SME Tech

The Disruption of Digital Business Models

This article by MOHAMED KHAN delves deep into the world of Middle East SMEs and elucidates the catalytic effect start-ups have on AI, Blockchain, IoT, and Machine Learning innovations in the region.

With SMEs accounting for more than 80 percent of businesses, and majority of employment and job creation opportunities, they are the powerhouse of the Middle East’s digital economy.

But as the Internet of Things era accelerates, SMEs face increasing urgency to undergo digital transformation to drive business success and innovation, and transform the region’s economy, society, and environment.

Simplifying SMEs to Boost Growth
As SMEs expand to new countries, they face legal, tax, regulatory, and operational requirements. While SMEs have been able to struggle along with out-dated methods, today’s digital economy requires SMEs to overcome complexities to grow and prosper.

Middle East SMEs should simplify and streamline business processes to scale up and enhance competitiveness. While simplification is easier said than done, it must be at the core of every Middle East SME’s growth strategy.

Take talent development. When a business starts, a small set of staff knows customers, and they can use spreadsheets and disparate software programs. But this method is unwieldy, cumbersome, and counterproductive – and will hold back business success and force executives to train new personnel.

Now, Middle East SMEs cannot rely on slow legacy systems to interact with customers in real-time. In many industries, new companies with superior technology are beating established firms, thanks to real-time data on inventory, sales, and marketing leading to better and faster decision-making.

Does Company Size Matter in the Digital Economy?
By embracing digital transformation, SMEs can gain a significant competitive advantage. While small business owners cannot easily experiment with new business models, they can determine how digital technologies –mobility, analytics, and social media — can help them achieve business goals.

Simplification can lead to better customer experiences and retention, higher profits, lower costs, greater employee engagement and retention, and increased operational efficiency. SMEs can react faster to market changes and customer needs, lighten employee workloads, and accelerate innovation and time-to-market. Mobile apps can persuade millennials to buy local. Cloud-based tools can help small contractors to out-price competitors.

Benefits of Cloud ERP for Small Busines
One of the biggest game – changers for Middle East SMEs is replacing bookkeeping records and spreadsheets with automated enterprise resource planning (ERP). The right ERP solutions can improve the quality, consistency, and delivery of products and services. Think better inventory management, data access, collaboration, and customer service. And hosting ERP in the cloud can reduce costs, scale up, and improve security.

SMEs that are considering adopting cloud-based ERP should study four key benefits:

1. Security – While some SMEs are concerned about data vulnerability, most SMEs trust the cloud for their data.

2. Productivity – Disruption of work following a technology move is only temporary. Moving to a cloud-based platform increases productivity with easy and real-time collaboration. Less time for tedious processes means more time for innovation, which is what every organisation should pursue in the digital economy.

3. Costs – Compared to the implementation and maintenance of an in-house IT system, cloud-based business applications and data storage costs less than initial on-premise investments, and is more cost-effective in the long run. By charging only on an op-ex basis, cloud ERP is more economical for SMEs than systems that require expensive licenses and constant hardware and software upgrades.

4. Agility – Cloud enterprise resource planning provide the flexibility, accessibility, and mobility over legacy systems. Deploying tasks is quick and easy on a system that is always online and administered offsite.

Channel-led Approach meets Middle East

SME Needs
For SMEs, it can be daunting to begin digital transformation. The first step is to find the right channel partners that are aligned to their industry and solution needs, and have the specialised training and certification with vendors.

As one of the world’s leading digital transformation enablers, SAP is committed to supporting SMEs – with an increasing number of Middle East SMEs running their business applications on the in-memory SAP HANA platform, the SAP S/4HANA real-time business suite, or the SAP Leonardo digital innovation system.

One of the UAE’s up-and-coming transport and logistics companies, Bion Group, formerly Tarwada Cargo Transport deployed real-time truck analytics using GPS technology. The automated fleet management system facilitates real-time, accurate and reliable data analytics, and empowers logistics operations with robust tracking tools, secure on-time deliveries, and enhanced customer service experience.

One of the biggest game-changers for Middle East SMEs is replacing bookkeeping records and spreadsheets with automated enterprise resource planning (ERP).

Qatar’s Abdullah Abdulghani and Brothers Co. WLL is revamping its back-office and front-office processes with dealer business management solutions, integrating and simplifying sales and warehousing to focus on customer demands. The company is delivering shorter queues, better visibility on spare parts, and enhanced invoicing.

In the Kingdom of Saudi Arabia, we are partnering with many of the leading organisations – including the national carrier SAUDIA and communications company STC – to deploy business solutions to SMEs that will help them to enhance their supply chain, sales and financial management, and talent development.

Startups Drive Internet of Things Innovation
The Middle East is posting strong interest in innovations, blockchain, artificial intelligence, and machine learning.

Dubai government agencies are piloting blockchain for more efficient and secure government Smart City services. Saudi organisations are adopting machine learning to predict new business models and enhance research and development, in line with Saudi Vision 2030. Artificial intelligence is transforming industry verticals, with one recent industry survey showing two-thirds of Middle East healthcare providers would replace a human clinician.

While government strategies underpin these advanced technologies, the innovation has to come from SMEs – particularly ambitious start-ups with local experience. Supporting Middle East entrepreneurs, our Startup Focus Program has seen strong success on inspiring analytics start-ups.

Over the past year, SAP engaged with more than 950 innovators in the Middle East, with 12 start-ups currently building their success on our platform – and many already scaling up.

Never before have had Middle East SMEs faced such massive challenges in going digital so fast – or such great opportunities to scale up and beat their competitors. With 73 percent of global SMEs meeting or exceeding expectations with digital transformation, Middle East SMEs need to invest now in their digital transformation.

About the author

SPI Group

An integrated platform created to serve entrepreneurs and service providers. SPI engages with over 100,000 Entrepreneurs & Senior decision makers through a unique combination of cutting edge business magazines, high profile B2B summits and conferences, strategic alliances with Govt, business associations and government bodies. SPI also leverages the power of digital marketing and social media.

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