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For region’s small business, digital is a gap to bridge

For this to happen, tech vendors need to cut out the jargon and make it easier

Image Credit: Hugo Sanchez/©Gulf News
Gulf News

Despite the economic uncertainty that has dominated Middle East and North Africa, the World Bank is optimistic the region will witness gradual growth during 2017, recovering at a 3.1 per cent pace until 2019.

Chief executives seem to have a confident outlook, with 39 per cent claiming the economic environment will improve in the coming six months. For this forecast to be realised, look for no catalyst better than small and medium enterprises.

We’re talking about a collective power of SMEs that make up 90 per cent of registered companies in MENA. We’re talking about an economic force that employs 17 million people in the GCC alone.

Their size does not limit their impact, in fact SMEs contribute to 30 per cent of the UAE’s GDP, 28 per cent of Bahrain’s, 22 per cent of Saudi Arabia, 20 per cent of Kuwait’s and 17 per cent in Oman.

While the World Bank sees that SMEs have the potential to contribute by up to 40 per cent of GDP in emerging economies, SMEs in first-world countries account for 51-60 per cent. How do we fill the gap in our markets?

For this economic engine to prosper, SMEs themselves need to grow. The most important factor, according to Barclays, is technology. This means that the survival of SMEs relies on adopting digital transformation.

SMEs in the Middle East are aware of the value of this approach, where four in ten consider digitising their portfolios as “critical to future revenue growth”. In fact, companies who have invested in big data, cloud computing, mobility, and security, enjoy about 50 per cent faster growth versus their competitors that didn’t.

But this doesn’t come easy, or cheap. The region has realised only 8 per cent of its digital potential, as opposed to 15 per cent in Europe and 18 per cent in the US, according to Digital McKinsey. There are a number of factors contributing to this reality, the top being finance.

And while the Middle East’s SMEs are lagging behind in digitisation, consumers and governments alike have already created a trend.

The region is home to the highest smartphone penetration rates in the world, which is projected to grow from 39 per cent to 65 per cent in three years only. The UAE has reserved its global top spot in this field with 83 per cent, the highest smartphone adoption rate, while Kuwait and Oman have surpassed 70 per cent.

On the other hand, we’ve seen local governments adopt digital transformation as well, by setting national KPIs that drive them to smart economies. The 2021 UAE Vision and the 2030 Saudi Vision are great examples of the policy shift.

This behaviour is also apparent in the channels leaders of the region communicate with their people. Their social media presence is remarkable, with their activity placing them on top of the global leaderboard. For example, Queen Rania of Jordan has consistently been among the top active leaders of the world on Twitter.

The dynamics governing the digital ecosystem exert a further pressure on SMEs to operate efficiently and effectively. Consumers are being more demanding and less patient since they expect services offered by SMEs to be as fast as mobile clicks.

This pressure is multiplied by the governments’ initiatives since they expect SMEs of all sectors to drive their economies to smarter visions. However, this reality drove an optimistic perspective by Accenture: “The combination of the high penetration of mobile devices and the readiness of the population to adopt new technology, and the vision from government leaders and companies are all factors that will position the region to make the most of digital transformation.”

The ecosystem is in favour of SMEs investing in technology. It offers the app industry a huge potential with the audience being more digital savvy than ever. SMEs can take advantage by communicating with their customers through emerging e-commerce channels and social networks, benefiting from the lower cost and wider reach.

SME leaders know they need technology to advance but they have no idea where or how to initiate the process in the best manner. In a US survey that polled 500 business executives, 65 per cent said they are overwhelmed with the growing number of technology options available to them.

They feel intimated by digital jargon, anxious about its direct RoI (return on investment) and pressured to utilise it to make their businesses more efficient and effective. At the same time, there is little to no support available to them to help them in taking this step. Only 17 per cent have a technology mentor, and usually it is a friend or a family member, not a dedicated professional.

Tech vendors tend to forget that business owners talk business, not technology. They fall in the trap of communicating their technologies to SMEs in a robotic tone.

Lacking the human aspect could be a repulsive factor for SMEs to considering their services, and therefore, lag in adopting the digital cycle. IBM’s global #MakeTheTeam campaign is a great example that breaks the barrier and addresses business decision makers in a lively piece of communication.

Tech providers need to simplify the equation for businesses of different industries that are in need for their services to grow. The transition will require providers to go beyond selling their technology and pushing their digital products. They need to not only build useful products but also build relevant brands that play a meaningful role in SMEs’ lives.

They should learn to put themselves in SMEs’ shoes, because they, tech giants, were once small. Small — and medium — steps, are the only way forward to save MENA’s economy.

— The writers are with Leo Burnett MEA.

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