Easy and affordable access of Information and Communication technology (ICT) to SMEs would help them in exploring new markets globally. “ICT is an enabling tool for any small and medium enterprises (SMEs) SMEs are often determined as the main driver for country economic growth. But it has been seen that ICT plays an important role in developing growth of SMEs. But still in some countries very few rganizations go for ICT. It has been seen that when firms in developed countries adopt ICT, firms in developing countries will lose out on the competition. This in turn can slow the growth rate of SMEs and hurt the economy as a whole. ICT can thus play a very important role because it can help SMEs both create business opportunities and combat pressures from competition.
The emergence of Information and Communication Technology (ICT) is not only reshaping the business models but also intensely interlining enterprises across its internal as well as external value chain. In other words business enterprises are in the process of major transformation in order to meet the challenges of network economy. The role of ICT is redefined as a fundamental enabler in creating and maintaining a flexible business network of inter organizational arrangements – joint ventures, alliances and partnerships, long term contracts, technology licensing, and marketing agreement. Traditionally, in house developed customized management information systems (MIS) have been used to enhance business networking and now enterprise resource planning (ERP) systems, supply chain management systems, customer relationship management systems (CRM) and e-Business portals are being used to establish business networking systems. Appropriate ICT can help SMEs cut costs by improving their internal processes, improving their product through faster communication with their customers, and better promoting and distributing their products through online presence. In fact, ICT has the potential to improve the core business of SMEs in every step of the business process.
Benefits of ICT in SMEs
Information and communication technology (ICT) and e-business applications provide many benefits across a wide range of intra- and inter-firm business processes and transactions. ICT applications improve information and knowledge management inside the firm and can reduce transaction costs and increase the speed and reliability of transactions for both business-to-business (B2B) and business-to-consumer (B2C) transactions. In addition, they are effective tools for improving external communications and quality of services for established and new customers Information technology had a great impact in all aspects of life and the global economy is currently undergoing fundamental transformation. Information technology has very real impact in most of industries and in all aspects of economy, while businesses and enterprises continue to undergo considerable changes. Usage of these technologies is revolutionizing the rules of business, resulting in structural transformation of enterprises. Modern businesses are not possible without the help of information technology, which is having a significant impact on the operations of Small and Medium Sized Enterprises (SME) and it is claimed to be essential for the survival and growth of economies in general.
SME is drawing attention in developed and developing countries as well as in transition countries. It is generally recognized that SME play a key role in the revitalization and development of national economy in many countries. It is encouraging the development of SME and the role that SME sector can play in promoting economic and social development by creating opportunities for employment.
The rapid spread of information and communication technologies (ICT) and ever decreasing prices for communication, markets in different parts of the world become more integrated. Therefore, one basic question is whether the use of ICT (as production technology, as information processing technology or as information communication technology) can help them to cope with these new challenges. Information asymmetries are one of the major causes for high transaction costs, uncertainty and therefore market failure. A reduction of the information gap also reduces the ability of the better informed to extract rents from the less informed, be it buyers or sellers of goods or factors. A reduction of information asymmetry will also create new opportunities and therefore enhance the efficiency of resource allocation. The percentage of firms that uses mobile phones is increasing fast in both countries. ICT can thus play a very important role because it can help SMEs both create business opportunities and combat pressures from competition. Appropriate ICT can help SMEs cut costs by improving their internal processes, improving their product through faster communication with their customers, and better promoting and distributing their products through online presence. In fact, ICT has the potential to improve the core business of SMEs in every step of the business process. In countries where SMEs are only starting to adopt basic ICT, obtaining a fixed or mobile phone line can help their business. It can replace the time and costs necessary for face-to-face communication. In countries where SMEs already have basic ICT, adopting more advanced ICT still brings enormous benefits. Advanced communication technologies such as email can help firms communicate faster and cheaper with both its suppliers and clients.
Most of the small and medium enterprises (SME) in India are in early stage of business networking as they have recently started adopting integrated information systems such as ERP and supply chain systems.
Why only few SMEs adopt ICT?
Why only few SMEs adopt ICT is the main point to be focused on. SMEs in most developing countries in the Asia-Pacific region still have been slow to adopt it. For example, 90 percent of Thai SMEs still use basic communication technology such as fixed phone line and fax, and only 1 percent use CRM software. Meanwhile, their counterparts in developed countries are using advanced ITs. One cause of limited adoption is the lack of dynamism between ICT firms and SMEs outside of the ICT sector. ICT firms have not provided goods and services tailored to SMEs in the past because demand from SMEs has been low. However, their demand is low in part because ICT products available in the market are too complex and expensive. The result is a vicious cycle of limited supply and limited demand that ultimately excludes SMEs from the benefits of ICT. Other factors also contribute to the limited supply and demand of ICT for SMEs:
• Lack of government focus:
Many governments have not explicitly focused on ICT adoption by SMEs in the non-ICT sector. They have either focused on growing the ICT sector or supporting the growth of SMEs, but they have not focused on integrating the two areas to implement broad-based policies.
• Limited ICT literacy of employees in SMEs hinders ICT adoption
Even if SME owners have a strategic understanding of why they should adopt ICT, their staff is often untrained. Training costs both time and money – resources that SMEs usually lack.
• Most advanced ICT products are designed for larger firms and not SMEs.
ICT firms used to target large enterprises because they had a larger budget and were willing to pay for more complex ICT services. Their products are often too expensive and too complex for SME users. However, competition in this market is making firms – both large and small – turn their attention towards the untapped SME market. Rosetta, for example, is pushing to capture SME customers by lowering prices by 50 percent and increasing awareness.