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Asia-Pac SMEs responding well to pandemic, but face challenges in digital transformation: poll

THE Covid-19 pandemic has compelled small and medium-sized enterprises (SMEs) to swiftly adopt new ways of working and selling, and firms in the Asia-Pacific (APAC) region have responded better than their peers elsewhere in key areas, a study by SAP and Oxford Economics found.

The study published on Friday was conducted between Feb 27 and April 30 and surveyed 2,000 respondents from the Americas, Europe and APAC on their priorities, challenges and digital maturity.

Mid-fieldwork, the researchers added a section on the impact of the Covid-19 pandemic, which garnered responses from 240 SMEs in APAC, 174 from Europe and 92 from the Americas.

Among the APAC SMEs that responded to the section on Covid-19 impact, 77 per cent said they had adjusted remote work arrangements for employees in response to Covid-19. In comparison, 75 per cent in Europe and 71 per cent in the Americas said they had done so.

Singapore SMEs were on a par with India in this regard, with 73 per cent reporting that they have adjusted such arrangements. They fell behind the Philippines, South Korea, Japan and China; the Philippines topped the chart with 89 per cent.

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IT and collaboration solutions have been a key priority for Singapore SMEs, as 73 per cent of them said they have invested in these for remote access and/or online learning. The percentage of SMEs that have made such investments in the Americas, APAC and Europe were 72 per cent, 69 per cent and 68 per cent respectively.

More APAC SMEs are also actively exploring new ways to reach customers - 66 per cent, compared to 65 per cent in the Americas and 59 per cent in Europe. In Singapore, 68 per cent of SMEs are doing so.

About 46 per cent of APAC SMEs and 45 per cent of Singapore SMEs are developing new products and service offerings, lagging Europe's 49 per cent but ahead of the Americas' 40 per cent.

The areas that Singapore SMEs cited the most often as significantly impacted by the pandemic were the abilities to meet customer demand, win new business and operate at full capacity. They cited less impact on their ability to accommodate remote work, maintain employee productivity and manage cash flow and liquidity.

"SMEs across the region - like their counterparts around the world - have certain advantages over larger competitors in terms of agility and closeness to the customer," said Edward Cone, editorial director of thought leadership and technology practice lead at Oxford Economics.

However, he noted that SMEs in APAC have been facing challenges in keeping up the pace of digital transformation, even before the pandemic.

The overall survey results found that 39 per cent of the 832 respondents from APAC have made moderate progress towards digital transformation, while 21 per cent have made substantial progress or completely transformed. About 19 per cent expect to have completely transformed within three years.

They have made the most progress in technology adoption in HR (human resources) and talent management (66 per cent), governance and cybersecurity (63 per cent) and finance and risk management (59 per cent).

Still, they face key internal challenges including upskilling and reskilling their current workforce (30 per cent), lack of coordination between departments (29 per cent) and inability to gain insights from data (29 per cent).

They are also dealing with external challenges such as changing customer wants and needs (40 per cent), competition from larger organisations (39 per cent) and adapting to a rapidly changing marketplace (27 per cent).

"Today's new normal requires businesses to pivot and adapt with speed. SMEs in the region seem to understand that the sense of urgency to digitally transform their businesses will give them an advantage through the pandemic and beyond," said Claus Andresen, senior vice-president and head of general business (SME) and emerging markets growth for APAC and Japan at SAP.

"With the adoption of an intelligent enterprise strategy, SMEs can establish a digital core that will power the entire organisation, embedding data-driven insights and decision-making processes across the business."

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