How can SMEs harness the power of 4IR?

The fourth industrial revolution (4IR) is upon us, connecting the world’s devices and peoples through digital technology. Any business that wants to guarantee its future needs to adopt and adapt.

How can small and medium enterprises (SMEs) use the emerging digital landscape to their advantage? This was the question explored by the Blaze with Telkom Business Conference, in partnership with Business Day.

Makgosi Mabaso, managing executive for consumer and business broadband solutions at Telkom Business, said in her keynote address that digital transformation offers SMEs the capability to compete with corporates and larger enterprises by expanding access to markets, funding and opportunities to acquire new skills. 

The panel discussions provided further insights on the opportunities, challenges and solutions available for SMEs to bridge the technology gap and ride the wave of 4IR into a successful future.

Digital technology is changing small businesses

Change is afoot, and SMEs can’t deny the reality because technology is changing the face of small business in a big way, according to Machaka Mosehana, director of the Centre for Entrepreneurship at the Johannesburg Business School. 

Mosehana said Covid was a good example of the pressure on SMEs to digitally transform because the pandemic compelled small businesses and corporations to automate, and this required adopting remote working and digitising strategies.

Unfortunately, many SMEs failed to adapt. 

“So we had to look at ourselves as professors of practice, and even of incubation spaces and accelerators. How is it that all the interventions we’ve implemented didn’t prepare our own small and medium enterprises to face this volatile and ambiguous environment?” Mosehana asked.

“Most businesses shrivelled and faded because they weren’t able to pivot or adopt digital technologies at the time.”

Part of the challenge with equipping SMEs appropriately lies in access to the relevant technologies to bridge the divide. 

Thabiso Mongane, client relations officer at 4IRI, said most technologies are protected by intellectual property laws, including patents, which makes the cost of acquiring these technologies exorbitant for cash-strapped small businesses. This means there’s a need for more open-source options that can help SMEs. 

If open-source technologies were ubiquitous, it would be easier for SMEs to adopt and use digital technologies at a fraction of the current cost. But cost is no longer as prohibitive because technology is now sold as services that businesses can subscribe to, so they no longer need to invest in expensive hardware.

Karen Luyt, expert solution architect at business & digital advisory BCX, said that SMEs don’t always think they need digital when they consider their product and service offering. But digital transformation is also about improving the way SMEs work, so they need to consider how it can help them with the administration of their businesses and to become more efficient.

Theory vs practice

Tshepo Magoma, head of business, innovation and entrepreneurship at Sadc Youth Forum, said experiences in the Sadc region show that young entrepreneurs can compete with large corporations by incorporating artificial intelligence into their businesses, because 4IR is democratising access to information and expertise. 

“SMEs are always faced with the challenge of adopting new technologies and the developing the expertise to use those technologies. There’s a huge skills gap in the country, represented by the structural state of unemployment: there’s a huge demand for specific in-demand skilled jobs — cyber security and web development, for example — but our labour force is just not in the position to take up those job opportunities,” said Kgolo Lekoma, product and sales lead at Credipple.

Mosehana proposed that to address this failure, universities must revisit their training modalities by decolonising how they impart knowledge and by creating learning environments that enable SMEs to translate what they learn to their immediate contexts. 

But SMEs don’t have to see the skills gap as a barrier. According to Strini Mandri, head of medium business and diversified sales at Telkom Business, instead of trying to hire skilled talent, SMEs can leverage on other businesses that provide 4IR-related expertise as their core business. 

A comprehensive approach to bridging the digital divide

Bridging the digital divide does not only concern what SMEs are doing and can do, but is also about addressing structural problems, particularly the availability of adequate infrastructure.

Larger, privately owned entities actively invest in infrastructure and, as a result, decisions on whether and where to invest in infrastructure are influenced by profit rather than social outcomes. 

“If you have a commercial outcome vs a social outcome, there is bound to be conflict,” said Lunga Siyo, CEO of Telkom Consumer Business. ,The government therefore needs to co-invest and partner with the private sector to address this challenge.

Making a business case for digital transformation in SMEs

For SMEs and corporates to see the value of adopting new technologies, it is important to demonstrate how they can address challenges and positively contribute to their bottom line. 

Hepsy Mkhungo, co-founder and director at One Linkage, said SMEs are tired of being empowered and trained through enterprise support and development programmes, then not be given access to opportunities and markets where they can grow as going concerns. Digital transformation needs to respond to this challenge.

Additionally, SMEs want to know how adopting digital technologies will improve their capacity to deliver on their purpose. Like all businesses, SMEs provide products and services to solve customers’ specific problems. 

To bridge the digital divide, Siyo said that because SMEs exist to sell their products and services to consumers, digital transformation needs to address the need to connect SMEs to tech-savvy consumers to sustain their businesses. 

To watch the Blaze with Telkom Business Conference, click here.

This article was sponsored by Telkom.