MSME

Adopting digital tools to survive, stabilise and surge

G Balachandar Chennai | Updated on June 26, 2020

Lack of knowledge is alienating MSMEs from the digital space   -  NicoElNino

Technology adoption will enable MSMEs to catch up with big companies and stay relevant in the global supply chains

Micro, small and medium enterprises (MSMEs) can reap huge benefits from automation and digital technologies in this rapidly digitising world. Such technology adoption promises bettercustomer reach, enabling them to catch up with big companies and stay relevant in the global supply chains.

However, MSMEs in India have a low awareness about all new digital technologies that are prevalent today. It is estimated that there are more than 70 million SMEs/MSMEs in India, but the digital penetration has not been that encouraging.

“While more than 50 per cent of the Indian MSMEs, in many polls, claimed benefits of using digital tools in several areas, a majority of them also cite lack of knowledge and guidance in using such tools, cost of investing in these technologies, and lack of skilled talent to manage them as among the key challenges towards adoption of digital technologies,” points out Prakash Seshadri, Business Strategist and founder-cum-CEO, See Change Consulting, which has helped turnaround numerous MSMEs across sectors.

Fear factors

Factors that prevent faster adoption of technologies include fear, absence of appropriate knowledge and lack of funding,

“I am surprised to find that many are not even aware about the fundamentals of IOT (internet of things), digital economy etc. Hence, MSMEs are unable to strategise on IT and digital areas. Many see it as automation/computation work, at best,” adds Prakash. Many MSMEs still follow the traditional marketing and sales and SCM (supply chain) models. Lack of knowledge is alienating them from the digital space. Besides, the Covid-19 pandemic has hit them hard. Amid this, there are some success stories and MSMEs that have understood the benefits of digital adoption have managed to improve their competitiveness.

For example, the textile spinning sector, an energy-intensive industry where power cost is a major factor, has reaped dividends by going digital.

“We implemented energy monitoring system to monitor all the machines 24/7 and we developed and negotiated this tool as a consortium, and because of this group effort, our member company got the system for affordable pricing and, in one stroke, many units were installed, saving energy to the tune of 5-10 per cent,” says Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation, Coimbatore. They also adopted similar efforts in small automatons like spindle monitoring system, app-based for air audits etc. “Even smaller companies are using these tools and improving their manufacturing efficiency,” he adds.

Way forward

Prakash feels government and big players (even players like TCS, Wipro can step in through the CSR funding route) should help spread “digital awareness/adaption”. After all, the ecosystem would benefit and have an all-round positive ripple effect.

An MSME board for IT infra funding will also help. Recent funds earmarked for MSMEs should be specifically set aside and used for long-term, soft funding of IT penetration for MSMEs. In parallel, digital transformation efforts of MSMEs could be explored.

Published on June 26, 2020

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