SMBs: Negotiating the curve toward IT efficiency

Since the ’80s, Tirupur, 60 km off Tamil Nadu's Coimbatore district, has remained India’s knitwear capital. Helping the city stay on top is a textile cluster comprising Small and Medium Businesses (SMBs). Businesses in the cluster pursue diverse activities in the textile value chain and interact with a vast network of partners. There is a lot of communications ups and downs since most SMBs lack the platforms needed to ensure reliable and high-quality communication across this ecosystem, especially via email and teleconferencing. Clifton Trends’ business situation was no different in the past. The apparel maker knew that finding a way out of this problem without the luxury of an enterprise-size IT budget was a challenge, but not something unachievable. The company soon subscribed to a cloud-based productivity software to enable its 25 employees, half of whom are always on the move. With this, employees are able to communicate more effectively with their partner network as well as share data along the network, no matter where they are, what time of day or night, or what device they are on. The resulting increase in productivity helps save time and cost and speeds sales. 

On the back of cloud-based messaging solutions, educational institutions are now able to network extensively with their alumni scattered worldwide and encourage them to give back to their alma mater. Most state-run institutions of higher learning in India are hamstrung by inadequate funding. Private donations can help make this cash crunch less severe. It will also enable institutions to expand their physical infrastructure and support seminal research. This in mind, the Indian Institute of Management Bangalore (IIMB) looked for ways to strengthen ties with its alumni scattered worldwide. Getting them to talk to each other was the first step in this direction. Because the nearly 10,000-strong alumni of the country’s premier B-school have hardly ever stayed in touch. But Rajesh Godhwani and friends from 2004 batch decided to change all that. Using Office 365 cloud-based productivity software they got every batch together, starting from 1976. The new setup allows alumni to interact effortlessly. They can get regular updates, catch up with their batch mates, and coach students. 

Cloud has the potential to bring SMBs the benefits of big IT on their small-business budget, at an affordable monthly subscription rate. Since no on-site hardware is required, implementation could start immediately without capital investment. Adopting such contemporary technologies like cloud will ensure SMBs pay only for what they use, nothing more. SMBs face threats from domestic competitors and often from cheap imports, so they must stay price-competitive. This means, ideally, their operating costs must be lower than the competition’s. By taking the cloud route, SMBs can also stay away from the huge advance payments they would otherwise have made on enterprise IT assets.  For in-house IT teams, cloud-based service means the headache of dealing with third-party providers is finally gone and they can focus on more important IT issues.

Without a doubt, one size doesn’t fit all. Providers of enterprise-enabling technologies seem to know this more than anyone else. Providers actually let SMBs pick and choose their flavor. Some SMBs are skeptical about the promise of the cloud and so prefer to go for a 15-day trial pilot to test the solution. Once IT teams realize the solution is easy to set up and administer and employees find it is simple to use, it is easier to get their buy-in. Certain other SMBs use cloud-based services (e.g., Exchange Online) for information exchange and make sure sensitive information therein is protected against loss or threat. For example, the Federation of Indian Chambers of Commerce and Industry (FICCI) has secured its confidential information, including on member companies, behind a 5-layer data protection setup on the cloud. Other companies like Dabur have chosen to go with a careful mix of an on-premise data center and cloud services, and this is helping the pharma player enjoy the best of both. Dabur has provided employees access to cloud-based services like email, contacts and more while retaining their own on-premise Exchange server for critical data. Its international subsidiaries access an auxiliary mail server on the cloud.

India SMBs show potential, but there is a lot of work ahead. For every success story – be it Clifton Trends or IIM Bangalore, there are so many small businesses that disappear with barely a whimper. The mortality rate of SMBs tends to be high, more so in India. SMBs, along with micro home offices, contribute not more than 8 percent to India’s gross domestic product (GDP). India SMBs and micro enterprises clocked the lowest GDP contribution by the sector from among the 13 countries covered by a recent report. India occupies the last-but-one spot when it comes to employment generated by SMBs as a percentage of overall employment. If India’s ideas about energizing its startup circuit are to stack up and take effect, the country would need as many as 10,000 SMBs. Out of this, around 2,500 will possibly achieve scale and show a combined revenue potential of around $200 billion by 2024. This could make the sector a significant contributor toward GDP and enable job creation on almost the same scale as IT and ITES industry.

Adopting latest technologies makes all the difference between leaders, followers, and laggards in the SMB space, like everywhere else. Not surprisingly, the ones that lead the SMB pack in terms of the adoption of latest technology also increased their annual revenues 15 percentage points faster than peers who fell behind in the technology adoption race, says a report by consulting firm, BCG. The leaders generally use a combination of contemporary enterprise-enabling capabilities (such as online presence and use of social networks), connectivity tools (such as Internet and mobile technology, productivity software), as well as cloud-based services and solutions. Take the case of retail. “Better, faster, leaner” is the success mantra in retail. Multi-brand electronics chain Croma is India’s first large format electronics retail chain and a leader in retail. But this hasn’t slackened its pace of technology adoption. A few years ago, the store moved to an email, calendar and contacts solution – delivered as a cloud service – shaking off its dependence on legacy IT hardware. Croma pays a monthly fee for this service, and it has helped improve communication, reduced IT effort, and trimmed overall cost by a third. In the end, whether you are an SMB, or a national chain, or an Internet-only outlet, the essence of winning is the willingness to change – ahead of others.