Asean SMEs prioritising tech investments over other assets: survey

FEBRUARY 12, 2018 - 6:00 AM

SMALL and medium-sized enterprises (SMEs) in Singapore and across the region are prioritising tech investments over assets such as factories and machinery, according to a new survey.

The poll by United Overseas Bank (UOB), professional services firm EY and consultancy Dun & Bradstreet found that three in five Asean SMEs polled intend to focus on technology investments in the coming year, with the majority keen on investing specifically in software.

The study polled 1,235 SMEs across the six largest Asean countries - Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam - about their plans for participating in the region's growth. Among the companies surveyed, 203 were from Singapore.

Among those prioritising tech investments, 78 per cent are keen to invest specifically in software such as improving their websites and creating mobile apps, the report found. Hardware and infrastructure investments ranked second, at 65 per cent.

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"SMEs have typically been cautious in adopting cutting-edge applications," said EY Asean managing partner Liew Nam Soon.

"But that is changing as we see disruptive offerings such as robotics process automation, artificial intelligence and 3D printing beginning to rouse the curiosity of SMEs."

The poll also found that Software-as-a-Service (SaaS) and digital talent were relatively low on respondents' list of investment priorities.

"SaaS has yet to gain critical mass despite being cheaper to implement versus a traditional on-premises application. This suggests respondents are more familiar with traditional licensed software than applications delivered as Web-hosted services," the report noted.

These findings indicate that many small businesses may not be optimising their technology spend, said UOB head of group business banking Lawrence Loh.

"Their preference for traditional licensed software could be due to their familiarity with these options over newer solutions such as SaaS. However, SaaS is often more cost-effective and enables the business to keep pace with technology advances," he noted.

The study also found that more than a third of respondents have ambitions for overseas expansion.

Overseas operations already account for up to 30 per cent of revenues for 60 per cent of the respondents, and more than 30 per cent of revenues for the remaining 40 per cent.

Companies polled were also generally upbeat about the regional growth outlook, with 52 per cent anticipating revenue growth and 26 per cent projecting a double-digit expansion.

Firms in the agriculture, manufacturing and financial services sectors were most optimistic.

"The improving outlook for Asean SMEs does not discount the intensifying need for change . . . With greater support from (governments) in the form of grants and subsidies for digitisation and technological innovation, we believe that these will help SMEs attain sustainable growth in today's digital economy," said Dun & Bradstreet Singapore chief executive Audrey Chia.