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Fast-tracking SME’s digital transformation

May 29, 2023

Fast-tracking SME’s digital transformation
Small and Medium Enterprises (SMEs) play an important role in driving employment and fostering growth in emerging markets, including India. The MSME Ministry in India has been at the forefront of numerous initiatives, including the recently launched FIRST program, a forum for SMEs among government representatives and policymakers.

As part of a nationwide study on the digital transformation of SMEs, we surveyed over 350 SME owners across various sectors in India. Our research demonstrates that SMEs can successfully transform with the right inputs. It also suggests that SMEs who have begun their transformation journey are gaining tangible benefits, including increased customer satisfaction, better quality, higher sales and profitability, and the ability to expand globally.
 
The study also highlights several challenges faced by SMEs during their digital transformation journey. These challenges start with a lack of awareness and understanding regarding digital transformation and extend to their struggles in effectively implementing digital solutions.  
 
Regarding awareness and understanding of digital transformation, our study suggests that SMEs primarily rely on three sources for information. The first source of information is technology vendors. These vendors they tend to focus more on selling technology rather than assisting SMEs in developing a digital strategy or technology road map. Second, SMEs often turn to small system integrators, but a lack of mutual understanding between these vendors and SME owners, combined with a limited grasp of the SMEs’ requirements, results in a significant mistrust between the two parties. The third source of information is consultants, who are primarily retired senior corporate personnel. While these consultants are trusted by SMEs, only some of them have expertise in digital transformation.
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