Small and Medium Enterprises (SMEs) may not have the financial clout of larger organizations, but they still contribute almost S$200 Bn to Singapore’s economy, according to the Singapore Department of Statistics. What is also important to note is that they employ two-thirds of the functioning economy as well. Recognizing the critical role that SMEs play in the economy, the Singapore government has initiated several programs to support and help develop these enterprises.
However, the success of SMEs depends on their willingness to adopt forward-thinking business practices in a rapidly changing socio-economic climate and the ability to deploy these sustainably.
There is a valuable lesson for smaller enterprises in the message of ex-CEO of Samsung, Kwon Oh-Hyun
We should adapt ourselves to the new environment instead of sticking to our success in the past. I believe now is the time for us to turn ourselves into a first mover from a fast follower.
What are the GameChangers of this decade that could make or break an organization looking for better go to market strategies?
Getting equipped for the digital age is a given. Still, within these, the top contenders seem to be adoption of blockchain, becoming Industry 4.0 ready, integrating AI and deep machine learning, and getting aligned with cashless payment systems and green financing. SMEs that can harness disruptive technologies from blockchain to voice and AI can penetrate markets, create profound efficiencies, and implement sustainable practices.
Industry 4.0 (I4.0)
The term refers to the migration of manufacturing processes towards cyber-physical systems, internet of things, computing, and AI. Manufacturers who deploy machine to machine (M2M) systems lead to automated processes with greater transparencies, monitories, analysis, and troubleshooting, resulting in a dramatic rise in productivity.
The Boston Consulting Group claims that the adoption of I4.0 could accelerate Singapore’s labor productivity by almost 30% by 2024. However, according to an EY report, over half of the SMEs in Singapore are still struggling with digital adoption. Acknowledging the importance of Industry 4.0, the Singapore Government’s Go Digital program provides massive subsidies of up to 70% on setting up cybersecurity and AI and has already supported around 4000 SMEs in getting automated. It could have an impact on a range of SMEs across industries – engineering, textiles, food, and semiconductor and electronics, among other fields.
A valuable way in which I4.0 can integrate is through the supply chain. Digital smartness can make the supply chain more transparent, efficient, and sustainable, leading to not just profitability for the business but also the increasingly vital customer satisfaction. Firms can scale up to global markets and manage manpower shortages through automation.
A Gartner study reinforces the message that the top eight supply chain technology trends that could help SMEs improve their go to market strategy are artificial intelligence (AI), Internet of Things, automation, and blockchain.
MAS and the Info-communications Media Development Authority (IMDA) jointly offer a cross-border innovation platform for SMEs, Business sans Borders. It is an ingenious AI-enabled marketplace where SMEs can match with aligned buyers or vendors across the globe. The Singapore government has been active in helping SMEs bridge the technology gap, through installation of model smart factories and preparing a Singapore Smart Industry Readiness Index that helps businesses evaluate their technology and people, process compliance.
Managing Director of Mistletoe Singapore, Mr Atsushi Taira, says..
Individual technologies are important, but we need to think of holistic views of the integration of technologies to solve issues. Once we set a target domain or issue to solve, then we can bring different technologies from AI, and robots, and blockchain to combine into a single solution. It’s more important to see more orchestration. That’s a fundamental shift.
The blockchain conversation is a vital part of the I4.0 transformation. Along with AI and ML, blockchain can provide transparency and accurate analytics at every step of the lifecycle of a product. It gives clarity into not only manufacturing but also logistics, giving them insight into the areas that need refining. The ability to track every part of the product’s journey and have it time-stamped also creates more sustainable practices, which translates to increased customer engagement. According to a Nielsen study, up to 81 percent of customers around the world prefer companies who are accountable to the environment. Thus, leveraging blockchain to achieve higher sustainability can be a profitable business model.
The blockchain conversation also lends itself to the SME financing scenario well. All data and financial transactions are secured and transparent, thus improving trust from both the client and investor perspectives. Customers are happier about digitized transactions in a world where all business interfaces are now rapidly becoming online and protected from fraud and identity theft issues.
The Singapore based Blockchain Technology Creatanium Centre (BTCC) is a platform that creates an almost instant blockchain ecosystem for smaller Singapore enterprises.
Blockchains can also facilitate smart contracts where the terms are not only pre-defined but also automatically implemented, eliminating the need for intermediaries and time consuming red tape. Confideal and dApp Builder are blockchain enablers that create smart contract portals for SMEs with little or no effort.
AI and Robotics
Sweeping developments in technology are leading to permanent disruptions in the social and economic spaces, and the only organizations that stay afloat are the ones that seamlessly integrate these disruptions into their business processes. Robotics have created incredible competencies in the manufacturing processes, moving from automated tasks to smarter, human-like strategy roles. Newer robots use Vision AI to identify objects through cameras.
While AI has made manual processes efficient and error-free in the last decade, it is now evolving into a collaborative human-aid identity. Chatbots are now becoming an elemental part of any customer-facing online interaction in almost any B2C vertical. It is also going well beyond the chatbot aspect to integrate with the entire technology stack. AI is further innovatively deployed in non-conventional industries like agriculture to analyze the soil, water components, and suggest optimal solutions. Their use is limited only by imagination, and SMEs who crest the wave are way ahead of competitors who rely on only human resources.
According to Mr Billy Chen, CEO of Oriole Technology, developer of intutive chatbots for service industry, says
Many people think that AI will replace human jobs, but it’s more like AI is becoming able to co-work with humans.
Voice-enabled AI has transformed the daily lives of consumers today, with smart speakers like Amazon Echo and Alexa. In an incredible trajectory, there are now Mind-Activated AI products that analyses images from the human brain’s visual cortex to draw interpretations.
Any smart SME is on track to utilize AI tools in social media marketing, drawing deeper insights and predict behaviors of its customers and product positioning. Twitter, in fact, uses AI to determine the part of the photo that is attractive to the viewer and displays it.
During panel discussion on “Technology in Finanical Services” at Singapore, November 2019, SEBI Chariman, Mr Ajay Tyagi said
Technology is a key Gamechanger in financial services as it can not only provide fast and better services to the consumer, it can also be a catalyst in improving the ease of doing business.
Using QR codes for sales and purchases has already been adopted with great success in countries like China and India, paving the way to a cashless economy. Almost 60% of the approximately 700 million internet users in China are already using mobile money, through AliPay or WeCHat app.
Singapore consumers have eagerly adopted Quick Response Code to transact with local merchants. Singapore’s DBS Bank has tied up with around 3000 merchants with its SNAP reach program. PayNow allows customers of its nine banking partners to do peer to peer transfers, in the form of Singapore Dollars, with just an NRIC/FIN or mobile number.
Migrating from a paper to a cashless economy not only means a more efficient and transparent economy, but it also leads to enormous environmental benefits and reduction in carbon emissions. For instance, the cashless toll systems led to savings on paper generated and fuel consumed by idling engines. Digitally enabled financial transactions also benefit the peer-to-peer lending platform for credit and small loans.
A pivotal study by OCBC reveals that 66% of SMEs in Singapore are prepared to eliminate cash and cheque transactions with their customers and suppliers, go cashless by 2023. Many SMEs have strategized, moving ultimately towards e-payments even as early as 2020. Singapore based cashless platforms like DBS’s PayLah!, NetsPay, GrabPay, and PayNow have paved the way for a complete transformation very soon in this decade.
Green finance is the new sustainability mantra driving governments, consumers, and enterprises in this crisis of climate change. Consumers have expressed a clear preference for products and companies that are responsible and sustainable in all aspects of their business, from production, supply chain, distribution to marketing.
Green finance relates to the market instruments and policies that set up to invest in entities that are accountable and sustainable. SMEs that can demonstrate environmental efficiencies and energy-efficient revenue models can benefit from such green financing. For instance, the Monetary Authority of Singapore (MAS) offers a green bond grant scheme called GIP to drive sustainable investments. City Developments Limited has issued a green bond to the value of $100 Mn to DBS Bank, which is a pioneer in sustainable business practices.
The United Overseas Bank (UOB) has extended its first green loans to three SMEs in the real estate vertical, with sustainable objectives. In contrast, DBS Bank has delivered on a sustainability-based loan to an egg-producing SME in Singapore. What SMEs need to know is that these green bonds issue based on Environmental, Social and Governance (ESG) metrics, with established eligibility criteria based on the SME’s business goals and processes from sourcing to delivery.
The writing on the wall is clear. The key catalysts of growth seem to be green, digital, and customer-centric. The new decade belongs to the businesses that can keep pace with the incredible fintech innovations driving the development game.