SME adoption of ICT services: catching up but still a long road ahead…
Middle East perspective
Though the future holds great promise and potential, it is also fraught with key challenges, which need to be overcome if ICT adoption is to take hold in the region’s SME sector.
Access to finance remains a key challenge for SMEs in the region. This is clearly reflected in SME lending activity, which in 2013 was just 8 percent. However, in light of the current global economic recovery, SMEs in the Middle East are also expected to benefit the fastest with foreign direct investment flowing into the region, encouraging SME expansion and spend. Governments should also work with SMEs and key ICT players to promote and financially incentivize ICT adoption to encourage development and spending. The Tamkeen program in Bahrain is a good example, where SMEs are eligible to obtain funding from Tamkeen for utilizing Batelco’s ICT products and services.
SME awareness and trust in ICT is also another issue that has inhibited mass adoption to date. Arab SMEs have traditionally avoided ICT adoption despite the anticipated benefits. Due to security concerns and linguistic barriers, many SMEs still rely on personal interactions and have still not moved their operations online. Both governments and ICT players therefore need to be very proactive in educating SME owners about ICT and its far reaching benefits.
SMEs need to develop their capabilities in terms of resources and more sophisticated business practices as well. Currently SMEs in the region have limited access to talent and expertise, especially for executive positions which places undue load and reliance on the owners experience, time and skills. Regional business networks also need to be developed to enable SMEs to expand, as they have limited internal and external resources to do so. The availability of business planning tools, which can make a huge impact to the success or failure of SMEs, is also lacking in the region.
To strengthen their ICT sectors and foster innovation, governments in the Arab region in partnership with key ICT players need to engage SMEs together to identify key focus areas for development, establish SME-friendly policies and regulations, make funding more widely available, improve ICT infrastructure, and develop the local ICT talent pool.
Encouraging initiatives across the region are in place, for example in Google’s “Getting Saudi Businesses Online” initiative. As a SME tailored program for the GCC, the initiative aims to develop free websites for SMEs as well as offering one-on-one mentoring in how to turn online presence into profit. Launched in Saudi Arabia in 2012, the initiative is expected to be rolled out across the rest of the MENA region as well. Telecoms operator du has also recently partnered with Google aiming to make business communications more effective for SMEs. Through a one stop shop approach, du is reportedly targeting to capture 50 percent of the SMEs ICT market by 2016. A number of SME incubation programs are also in place including In5 (part of Dubai Internet City), Silicon Oasis, Seedstartup, TwoFour54 Ibtikar (focused on digital and media SMEs), i360 & Turn Accelerators (supporting SMEs in logistics and supply chain) and newly opened Afkar.me (for SMEs focused on digital product and content), which all provide some form of funding, access to office space as well as to experts. Government players such as ictQATAR are also very active in supporting SME ICT development, through their SME ICT Toolkit offering. International players such as SAP have also broadened their product offerings to SMEs in the region, with Microsoft offering ICT support to SMEs in Qatar.
Governments, ICT players and SMEs across the Arab region should continue to build on and learn from the initiatives above. Economic and well-planned deployment of ICT is critical to the success of SMEs.