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Innovate, or exit

More SMEs are seeing the value of digitalisation and technology and realise that these are not just 'good to have' but a necessity

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"We have developed a multitude of support and tools for businesses at every growth stage, scoped according to sectors. They range from SME Centres, where SMEs can get help to tap support schemes . . . to e-commerce and food delivery booster packages to help companies sell through new avenues." - Enterprise Singapore's Chew Mok Lee

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"We've been working with our partners to organise webinars for business owners, who might be confused about applying for available schemes. To date, over 5,000 employees from more than 2,500 SMEs have attended our OCBC Virtual SME Campus webinar series since April." - OCBC's Christie Chu

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"Businesses are dealing with challenges such as lower consumption, footfall and demands that are severely impacting their businesses. Mastercard has been supporting SMEs in going digital. With SGTech, we're also conducting webinars on digitalisation for SMEs." - Mastercard's Deborah Heng

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"We are receiving more enquiries from SMEs about our digital solutions. We're also seeing strong take-up of our subsidised collaboration tools bundle which enable SMEs to operate remotely. For those uncertain about taking the first step to digitalise, we recently launched our 'Let's Get Digital' initiative." - Singtel's Lim Seng Kong

Roundtable panellists

  • Chew Mok Lee, assistant chief executive officer, Enterprise Singapore;
  • Christie Chu, head of emerging business and commercial banking cash, OCBC;
  • Deborah Heng, country manager, Mastercard Singapore;
  • Lim Seng Kong, managing director, Singtel Enterprise Business

Moderator: Lynette Tan, journalist, The Business Times


SMALL and medium-sized enterprises (SMEs) no longer have the luxury of waiting for the right time to innovate, even as the novel coronavirus pandemic rages, industry watchers have said.

That's as the pandemic has led to permanent changes within industries and continues to cloud the economic outlook.

But help is available and the first step towards innovation does not necessarily have to be monumental, the observers noted.

Industry leaders tell The Business Times more about the low-hanging fruits firms wanting to innovate can reach for, and best practices they should adopt.

Why is the Covid-19 pandemic an appropriate time for Singapore's SMEs to innovate?

Chew Mok Lee: We cannot wait for the pandemic to end to begin charting our way forward as the pace of recovery will be uneven and unpredictable. Particularly, companies which have been severely impacted by travel restrictions and changing consumer behaviour will find it hard to sustain their business if they continue to operate as usual.

To deal with the pandemic, SMEs must be creative and innovative, from expanding sales channels to creating new products.

For instance, given the limited domestic market and supply chain disruptions, diversification and expansion to new overseas markets is important.

Online channels can allow SMEs to establish presence in a new market without being physically present.

Christie Chu: I think SMEs no longer have the option of waiting for the right time to innovate.

Covid-19 has so fundamentally changed the world that it is necessary for SMEs to act now if they want to survive, and even thrive, in the post-pandemic new normal.

For instance, footfall at retail outlets remains a fraction of what it once was and the future is still uncertain. Consumer behaviour has also changed during the pandemic - people are now used to making digital purchases - so SMEs need to reinvent their business models immediately.

They need to think of how to sell digitally and market themselves online effectively by leveraging data.

Being able to collect payment digitally is also key as consumers, fuelled by their expectations of convenience and speed, are switching to digital payments.

Deborah Heng: It's no longer business as usual, with dwindling demand, disruption to supply chains, absent manpower and cashflow bottlenecks being some of the key challenges triggered by the pandemic.

Consumer habits have also changed. According to Mastercard's Impact Study, Singapore showed the greatest behavioural change in Asia, with about three in five respondents reporting a decrease in cash usage since the beginning of the Covid-19 outbreak.

Hence, firms need to be creative with their product and service offerings, and ready to overhaul their normal strategies to remain competitive.

Lim Seng Kong: With the restrictions imposed by the Covid-19 situation, consumers are much more open to the digital way of life, be it performing online transactions, communicating with one another, or consuming goods and services.

Digitalisation thus opens up a whole new world for innovation. We encourage SMEs to be forward looking and seize this window of opportunity to innovate.

What could be the main reasons holding some firms back from doing so?

Mok Lee: Many companies may be pre-occupied with immediate operational challenges.

Cash flow, jobs and a safe restart are probably top of mind at the moment.

Also, companies tend to be more cautious about trying something new amid uncertainty.

Another reason could be that companies are still hoping the situation will return to pre-Covid and adopting a wait-and-see approach.

Christie: Among SMEs, there might be a perception that digitalisation and innovation involves a large cash outlay. This might discourage businesses, especially those that are facing significant cashflow pressures.

Some SME owners might also see it as too daunting a task, with some not knowing where to even begin.

But I think that more SMEs see the value of digitalisation and technology now.

Prior to the Covid-19 pandemic, many thought that it was just a 'good to have'. Now, they know that it is a necessity.

This mindset change is one of the few silver linings from the crisis.

Deborah: When it comes to going digital, many SMEs remain deterred by the investment needed, according to a survey conducted by QBE Insurance Singapore.

They also continue to have concerns over data theft, customer fraud and fraudulent payments via the Internet, and infringement of intellectual property rights.

The lack of skills and knowledge to go digital is another deterrent, holding some firms back from transforming their businesses.

Seng Kong: Small businesses face many pressing concerns in the day-to-day running of the business.

Faced with the unprecedented challenges of the pandemic and prevailing economic climate, they are focused on keeping their businesses going, so digitalisation may not be a top priority now.

SMEs may also be held back from making the initial investments to procure digital solutions due to the need to conserve financial resources amid lower revenues.

Another deterrent to digitalisation is the need for employees of a business to be trained or equipped with the skillsets needed to operate the solutions.

Do businesses need more help to do so during the pandemic?

Mok Lee: We understand that SMEs are diverse - they have varying capabilities and come from different sectors; they may also be at different stages of the business life cycle.

We have thus developed a multitude of support and tools for businesses at every growth stage, scoped according to sectors.

They range from SME Centres, where SMEs can get help to tap on the various support schemes for basic capability upgrading and business transformation, to e-commerce and food delivery booster packages to help companies sell through new avenues.

Christie: We've been working together with our partners to organise webinars for business owners, who might otherwise be confused about what schemes are available to them and how they can apply for them.

To date, over 5,000 employees from more than 2,500 SMEs have attended our OCBC Virtual SME Campus webinar series since its launch in April.

We expect about 6,500 employees from more than 3,000 SMEs to benefit by the end of this year.

The webinars also complement the digital solutions that we avail to our SME customers, which run the gamut from accounting to HR to digital marketing.

It isn't only about providing these solutions, but also explaining how they work, and going through their practical applications with our customers.

Deborah: They certainly do, as they are dealing with challenges such as lower consumption, footfall and demands that are severely impacting their businesses.

Mastercard has been supporting SMEs in going digital.

For instance, we've partnered Oddle and NinjaOS to create online acceptance for brick-and-mortar F&B merchants.

With SGTech, we're also conducting webinars on digitalisation for SMEs.

Seng Kong: We are actually receiving more enquiries from SMEs about our digital solutions.

We're also seeing strong take-up of our subsidised collaboration tools bundle which enable SMEs to operate remotely.

That said, for businesses still uncertain about taking the first step to digitalise, we recently launched our "Let's Get Digital" initiative.

Under that, we provide advice, closer engagement and support via digital clinics, webinars and online courses to help SMES begin their digital transformation.

What are some low-hanging fruits in terms of the ways that firms can start innovating?

Mok Lee: Those looking to innovate and develop new products can ride on existing strengths to venture into new areas.

For example, JML Uniforms, which manufactures uniforms for sectors such as F&B and construction, used the knowledge they gained from making comfortable, easy-to-care and stylish uniforms over the last 30 years to create their first gym-wear brand. They sell it directly to consumers online.

Christie: Sometimes, SMEs can benefit simply from exchanging ideas or even working together with their peers to pool resources.

Some SMEs in the F&B industry, for instance, have partnered with their neighbours to offer an expanded menu to customers.

Deborah: With consumer behaviour evolving and shifting towards online platforms for purchases, it is critical that firms start by innovating their business processes and digitalising their business to reach customers.

In addition, it is key that productivity and operational efficiency are improved.

Many businesses have been held back by disparate systems across their operations, limited manpower and inefficient workflows that rely on manual processes and limited analytics capabilities.

With tightened budgets, these redundancies are luxuries that SMEs can no longer afford to carry.

Seng Kong: With more consumers going online and the widespread shift to digital channels and platforms, a trend we foresee will be here to stay post-Covid and which SMEs can seize on, is to have an online or e-commerce presence.

Whether they're in the business-to-business or business-to-consumer space, having an e-commerce platform will enable them to reach a wider range of consumers and scale their business.

What are some best practices from your own organisation's experience?

Mok Lee: We have seen and supported many SMEs in their innovation efforts and there are a few similarities.

First, innovation and collaboration form part of their strategies and culture. This encourages ideation among employees.

Second, there is strength in numbers - that is, supporting each other and collectively exploring new business opportunities.

For example, the collaboration between precision medicine company Lucence and precision engineering company Akribis Systems led to the development of a saliva processing automated platform that enables mass testing for Covid-19.

Finally, leaders who embrace continuous learning and invest in employee upskilling will be able to react and adapt to changes more easily.

The founder of SaniQUO, a manufacturer of bathroom ware, took over 10 courses virtually when the business was suspended during the circuit breaker.

The courses sparked ideas which have led to the company's digital marketing and e-commerce efforts today.

Christie: Many of our innovations arise from customer feedback. When we engage them, we find out what painpoints need to be addressed and what makes them frustrated.

From there, we rework and refine our solutions. I think all businesses should adopt this customer-centric approach to innovation.

OCBC has also benefited from investing significantly in digital transformation over the last decade.

It is this investment into the bank's digital channels and services that helped us serve our customers during the crisis, and especially during the extended circuit breaker.

We invested with the long term in mind, and I think SMEs need to adopt a similar mindset.

They then need to act on it as soon as possible, and build on it.

Transformation does not happen overnight, but it will pay off down the road.

Deborah: At Mastercard, we believe that collaboration has the power to spark innovation in the workplace as everyone brings a unique set of knowledge and skills to the table.

We embrace collaboration from the inside out - within the organisation, where different departments work closely with one another, and externally, by partnering governments, financial institutions, non-governmental organisations, merchants and tech companies to build a world beyond cash.

This is especially as the scale and complexity of problems faced by societies these days have increased.

We're now working with the Singapore Tourism Board to enhance the Visit Singapore Pass' contactless ticketing and payment capabilities.

We will also be sharing and leveraging data insights for business planning in the tourism industry, as well as undertaking joint marketing initiatives to promote Singapore's tourism offerings.

Seng Kong: Be willing to change and take risks and it may open up new growth opportunities.

We recognised that we had to pivot our business with the advent of the digital economy, and our digitalisation efforts in recent years have positioned us well to leverage the accelerated digitalisation by consumers and enterprises driven by the current pandemic.

It's also important to nurture people with the right mindsets and skillsets, and have a culture that fosters innovation.

This is especially important as customers are more tech savvy and their expectations are increasing all the time.

Innovation must become a part of everyday life in an organisation and everyone should be encouraged to come up with ideas that can make a real difference for the business or for customers.

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