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Collaboration is key to growing SMEs: KPMG
PROFESSIONAL services firm KPMG is looking to play a bigger role in the nurturing of local enterprises, starting from the earliest stage in their life cycle as a small startup, instead of the traditional focus on firms that have already grown large enough to be listed on the stock exchange.
One key strategy is to build an ecosystem to promote collaboration with small and medium-size enterprises (SMEs) so that they can grow to become global names, says KPMG's new head of enterprise Jonathan Ho, in an interview with The Business Times.
This collaboration comes in many forms - within KPMG itself, among SMEs, and between SMEs and larger corporations.
"Serving the local enterprise community is nothing new to KPMG, but the focus has always been on companies which want to improve its governance and processes, or those going for listing," Mr Ho explains.
"There are smaller companies out there, such as family-owned businesses, mom-and-pop shops or innovative startups that may not be big now, but have great potential to be big names going forward."
He has taken over the reins of the enterprise division from Chiu Wu Hong, who remains head of tax in KPMG, starting October. Since then, it has been full steam ahead for Mr Ho.
He reveals that one new initiative in the works is to implement a formalised enterprise committee within KPMG Singapore that cuts across the different service lines.
The committee will be made up of representatives from areas such as audit, consulting and tax who will work together in a multi-disciplinary effort to better understand the needs and challenges of the different industries.
"We need to be more collaborative as a firm, especially in bringing solutions to our clients that are more holistic, rather than on a piecemeal basis. With that, we need a community of ownership to help this sector," he says.
This new committee will share responsibility for helping SMEs succeed, together with the existing enterprise team which consists of six people.
Apart from internal collaboration within the firm, partnerships among enterprises will also be needed in their pursuit for growth.
In particular, Mr Ho sees synergies to be harnessed across three groups - family businesses, innovative startups, and high-growth companies.
For instance, startups and family-run businesses can benefit from the experiences, processes and branding of larger companies, while the bigger firms get fresh ideas and innovation for their own operations.
KPMG's role in the ecosystem would be to match needs between the different parties. Mr Ho gave the scenario of a merger and acquisition, where an innovative startup is looking to sell its business to a high-growth company looking to expand.
Says Mr Ho: "Business need not be a solo venture. It could be about going on a business venture together, or as simple as exchanging ideas or advice. You will then be in a position to enjoy that extra support, new networks and get inspiration."
Collaboration among enterprises and other stakeholders is nothing new to KPMG - its Digital Village was launched in 2016 as an open ecosystem which brings together investors, startups and corporations to work together to innovate.
Its main aim is to boost adoption of technological solutions by corporations, says Mr Ho.
The adoption of digital technology, with the likes of robotic process automation or the use of cloud solutions, is also one top priority that he says SMEs must focus on.
"In the past, SMEs were debarred by the fact that implementing IT systems is very costly. But with the cloud, you don't need to worry about high upfront IT costs. It's very scalable - you can increase or decrease the number of users depending on current needs," explains Mr Ho.
He notes that more SMEs are recognising the need to relook their business processes and operations to be more productive and innovative. Some are even using artificial intelligence and robotics to prepare themselves for the new digital economy, or Industry 4.0.
"SMEs are small, so they must use that to their advantage… With new digital platforms coming up, SMEs must be prepared to disrupt their own business models," he adds.
He argues that risk-taking leads to new ideas and breakthroughs, possibly even innovations that can drive the business. To succeed, one has to first fail.
"I feel that risk-taking shouldn't be intimidating, and SMEs should start empowering their people to recognise that doing new things can lead to rewards. And there is value in failure."
But true to his risk consulting background, he adds that calculated risks will help soften hiccups along the way - "proper risk governance practices will help mitigate key business risks", he quips.
Lots of experience
With over 20 years of audit and consulting experience, Mr Ho is also the service line leader for internal audit and control self-assessment, and leads the government sector and the enterprise market in risk consulting.
He considers his new role a "natural progression" as working with SMEs is nothing new to him. He has been involved with corporate governance reviews for numerous enterprises, and also in various projects in the enterprise sector over the years, most notably the Enterprise 50 (E50) Awards.The E50 Awards recognise the top 50 privately-owned local enterprises in Singapore.
With SMEs constituting 99 per cent of the economy, he says his hope is for this group of enterprises to innovate, grow and succeed - incidentally, the theme of the upcoming E50 Awards 2017.
In today's highly disruptive environment, he believes the transformations in the next five years will eclipse the changes seen in the last 50 years. The firm remains "very committed" to the SME sector, which he says will determine Singapore's future.
"Professionals like ourselves can be at the heart of this transformation to support clients in their pursuit of growth by promoting collaboration, helping them adapt to change to remain relevant, and to manage risk along the way."