SAP, Oxford Economics Study Digital Maturity of Small, Medium-Sized Enterprises

SAP, Oxford Economics Study Digital Maturity of Small, Medium-sized Enterprises

SAP and Oxford Economics, a leader in global forecasting and quantitative analysis, recently surveyed 2,000 senior executives from small, medium-sized enterprises in the Americas, Europe, and the Asia Pacific to understand their companies’ priorities, challenges, strategies, and digital progress.

The small, medium-sized enterprises (SMEs) in the Asia Pacific comprise over 90% of all businesses, employing about 60-80% of the workforce. Through the years, the SMEs have shown unprecedented growth and contribution in the region’s healthy macro-economic environment. However, the recent economic climate due to the coronavirus has challenged the sector’s capability to adapt to the rapid market changes and seek new opportunities to remain resilient and sustainable. 

The recently published Oxford Economics global research in collaboration with SAP centres on the SMEs’ digital maturity and their response to the pandemic, including remote work arrangements, technology adoption, supply chain management, and new product development and service offerings. 

Research Methodology

The SAP and Oxford Economics survey covered 19 countries across various industries with 42% respondents from APAC, 30% from Europe, and 28% from the Americas. 

The 2,000 senior executives surveyed are from across functions such as operations (18%), management (17%), finance (13%), technology (11%), sales (10%), human resources (9%), marketing (8%), legal/risk (7%), and customer service (7%). The survey reported organisations under $1 billion in revenue and countries, except for India, with employees fewer than 1,000. Companies surveyed in India have between 1,000 and 2,000.

The study was conducted between 27th February and 30th April 2020 and researchers added a section on the COVID-19 impact mid-fieldwork, which garnered responses from 240 SMEs in APAC, 174 from Europe, and 92 from the Americas.

In this article, we highlight the responses and data gathered from the surveyed countries in the APAC region– Australia, China, India, Japan, New Zealand, Philippines Singapore, and South Korea.

Digital Adoption

39% of the 832 respondents from APAC have made moderate progress towards digital transformation. 21% of small and midsized organizations have made substantial progress or completely transformed while 19% expect to have completely transformed within three years.

Claus Andresen, Senior Vice-President and Head of General Business (SME) and Emerging Markets Growth for APAC and Japan at SAP said:

“Today’s new normal requires businesses to pivot and adapt with speed. SMEs in the region seem to understand that the sense of urgency to digitally transform their businesses will give them an advantage through the pandemic and beyond.”

“With the adoption of an intelligent enterprise strategy, SMEs can establish a digital core that will power the entire organisation, embedding data-driven insights and decision-making processes across the business,” he further explained.

SMEs in APAC have made the most progress in technology adoption in the field of HR and talent management at 66%, governance and cybersecurity at 63%, and finance and risk management at 59%.

69% of APAC respondents shared that their organisations have made IT investments, almost at par with the Americas and Europe’s at 72% and 68%, respectively. In Singapore, 73% of the respondents reported that IT and collaboration solutions, including investments on remote access and/or online learning, are their organisations’ top priorities.

Remote Work Adjustment

77% of APAC SMEs said they have adjusted remote work arrangements for employees in response to COVID-19 as compared to Europe and Americas’ numbers, which are at 75% and 71%, respectively.

The Philippines garnered the highest adoption of remote working at 89%. India and Singapore reported that 73% of businesses have adjusted to such arrangements, falling behind South Korea, Japan, and China.

Customer Management and Service Offerings

66% of APAC SMEs are exploring new ways to reach customers, a little bit higher than in the Americas (65%) and in Europe (59%). In Singapore, 68% of SMEs are also expanding their customer reach.

In terms of new product development and offerings, APAC (46%) SMEs are ahead of the Americas (40%) but a bit behind Europe (49%).

Edward Cone, editorial director of thought leadership and technology practice lead at Oxford Economics shared:

“SMEs across the region – like their counterparts around the world – have certain advantages over larger competitors in terms of agility and closeness to the customer.”

SMEs’ Challenges

The Oxford Economics study also shared the internal challenges of APAC SMEs such as upskilling and reskilling their current workforce (30%), lack of coordination between departments (29%), and inability to gain insights from data (29%).

As for the external factors, the survey reported companies’ concerns on changing customer wants and needs (40%), competition from larger organisations (39%), and adapting to a rapidly changing marketplace (27%).

The SAP and Oxford Economics study has concluded that small, medium-sized enterprises in the Americas, APAC, and Europe are balancing short-term problem-solving with longer-term, more strategic initiatives. These initiatives include sustained customer and employee satisfaction as well as investment in innovative technology to accelerate digital transformation. 

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