Going with the right tech investments
Rozana Sani
Computimes-29/10/01
Faced with an increasingly challenging business environment, it is crucial for small and medium-sized (SMEs) to gain competitiveness and tap effectively into export markets. The implementation of Internet business solutions within the operations of these organisations could assist them to achieve the goal if they are equipped with the right tools and solutions.
This was, infact, recognized by government, as seen in the recent Budget 2002 announcement where a grant of RM5 million will be provided for the development of RosettaNet, an Internet-based common order code that enables SMEs to participate in the global supply chain management (SCM) network for online and real-time procurement, production and logistics management. However, the impact of the stimulus on SMEs remains to be seen as it is just the latest of various incentives targeted at the group.
SMI Association Malaysia’s information and communications technology (ICT) committee deputy chairman Ng Boon Sing says although there are various incentives from the Government in the form of stimulus packages, they would not be of any significance if SMEs do not understand the importance of electronic business (e-business) in their daily operations.
“The implementation of ICT solutions among SMEs including Internet business solutions, is quite sporadic as many are still wary of the success of such projects,” he says.
“What SMEs need to realize is that to be more efficient in managing business in a borderless environment, they need to invest in such solutions. They must he able to see the potential that the Internet could bring and be more aggressive.”
According to Ng, before embarking on any Internet-related projects, SMEs need to analyse their internal readiness and identify what they want to achieve.
“Once they have got the specifications ready, in terms of the areas they want to address and set their limitations, they could then call in their selected vendors,” he says.
That sentiment is also echoed by Cordoda Corp Sdn Bhd’s chief operating Shane Hodge.
“Many SMEs often do not have an Internet strategy, let alone a technology game plan. They have been operating on very conventional tried and tested ways of doing business.
“Today, though, with the economic and commercial environment changing rapidly and completely, SMEs are facing a threat that they do not know how to manage,” he says.
“Often SMEs are looking for immediate returns on their investments, especially in technology-related investments. Education on the expenditure, training and preparation required to adopt these technologies are still not completely understood and appreciated by SMEs.”
Hodge stresses that setting realistic t expectations for investment of the technology is a issue key in managing technology investments and implementations.
“SMEs must be mindful of the fact that there is an element of retraining and reprogramming of corporate culture to fit technology and also to enjoy the benefits of such investments. Traditional practices would often be eradicated or subordinated to new methods. Efficiency can only be realized if one of the most vital components – the human factor – co-operates,” he says, adding that many such projects, unfortunately, are likely to fail from the outset as the expectations are not set or managed well.”
Hodge says often the technology implementator oversells the benefits and features leading to conflicts in expectations and performance.
“As with major implementation of enterprise resource planning (ERP), customer relationship management (CRM) and SCM, a performance measurement matrix and an implementation schedule clearly mapped and understood by all would be extremely useful in the whole programme,” he says.
Meanwhile, Federation of Malaysian Manufacturers (FMM) says Internet business solutions usage among local SMEs is still at the “Generation One” stage, for example, the use of Web sites as electronic brochures of their company and products.
“The more traditional SMEs generally do not have a planned Internet and IT strategy. They would more likely be driven towards such tools under pressure from their customers, especially from multinationals, which are pushing towards global linkages and supplies.
Once this decision is made, the next consideration for SMEs would be investment costs, followed by technologies and support services that could be provided by vendors,” a spokesperson says.
According to FMM, the ‘‘more modern” SMEs, whose entrepreneurs already have some Internet technology exposure or are techno-preneurs are likely to have an Internet and IT strategy as a feature of their firm’s development.
“The entire system of linkage with buyers and customers or front-end processes with production lines, including linking with suppliers and service providers, forms what is known as SCM. When this SCM links SMEs to their buyers in both local and global markets, SMEs would then become global suppliers,” says FMM.
Internet business solutions can help by reducing the time taken for a company to receive and respond to orders or enquiries from customers and facilitate the flow of information from front-end processes throughout the company and its production line as well as externally to suppliers of raw materials, components and parts required by the company to manufacture its product. The electronic flow of information will also include linkage with service providers such as logistics, customs clearance, etc.
The electronic flow of formation throughout the system without human interference will reduce possibilities of human error and wastage, thus leading to more efficient management of inventories and warehousing requirements.
This will in turn result in improved productivity.
FMM strongly believes that aggregation and consolidation of manufacturers into becoming a strong industrial community in a common marketplace will help strengthen the local economy, in general, and manufacturers, in particular. A common hub will help pool resources and expertise together to provide more affordable and cost-effective solutions to manufacturers, their suppliers and customers as compared to one-to-one proprietary linkages.
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