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SMEs must think big; no longer enough to just value add (Amended)
IT'S no longer enough for SMEs (small and medium enterprises) to just value add, says Titus Yong, vice-president of business sales at Singtel.
Increased tech-savviness and consumer expectations are forcing SMEs to think big and look at value creation - to develop entirely novel solutions to serve untapped needs of customers.
"Consumers are getting more tech-savvy as they can find out everything about a product or service simply by getting the information online. In addition, they have more choices and can easily buy a product online from around the world. Hence, consumers' expectations are increasing all the time," says Mr Yong.
If companies offer only slight or incremental improvements to their products or solutions over time, their customers will feel "jaded" and they can easily switch to competitors' new products or solutions, he adds.
Similar products can be bought across the world online. Worse, a product made by a company in Singapore can be rapidly copied by another company elsewhere.
Competition has become keener, and hence there is greater urgency for SMEs to stand out with their products and services, Mr Yong says.
Value add vs value creation
Value adding is to take what is already existing and add minor value without necessarily developing anything new. This makes it harder for an SME to differentiate itself from the competition in the long run.
Mr Yong advises: "Singapore companies have to come up with their own unique products or intellectual property that can set them apart and give them a competitive edge in the long run."
This, he says, can only happen when innovation starts from mindset, which then translates into processes and finally, to the product and service levels.
"If it takes the same amount of effort and time to make incremental improvements to a product, companies would be better off investing their resources in coming up with entirely new products," says Mr Yong.
Moreover, different SMEs have different needs and may each be at a different stage of the innovation or value creation cycle - from as nascent as wanting to improve their own processes with (ICT) infocomm technology to as late-stage as creating new intellectual property.
In essence, value adding is an incremental enhancement of what is existing to serve an existing need, while value creation is the creation of something unique to serve untapped needs of customers, according to Mr Yong.
For innovation to be sustainable, it has to meet an enduring need, Mr Yong stresses. An example of unsustainable innovation is the network of Internet kiosks, known as i-ONE, which were set up along Orchard Road in the late 1990s.
At the time, Internet connectivity and availability in Singapore was not as pervasive and fast as it is today. Also, e-commerce was just starting to take off, says Mr Yong.
The kiosks were located along the busy thoroughfare along Orchard Road for members of the public to use the Internet to look up information, and buy products and services from companies which then had basic e-commerce capabilities.
However, the roll-out of 3G, and subsequently 4G mobile networks, together with the availability of increasingly affordable, smarter and more powerful mobile devices, soon rendered the i-ONE kiosks obsolete.
Mr Yong says: "No longer would you need to go to an Internet kiosk to look up information on the Internet or book a movie ticket. Nowadays, you can do all these, and more, from the comfort of your home, or when you are up and about."
Increased need for cyber security
The increasing interconnectivity of devices, networks, applications and the Internet has made it easier for cyber criminals to carry out their activities. "It is a fallacy that cyber crimes only affect large companies and MNCs (multinational corporations) and SMEs are exempted," says Mr Yong.
SMEs are equally prone to cyber threats as larger firms but in fact less able to defend themselves, he notes. Particularly for mobile devices, malware attacks have increased in frequency and sophistication - rendering anti-virus software obsolete.
Mr Yong says: "Protecting your business today is no longer about whether you will be hacked. It is about what you do to prevent it from happening for as long as you can, and what you do to restore your business as quickly as possible if your systems are compromised."
Good cyber security measures should be treated as a business priority, he urges. Companies which adopt sound cyber security measures will provide greater assurance to their customers that their personal details and purchasing records can be protected.
"The company can translate this assurance from its customers into a competitive advantage," Mr Yong says, echoing a point he made a year ago.
SMEs to lead innovation efforts
Singtel, a co-sponsor of the Best Innovation Award at this year's Emerging Enterprises Awards, says it is committed to support SMEs that are seeking to innovate and enhance their competitiveness, productivity and capabilities through ICT such as e-commerce, social media, mobile and cloud computing.
Asked about robotics - the technology now in vogue after the government said it would invest S$450 million over the next three years to support the National Robotics Programme - Mr Yong says: "We are always open to exploring emerging technologies and thinking of ways to adapt them for our use."
Singtel is an investor in homegrown engineering and robotics startup HOPE Technik. In March, Singtel Innov8, the venture capital arm of the telecommunications company, upped its stake in HOPE Technik from 18.7 to 21.3 per cent for S$710,000.
SMEs - among them startups - have to tackle the innovation question for their own businesses on a day-to-day basis, says Mr Yong.
Depending on where they start on their innovation journey, innovation can simply mean coming up with a new way of doing things.
For example, an SME using ICT to be more productive is no less innovative than another SME creating a new business model for the first time. Both SMEs are innovating according to their relative realities, he adds.
SMEs form the backbone of the Singapore economy, comprising 99 per cent - a statistic most of us now know by heart - of incorporated companies here.
"If our SMEs adopt innovation ... then we are on the innovation train Singapore needs," says Mr Yong.
It was originally reported that Singtel Innov8 increased its stake in HOPE Technik from 18.7 to 21.3 per cent, valuing the startup at reportedly $710,000. This is incorrect. S$710,000 was the incremental investment by Singtel Innov8, and not the value of HOPE Technik. We are sorry for the error.