 "Cost, awareness levels keep technology away from MSEs")
The two main barriers that keep Indian micro and small enterprises (MSEs) from adopting new technology that helps them compete and grow are cost and a lack of awareness of the benefits of technology, according to the findings of a recent study based on a survey of 748 MSEs across 12 cities in India.
The study - Understanding and Overcoming Barriers to Technology Adoption Among India's Micro, Small and Medium Enterprises: Building a Roadmap to Bridge the Digital Divide - was done by Intuit Inc in collaboration with the ministry of MSME, the National Institute of Entrepreneurship and Small Business Development and the National Small Industries Corporation.
The report identifies three other barriers to adoption of technology - lack of skilled manpower, security and privacy concerns, and poor infrastructure.
The report also said that MSEs are not yet convinced about the return on investment from technology adoption. Demonstrating value-addition for the business is critical and should be done using cost-benefit analyses and simple comparisons of growth between traditional operations and IT-based approaches, it said.
The study said businesses that utilised numerous governmental and other stakeholder schemes benefited; yet, there appeared to be very low awareness of these programmes among small businesses. Recognition of specific programmes was as low as 1-4 per cent and only as high as 32 per cent.
The report has recommended that all stakeholders, including the government, training institutions and the private sector, should work together to assess why existing communications about available resources are not reaching the end-user.
On the awareness front, neither government measures nor usage of technology was known among entrepreneurs. The Working Group on the 12th Five Year Plan had proposed to launch the Technology Acquisition and Support Scheme to assist MSMEs to develop or acquire technology.
The government has also recommended merging the Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation and relevant technology aspects of the National Manufacturing Competitiveness Programme with the new Technology Acquisition and Development scheme offered within the cluster framework.
A budget of Rs 9,500 crore has been recommended by the Working Group on MSMEs' Growth for various schemes under the 12th Five Year Plan's technology platform.
Referring to usage of cloud technology, the study said its potential is tremendous but customers are not yet convinced of its benefits - and that may be because it is not well-defined among India's MSEs or those who are providing solutions. "...they are hesitant to do so until issues relating to security and reliability are addressed and communicated. Concerns today may outweigh benefits if those benefits are not well-defined by providers and policymakers or experienced first-hand by the end-user," the study said.
MSEs can be encouraged to increase spending on the cloud through a simple comparison of the costs of using traditional methods versus leveraging cloud computing. The study quoted an example where small businesses using SaaS-based enterprise resource planning saved Rs 37,000 annually compared to others deploying traditional ERP.
The report said that targeting all of India's millions of MSEs would be inefficient and distract resources from where they could have the greatest impact. Therefore, an addressable audience needs to be identified. This community comprises the current moderate tech-adopters and the tech-aspirers, who are open to change and new ideas. Located primarily in professional services and the education sector, this addressable community is a prime target for cloud technology, it said.
The study concluded by saying that in order to identify and implement impactful solutions, a collaborative approach with dedicated drivers and contributors is needed, and this should be a multi-stakeholder approach - a collective effort between the government, private industry groups, training organisations and the enterprises themselves.
The study - Understanding and Overcoming Barriers to Technology Adoption Among India's Micro, Small and Medium Enterprises: Building a Roadmap to Bridge the Digital Divide - was done by Intuit Inc in collaboration with the ministry of MSME, the National Institute of Entrepreneurship and Small Business Development and the National Small Industries Corporation.
The report identifies three other barriers to adoption of technology - lack of skilled manpower, security and privacy concerns, and poor infrastructure.
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It stated that software usage is basic and depends on popular products and established brands. Internet and mobile solutions, used for personal purposes, are surprisingly not employed in businesses to the extent they are in business owners' personal lives. Moreover, there is little customisation of solutions to meet specific business needs.
The report also said that MSEs are not yet convinced about the return on investment from technology adoption. Demonstrating value-addition for the business is critical and should be done using cost-benefit analyses and simple comparisons of growth between traditional operations and IT-based approaches, it said.
The study said businesses that utilised numerous governmental and other stakeholder schemes benefited; yet, there appeared to be very low awareness of these programmes among small businesses. Recognition of specific programmes was as low as 1-4 per cent and only as high as 32 per cent.
The report has recommended that all stakeholders, including the government, training institutions and the private sector, should work together to assess why existing communications about available resources are not reaching the end-user.
On the awareness front, neither government measures nor usage of technology was known among entrepreneurs. The Working Group on the 12th Five Year Plan had proposed to launch the Technology Acquisition and Support Scheme to assist MSMEs to develop or acquire technology.
The government has also recommended merging the Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation and relevant technology aspects of the National Manufacturing Competitiveness Programme with the new Technology Acquisition and Development scheme offered within the cluster framework.
A budget of Rs 9,500 crore has been recommended by the Working Group on MSMEs' Growth for various schemes under the 12th Five Year Plan's technology platform.
Referring to usage of cloud technology, the study said its potential is tremendous but customers are not yet convinced of its benefits - and that may be because it is not well-defined among India's MSEs or those who are providing solutions. "...they are hesitant to do so until issues relating to security and reliability are addressed and communicated. Concerns today may outweigh benefits if those benefits are not well-defined by providers and policymakers or experienced first-hand by the end-user," the study said.
MSEs can be encouraged to increase spending on the cloud through a simple comparison of the costs of using traditional methods versus leveraging cloud computing. The study quoted an example where small businesses using SaaS-based enterprise resource planning saved Rs 37,000 annually compared to others deploying traditional ERP.
The report said that targeting all of India's millions of MSEs would be inefficient and distract resources from where they could have the greatest impact. Therefore, an addressable audience needs to be identified. This community comprises the current moderate tech-adopters and the tech-aspirers, who are open to change and new ideas. Located primarily in professional services and the education sector, this addressable community is a prime target for cloud technology, it said.
The study concluded by saying that in order to identify and implement impactful solutions, a collaborative approach with dedicated drivers and contributors is needed, and this should be a multi-stakeholder approach - a collective effort between the government, private industry groups, training organisations and the enterprises themselves.