SINGAPORE (Feb 12): Small and medium enterprises (SMEs) in Singapore and the Asean region see the need to invest more in technology in order to succeed under increasingly challenging conditions, according to a study shared today by United Overseas Bank (UOB), EY, and Dun & Bradstreet.

According to the ASEAN SME Transformation Study, 60% of Asean SMEs say they will focus their investments on technology in 2018 to help drive business performance. This will take precedence over investments in other fixed assets, such as factories and machinery.

In addition, some 78% of the 1,235 Asean SMEs interviewed say they will invest specifically in software such as improving their websites and creating mobile apps.

According to the report, Asean SMEs believe such innovations would enable them to create better customer experience and to increase customer loyalty.

“There is significant opportunity for SMEs in the region to improve their digital agility,” says Liew Nam Soon, managing partner, EY Asean Markets, Ernst & Young Advisory.

“SMEs have typically been cautious in adopting cutting-edge applications. But that is changing as we see disruptive offerings such as robotics process automation, artificial intelligence and 3D printing beginning to rouse the curiosity of SMEs,” he adds. “In time, we expect that SMEs will increasingly subscribe to web-hosted applications to free themselves from managing IT functions internally.”

However, the study also found that SMEs are not aware of how efficiently pay-per-use or Software-as-a-Service (SaaS) can address their business needs.

Referring to web-based software that can be used to manage business processes such as accounting, invoicing and payroll, SaaS is a more cost-effective option for small businesses than traditional licensed software.

It provides users the flexibility to pay only for what they use and to scale the solution based on their businesses’ needs. As small businesses expand, they can add on new functionalities or increase the number of users for their existing solution without the need for further significant investments. 

“The findings of the study indicate that many small businesses may not be optimising their technology spend,” says Lawrence Loh, head of Group Business Banking, UOB.

“Their preference for traditional licensed software could be due to their familiarity with these options over newer solutions such as SaaS. However, SaaS is often more cost-effective and enables the business to keep pace with technology advances,” he adds.

Meanwhile, the study found that the SMEs generally have an optimistic outlook. Some 52% of respondents anticipate revenue growth ahead, while 26% project a double-digit expansion.

“This optimism reflects the region’s positive environment – nations experiencing muted growth are approaching the tail end of their economic slowdown and restructuring while those approaching a ‘demographic sweet spot’ will benefit from multiple factors to fuel SME growth,” says Audrey Chia, chief executive officer, Dun & Bradstreet Singapore.

However, Chia notes that the improving outlook for ASEAN SMEs does not discount the intensifying need for change.

“Technology will be the catalyst for growth and transformation,” she says. “Enterprises must continually progress through proactively implementing productivity improvements, upskilling talent and embracing technological enablers to enhance and differentiate their product and services.”