that while larger Asian businesses are embracing cloud services, SMEs are lagging behind their enterprise cousins with 62% of organisations of more than 500 PCs either having adopted or planning to adopt cloud, while 68% of organisations with less than 50 PCs having no plans to adopt cloud computing. While some Asian cultures including Malaysia can be naturally cautious, this is a missed opportunity that could impact competitiveness for the country. Surprisingly though, the research also highlights the key driver of, and barrier to, cloud adoption is not simply managing cost, with most citing the ability to support unpredictable workloads as the most important consideration in adopting the cloud. In terms of concerns, data security and how to guard against unauthorised access are the biggest barriers. Clearly, regardless of size and geography, the need to address trust and confidence is as importance as reliability and cost.