Small and Medium Enterprises and ICT/Specific Policy Recommendations for Governments

It is in the interest of governments within the Asia-Pacific region to fully ensure the relevant adoption of ICT within their SME sectors to both increase their internal efficiency and productivity, as well as facilitate their entry into the global marketplace. The obvious benefits of increased job creation, public revenue, and a general rise in the standard of living provides enormous opportunities to narrow social and economic inequalities, thus helping to achieve broader national development goals.53

To stimulate the adoption and utilization of ICT by SMEs,developing countries within the region have deployed a wide range of policies, and have launched many different actions and ad-hoc initiatives. However, more often than not, other policy areas where ICT plays an important and complimentary role – such as in trade and investment, education, infrastructure, law, and national security environment – have been neglected.

What is currently required within the Asia-Pacific region is a coherent and comprehensive host of e-strategies that are both practical and relevant, and that consist of actions, priorities, implementation, and resources that operate on a cross-sectoral basis. It is without a doubt that the harmonizing of these ICT and SME strategies and initiatives within a larger cross-sectoral economic development would perhaps be one of the biggest challenges governments will continue to face within an ever-evolving digital economy.54 In line with this, there are three key essential recommendations for governments to take into consideration while developing their initiatives to encourage the adoption of ICT by SMEs:

• Raise awareness of the benefits of ICT;
• Strengthen ICT literacy and build capacity in the alignment of business and ICT strategies; and
• Create enabling environments for the adoption and growth of ICT firms.

Raise awareness of the benefits of ICT.

One of the key problems facing the Asia-Pacific region has been the fact that many SMEs are not aware of the benefits and the direct financial gains to be attained by adopting ICT. A weak understanding of the potential integration of ICT solutions within business models also leads to a great degree of inefficiency. This scenario is compounded by the fact that there are a large number of competitive ICT products and services available on the market, which causes a great deal of confusion to companies with limited ICT literacy and capacities. In addition, the high cost of acquiring and maintaining ICT solutions further creates barriers to their adoption. Governments could assist in creating awareness and reducing the psychological barriers to ICT acquisition by showcasing SME success stories, best practices, and benefits gained through ICT adoption. By clearly demonstrating the modern systems approaches to ICT/business integration, the failure rate of ICT adoption by SMEs can be reduced. For example, Enterprise-wide Business Process Management (EBPM), representing the third wave of Business Process Management, is a deliberate and collaborative approach to systematically manage all of a company's business processes. It facilitates seamless integration of ICT solutions into a business model. In addition, business approaches such as Business Technology Management (BTM), an emerging management science grounded in research and practice, demonstrate methods to unify decision-making from the boardroom to the ICT project team.

Specific actions that governments could consider exploring are:

• Providing financial or non-financial support to business organizations that promote best

practices in the field of ICT/business integration;

• Organizing annual Business-Technology Alignment Award programmes;
• Generating and promoting SME success stories, emphasizing benefits gained from

ICT adoption and integration; and

• Providing financial and non-financial support to Software as a Service (SaaS) firms that

give SMEs access to latest software without incurring high up-front capital costs.

Strengthen ICT literacy and build capacity in the alignment of business and ICT strategies.

The lack of ICT literacy is a major problem affecting all sectors of the economy in every part of the world. When business and technology are managed on two different tracks, companies spend a large part of their revenues on technology, and most of them are not satisfied with the return on their investment. Such expensive failures have led many observers to question whether ICT can ever produce a defensible long-term competitive advantage. While any business today should take full account of the impact of advances in ICT, the organization’s ICT strategy should be dominated by its business vision and strategic direction. Business principles, from which ICT implications can be drawn, should form the basis of the organization’s ICT policies and investment guidelines. One commonly used methodology is the ICT/Business Alignment Cycle, which introduces a simple framework that the ICT organization can adopt to manage a broad range of activities. The four phases of the cycle are: plan, model, manage, and measure.

Governments could assist by organizing capacity building workshops targeted to SMEs and focusing on the following:

• Ensuring that ICT investments focus on the real needs of the business;
• Enabling more effective communication between business and ICT functions at

a strategic level;

• Ensuring that the ICT function plays an appropriate role in creating value within the

business; and

• Establishing an Internet-based advisory or e-coaching service on advanced ICT solutions,

ICT/business integration practices, establishment of virtual offices, and virtual business units.

Create enabling environments for the adoption and growth of ICT firms.

The third and final recommendation revolves around the role for governments to create enabling environments for the adoption and growth of ICT firms. Such firms would be able to develop and design customized software and services that respond to the localized needs, and downstream requirements of SMEs. As the marketplace is a highly competitive area, possible actions to reduce market-entry barriers for start-up ICT firms could include:

• Establishing and supporting business incubators that specialize in growing ICT firms;
• Establishing business parks for ICT firms;
• Providing financial and non-financial incentives to start-up ICT firms; and
• Providing tax incentives to SMEs that buy ICT products and services from local firms.

It can be concluded that developing countries in the Asia-Pacific region have a tremendous potential for rapid and sustainable economic and social development by leveraging the potential of ICT and applying it appropriately within the SME sector. However, governments must continue to play an active role in encouraging and promoting the use of ICT while ensuring that coherent enabling policies are in place, and that capacity building and skills development are fostered in order to attain national socio-economic goals, for the benefit of the wider population.