Advertisment

The new digitally empowered Indian SME sector: Fast tracking growth on the Cloud

Most organizations within the SME sector understood the importance of technology driven transformation even before the pandemic

author-image
DQINDIA Online
New Update
SME sector

The SME sector is the fastest growing segment for cloud adoption in India, and this trend is likely to continue to at least 2028. The sector wasn’t always this digitally forward. At one point it was lagging significantly behind the enterprise sector in matters of digital transformation. But changing customer expectations for on-demand access to products and services, increasing competition, and the country’s push for Digital India led to the sector focussing on the cloud transition strategies. The COVID 19 pandemic and the ensuing lockdowns only served to accelerate the pace of cloud adoption. Two years on, as the country recovers from the pandemic, it is evident that technology holds the key to resilience and continued growth for the sector.

Advertisment

The Pre Pandemic State of SME Technology Transformation  

India has been on a digital first trajectory for several years, and most organizations within the SME sector understood the importance of technology driven transformation even before the pandemic. But lack of resources, budgets, and shortage of skilled staff proved to be a challenge, slowing down their transformation efforts. According to reports from 2019, while 68 percent of SMEs in the country wanted to digitally transform, 84 percent of them reported difficulties on account of shortage of digital skills and talent as well as a lack of funds. When the country went into lockdown in March 2020, this significant digital gap meant that most firms were not prepared to operate remotely or even continue with their business digitally. As lockdown cut them off from markets and labour and existing ways of working, they found it challenging to reach customers, access financing, and saw a marked decline in productivity as well.  95 percent of SMEs were negatively impacted by the lockdown and 75 percent continued to face disruptions till August 2020. The sector reported a 46 percent decline in business volume in 2020.

The Cloud Adoption Momentum

Advertisment

But this unexpected disruption also served to accelerate the pace of digital transformation amongst SMEs. 65 percent of SMEs moved quickly to digitally transform or upgrade their existing digital investments.  And 52 percent moved to social media and online channels to market their offerings and connect with customers. This helped them manage remote transactions, ensure delivery continuity, and remotely access financial services. Modern digital operations helped ensure that work and business went on as usual, eliminated inefficient processes, helped manage risks better, and drove customer acquisition, and innovation. The cloud, of course, is the centerpiece of the sector’s digital transformation effort. It is the key to remote working models, ecommerce, easy backups, disaster recovery,  resilience, and collaboration. 

The cloud adoption journey is not uniformly distributed across the SME sector with some organizations, especially within the manufacturing segment, moving to the cloud quicker than others. But most organizations intend to move to the cloud sooner rather than later. The Government of India’s on building the country’s public cloud infrastructure with initiatives like Meghraj and Cloud Vision 2022 is helping create a favorable macro environment for SMEs to make the transition easily.   

Solving the Challenges of Cloud Adoption

Advertisment

The move to the cloud is of course not without some challenges. 

Budgetary Constraints - Many firms are concerned about upfront and hidden costs associated with cloud computing.  

Resistance to Change - There may be management and employee resistance to change as they have been working in a set way for decades.  

Advertisment

Skill Gap - SMEs often do not have a dedicated technology office and a significant technology skill gap. This makes it difficult to formulate a comprehensive strategy for migrating workloads from on premise data center to the cloud in a timely, cost efficient and seamless manner.  

Cybersecurity Concerns - There are also significant concerns around cybersecurity, particularly as the SMEs don’t have the resources to identify or deploy extensive cyber protection and security solutions. 

A cookie cutter approach to digital transformation does not usually work as every organization has unique requirements and goals. 

Advertisment

Comprehensive Approach - Complete understanding of the organization’s objectives and operational and efficiency gap forms the foundation of an effective cloud strategy. 

The Right Cloud - There are now multiple cloud models available, and each has its own pros and cons. The organization must adopt a model that can help them meet their goals while being cost effective. SaaS and IaaS options are extremely well suited to the needs of most SMEs as they deliver the agility, scalability, and flexibility of the cloud without breaking the bank. 

The Right Partner - A reliable cloud transition partner can help the SME chalk out their migration strategy. 

Advertisment

Phased Transformation - A gradual, phased approach with a focus on security and accessibility is advisable when it comes to data and application migration. 

Unremitting focus on Security - Of course, security is one of the biggest challenges before businesses today and SMEs must assess the security measures provided by the cloud provider and embed security as a priority into any strategy they adopt. Most public cloud providers now ensure intrinsic security, that is, they build security into the code itself rather than add it on as an afterthought. This is a good place to start, and SMEs must invest time and effort into understanding available security options and implementing additional measures to protect themselves. 

A Cultural Transformation Helmed by IT and Management

Advertisment

Small enterprises embarking on their technology transformation journeys or looking to upgrade their existing digital landscape must remember that the move to transform cannot be driven by IT teams alone. Technology today is no longer confined to the IT department. It is a powerful force driving tangible changes across almost every aspect of life and work. In a business context, technology is key to agility, scalability, innovation, and resilience. And in the modern world, it is integral to a business’s strategy. It has the power to improve operational efficiencies, ensure continuity, expand markets and customer bases, and drive innovation and revenues. To be successful, an SME’s cloud adoption strategy must be spearheaded jointly by IT and the business’s management team. From my interactions with customers in the segment, I can conclude that increasing number of SMEs are now cognizant of the inextricable link between technology transformation and business. They are looking to achieve better growth, compliance, and experience via technology. For example, an Internet technology company clearly cited the need for infrastructure that could support their business growth as one of the key factors behind their modernization effort. Others from the banking, pharma and even agriculture sectors have cited regulatory compliance as one of the driving factors behind their cloud adoption journeys. 

Finally, SMEs must invest in training and upskilling their staff to work productively in an increasingly digital environment. This transformation is as much about the technology itself as it is about organizational culture. The momentum to digitally transform must be driven by the organization’s leaders. They must take the lead to not just communicate the importance of moving to the cloud, but also showcase the importance of learning to effectively work in a digital landscape. 

The journey to the cloud has not been an easy one for SMEs. But today most organizations understand that it is a transition that is critical for future growth even in the face of challenges. The COVID 19 pandemic proved to be a watershed moment for Indian SMEs, that reinforced the urgent need to transform digitally. Now is the time for them to accelerate their cloud transformation journeys and be ready to leverage technologies of the future like AI and IOT for the next phase of their growth. 

The article has been written by Hardik Doshi, Director Sales, VMware India

Advertisment