How SMEs can leverage the power of technology to enable sustainable growth

Fast becoming one of the country's premier events for small and medium-sized enterprises (SMEs), the 2024 edition of the annual Standard Bank SME Summit, hosted in partnership with Business Day, once again attracted top entrepreneurs to discuss and explore strategies and innovations to level the digital playing field for South African SMEs.

With an estimated 2.6-million SMEs in SA making up 91% of formalised businesses, and providing employment to about 60% of the labour force with a total economic output accounting for roughly 34% of GDP, it is clear that these businesses are the lifeblood of innovation and job creation.

Technology has become entrenched in the daily life of an entrepreneur. It can improve operational efficiency and advance competitiveness, fast-track business growth, provide access to new markets and unlock untapped revenue streams. 

To ensure that SMEs aren't lagging in digital transformation and leveraging the power of digital tools and technologies, experts shared insights and participated in engaging and open discussions about how the strategic integration of technology solutions can become the cornerstone of SME success.

Hosted by Gugulethu Mfuphi, a seasoned presenter in the business and finance industry, the summit included expert panel discussions addressing two main topics:

• How digital transformation fosters innovation and competitiveness, particularly in the e-commerce landscape; and
• How emerging technology like artificial intelligence (AI) can pave the way for sustainable business growth.

E-commerce: accelerating economic growth for SMEs

One of the most potent digital tools driving SME growth is
e-commerce. By establishing an online presence, SMEs can quickly and with minimal financial outlay reach a broader customer base, transcending geographical boundaries. Expanded market access can increase sales, revenue generation and job creation. 

Within the e-commerce ecosystem, a critical topic that arose was SMEs' ability to scale their businesses. For many who may not be able to afford the accessibility of systems on which SMEs can accept payment, there is a crucial caveat for example. These digital platforms enable SMEs to reach markets, grow their business and receive payments from multiple sources. This is where Standard Bank Merchant Services steps in to provide access to these platforms and drive economic growth.

Integrating technologies can address concerns around scalability, but an innovative approach is required. Optimising customer experiences is another facet that technology can address to give SMEs a competitive advantage, but again, innovation is vital to embracing these kinds of opportunities.

Partnerships and collaborations were another prevalent talking point. SA has some large e-commerce players that SMEs would not be able to compete with. Instead of competing, a partnership that gives entrepreneurs a platform, such as the Takealot Market Place, gives smaller businesses the opportunity to leverage the already existing platform and e-commerce infrastructure to ensure a successful start and sustainability in the long term.

Regulations around protecting intellectual property (IP) were also discussed in terms of how entrepreneurs can ensure they are protected while mentorship and knowledge transfer can still take place. By formalising initiatives that give entrepreneurs access to mentorship and encourage more competitive practices in a regulated environment, more entrepreneurs would be able to capitalise on innovation without the fear of losing their IP.

However, before this can be done, the panel agreed that digital literacy skills must be addressed so that SMEs are equipped with the capabilities required to fully take advantage of digital transformation. There is an urgent need to scale up skills development workshops and learning initiatives to bolster digital literacy and give SMEs the opportunity to reap the rewards of an e-commerce landscape ripe to address the challenge of unemployment.

There is space within the ecosystem for both large and small players where cultivating growth across the board is pivotal to maintaining industry competitiveness and driving further innovation. While e-commerce is a competitive sector, it is also one that opens up the opportunity for entrepreneurs to evolve and grow.

A final piece of advice from panellists for SMEs just starting out is to have a simple solution in mind; things like understanding your area, location and access to support that SMEs can get through the solutions that Standard Bank has to offer can become game-changers. Partnerships are important. It is now up to SMEs in the e-commerce space to make the right ones.

How AI can deliver growth for SMEs

AI is emerging as a powerful tool for SMEs to optimise operations, enhance customer experiences and drive innovation. However, the concept can be overwhelming for many SMEs who may struggle with digital literacy.

An important point from the panellists is that AI can be leveraged regardless of business size. From the most straightforward applications that offer features such as Google Maps so that customers can be found in delivery cycles, for example, right through to the larger companies who are building their own chatbots and leveraging big data sets to drive business strategies, there is a place within AI hierarchy for all players.

However, another prudent point mentioned is that SMEs must understand AI's role in their business by conducting a thorough assessment of the business needs and goals before investing in any type of technology. 

Using data science, AI has the potential to help SMEs get an inside edge on what their consumers want, their purchasing behaviours and their overall online preferences. However, for SMEs who may not have access to big data, AI can automate routine tasks, simplify supply chains and even personalise customer engagements.

Panellists agreed that by automating routine tasks, SMEs have more time to focus on what is essential in terms of growing their businesses. They can identify new opportunities and trends, and experiment with new ideas and approaches. This culture of innovation goes a long way to differentiating themselves, meaning that they can stay competitive in the long run. Automation also has beneficial cost-saving implications as it eliminates spending unnecessary money on menial tasks.

Integrating AI within the business could still be a grey area for SMEs. The panellists suggest simply starting at a base level with what they already have and using the technology from there. An example of this could be Google Workspace and its associated tools. It is crucial to think about integrating AI through devices such as mobile devices. AI should integrate with what SMEs and entrepreneurs have, not vice versa.

In terms of ethics, AI's capabilities are progressing at an astounding rate. This means that SMEs have a responsibility to use the technology responsibly. They must play an active role in AI management within their business and they cannot lose the human touch as their adoption of the technology increases.

AI cannot be leveraged without a solid business plan for integration. Suppose entrepreneurs are not sure where they should be using it. In that case, they need to strategise before taking further steps to prepare themselves to effectively capitalise on these AI-driven opportunities for sustained growth and competitiveness.

The way forward

Predeshnee Pillay, Enterprise Banking manager at Standard Bank, reiterated that Standard Bank is committed to ensuring that SMEs can emerge fully equipped with technology capabilities that can effectively meet the current and future challenges.

She shared a prevalent quote from research scientist George Westerman: “When digital transformation is done correctly, it's like a caterpillar turning into a butterfly, but when done wrong, all you have is a fast caterpillar.”

Leveraging the power of technology to enable the country's SMEs is necessary for survival. In an increasingly cluttered landscape where digital skills and technology adoption will separate those who make it from those who don't, a tech-driven strategy is the only way for a future-fit SME to remain competitive, sustainable and, most importantly, profitable as technology evolves.

This article was sponsored by Standard Bank.