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How analytics can shape SMEs in Malaysia?

The small and medium enterprises (SMEs) are the backbone of the Malaysian economy. According to Economic Census 2016, Department of Statistics Malaysia (DOSM), there are 907,065 establishments in the country. These enterprises have been playing a vital role and contributing a major portion to the GDP, export, and employment.

In order to improve the boost the economy and performance of SMEs, the government has come up with “SME Master Plan 2020.” The aim of the Master Plan is to achieve 41 percent contribution to GDP, 62 percent in employment and 25 percent in export sector by 2020. The target can be achieved through increasing the technology adoption in the country.

Experts believe that technology is the catalyst for growth for SMEs in Malaysia. The Information Technology (IT) is believed to be the main driver of the Malaysian economy. It will help the SMEs to expand their market in other countries, compete with their partners designed by international conglomerates and overcome the challenges like the high market share of Japanese companies.

SMEs in Malaysia at a Glance:

As per the reports of DOSM, the SMEs contributed 36.6 percent in 2016 and 36.3 percent in 2015 to GDP, 15.6 percent in 2016 and 17.7 percent in 2015 to exports and 65.3 percent in 2016 and 64.3 percent in 2015 to employment sector. As many as 98.5 percent business establishments in Malaysia are SMEs.  

According to SME Corporation Malaysia, there are 907, 065 SMEs in the country, out of which, 20,612 (2.3%) are medium, 192,783 (21.2%) are small and 693,670 (76.5%) are microenterprises. Sector wise, 809,126 (89.2%) are in services; 47,698 (5.3%) in manufacturing; 39,158 (4.3%) in construction; 10,218 (1.1%) in agriculture and 865 (0.1%) in mining & quarrying.

Out of 907, 065 SMEs, 66.4 percent units are located in these six states:  19.8 percent SMEs are in Selangor, 14.7 percent in WP Kuala Lumpur,  10.8 percent in Johor, 8.3 percent in Perak, 5.4 percent in Kedah and 7.4 percent in Pulau Pinang. Remaining 33.6 percent SMEs are located in the rest of the states.

Technology adoption in SMEs:

The adoption of the right technology would help the SMEs to achieve higher revenue and sales. But, the major challenge is the select the right technology which would fit into their business model. As per the statistics mentioned above, 76.5 percent units are microenterprises, and they belong to the services sector. In order to select the best ERP software is a tedious task. Besides, these SMEs need best business intelligence software which would help and guide them in their business decisions. The Federation of the Malaysian Manufacturers (FMM) identified three factors that were deemed to be the source of SMEs’ IT usage problems:

A.    Lack of awareness of the importance of IT in SMEs,

B.    Low distribution of IT usage in SMEs, and

C.    Business associations are not good role models in state-of-the-art IT usage.

Most of the microenterprises don't have their own websites and the units having a website are unable to update those regularly. Malaysian SMEs still lag far behind in the acceptance of this new but necessary, technology.

How would analytics help to Malaysian SMEs?

In general, due to the day-to-day management, most of the SMEs fail to plan, predict and adapt business intelligence. They should consider technology adoption much seriously in order to grow and evolve. Analytics will help the businesses regardless of their size to predict and plan their growth. Analytics software is not only limited to business but, it also covers all the disciplines. It plays a vital role in defining success for SMEs.

Malaysian SMEs could adopt the latest technologies in order to achieve huge success and growth as per the master plan. They can use the analytics software in order to figure out the major challenges in their business. Predictive analytics would be an advanced version for them to chalk out their future strategies.

It is recommended for SMEs to adopt the right technology for better results. And simple software like analytics applications could be a good fit regardless of the size of the SMEs. For example, a unit in the manufacturing sectors would like to know the number of raw material they are using in the production process; the application would help them to provide the proper insights through charts and graphs, which will ultimately help the management to take business decisions. For SMEs in the service sector, the analytics application would be enough to monitor their entire process and all kinds of services.

The technology adoption and usage of the software applications like analytics would streamline their process help them to generate more profit and they can improve their efficiency & productivity.