As global economic growth slows down and many developed and emerging economies face severe pressure, the SME sector is again taking centre stage as a catalyst for job creation and growth throughout the African continent.
“Small and medium enterprises are the future of Africa’s economic development,” says Dumisani Moyo, Head of Marketing at SAP Africa. “SMEs can create more jobs more quickly than their larger counterparts, can stimulate innovation, and make a significant impact on their local and regional economies. And when supported by a strong digital strategy enabled by the cloud, there is virtually no limit to SMEs’ growth and innovation potential.”
The World Bank estimates that SMEs employ more than 50% of the workforce and contributes up to 40% of GDP in emerging economies. However, SMEs typically lack the financial and human resources of their enterprise counterparts, leaving them potentially more vulnerable to changing market conditions and other disruptive events, such as the pandemic.
“Cloud and other technologies enable greater innovation, which is essential to the success and even survival of SMEs,” says Moyo. “Between 1955 and 2011, it took Fortune500 companies an average of 20 years to reach a billion-dollar valuation. Today’s digitally transformed startups can reach milestone that in a mere four years.”
He adds that since 2000, more than half of companies on the Fortune500 have gone out of business, with a lack of agility cited as a key reason.
“Companies that have developed their business models and processes with technology as an enabler typically enjoy greater efficiency, improved innovation capabilities, and can more easily adapt to new challenges or opportunities in their operating environment,” explains Moyo. “This improves their chances at building successful, sustainable business models that can support the business strategy in the long term while still delivering to revenue targets in the short term.”
Why SMEs take to the cloud
Moyo adds that, in his experience, African SMEs seek out cloud solutions to boost revenue growth, become more efficient, open up new markets, and adapt to changes in their working environment, for example, adopting cloud-based collaboration tools to enable remote working during the pandemic.
“Every SME can benefit from leveraging cloud solutions to enable their digital transformation. Companies that use the cloud effectively enjoy greater flexibility and agility, and can more readily build competitive and sustainable business models that meet changing customer demands and employee expectations.”
He cites the example of SMEs leveraging templates during their digital transformation efforts to reduce complexity and lower costs while still unlocking a broad range of benefits.
“One of the major advantages of working with a global cloud provider with experience across multiple industries is that SMEs gain access to best-practice templates that have been proven effective in similar industries or markets. This can significantly cut down the time to value for new technology deployments and help ensure companies enjoy the full range of benefits of their new tech.”
Tips for SME cloud adoption
Moyo says SMEs have several distinct advantages over larger companies when embarking on cloud adoption or digital transformation initiatives. “SMEs are by nature smaller, more nimble and can therefore move quicker and adapt more easily. However, the road to cloud adoption is not always clear, and SME leaders need to be aware of key factors that may influence the outcomes of their cloud efforts.”
Based on SAP’s experience with supporting SMEs across the globe with their cloud, technology and digital transformation needs, Moyo provides the following tips to SMEs:
1 Identify and prioritise high-value areas for cloud
“One of the most important aspects of any cloud adoption strategy is to first identify where cloud can provide the most value to the business,” advises Moyo. “If your biggest challenge is managing your hybrid workforce, then choosing cloud solutions that can track and enable better productivity can deliver the highest returns in the short term.”
According to Moyo, one of the biggest stumbling blocks to realising the value of any cloud deployment is a lack of adoption within the organisation.
“Any investment into new cloud capabilities need to be supported with a strong change management program that is driven by top leadership throughout the organisation. When employees see the value of the new capabilities and can follow the example of senior role models – especially company leadership – they are more likely to use the tools themselves. This ensures the deployment realises optimum business value and has a transformative effect on how the business operates.”
2 Empower your teams
One of the biggest disruptors to SMEs’ business models is the pandemic, which has upended many traditional notions of work and employment.
“Today, more employees work remotely some or most of the time than ever before,” says Moyo. “This has forced companies to reengineer their employee engagement and talent retention models to suit this new world of work.”
Powerful cloud tools for tracking employee sentiment, for example, can empower companies with greater insight into employee expectations and help keep the pulse of their workforce. “With so many employees working remotely, it has never been more important to use technology to support employees and help ensure the smooth running of the business.”
3 Find and develop critical skills
Africa’s youth dividend is widely published, but the continent still struggles at times to nurture and develop sufficient tech talent to power its digital economy.
Moyo advises that SMEs work with other partners in the public and private sector to improve digital skills development outcomes and help ensure they have access to the requisite talent pool. “Initiatives such as SAP’s Young Professionals Program give talented graduates a streamlined entry into working in SAP-enabled tech environments, and ensures our partners have access to the skills they need.”
He adds that Africa’s young population offers enormous potential for economic growth and innovation, but they need to be supported with suitable skills development and work opportunities. “With the correct investment into skills, African SMEs can help mobilise the largest youth population on Earth to drive and support the continent’s growth ambitions for decades to come.”