Digitalization of SMBs could add as much as US$41 Billion to Thailand’s GDP by 2024
The digitalization of small and medium businesses (SMBs) in Thailand could add between US$35 to 41 Billion to the country’s GDP by 2024 and contribute to economic recovery post COVID-19, according to the 2020 Asia Pacific SMB Digital Maturity Study.
The study, based on a survey of SMBs from across the region conducted by International Data Corporation (IDC) and commissioned by Cisco, shows that SMBs that are more digitally mature enjoy twice as many benefits in terms of revenue and productivity compared to those that have an indifferent approach to digitalization.
SMBs are a critical part of Thailand’s economy. According to The Office of Small and Medium Enterprises Promotion (OSMEP), the sector accounts for 85.5 percent of Thailand's total workforce and contributes to 43% of total GDP. As such, they will play a key role in the economic recovery and growth in a post-COVID world.
The study, which is based on a primary survey of SMBs, shows that 73 percent of SMBs in Thailand are looking to digitally transform digitally transform to bring new products and services to market, 50 percent recognize that competition is transforming and they must keep pace, and 23 percent are transforming due to demand from customers.
“The SMB sector has been among the hardest hit by the COVID-19 pandemic. However, they have been agile and have taken various measures to overcome the situation. One of the key trends that we have seen is that of SMBs adopting technology to ensure they can continue to serve their customers during the period. As Thailand starts to ease some of the restrictions and consumer activity starts to pick pace, digital transformation of SMBs will play a pivotal role in their recovery and contribute to the country’s overall economic growth. Cisco is committed to work with SMBs to help them emerge stronger with the right digital solutions and strategy,” said Vatsun Thirapatarapong, Managing Director for Cisco Thailand.
The results of the study show that purchasing or upgrading IT software (20 percent) is the top technology investment priority for SMBs in Thailand, followed by purchasing and upgrading IT hardware (15 percent) and investing in cloud (11 percent).
However, SMBs are also facing challenges on this front. According to the respondents, shortage of digital skills and access to talent is the top hurdle (20 percent) for SMBs in their digital transformation efforts. This is followed by the lack of lack of proper digital transformation roadmap (18 percent) and lack of necessary technologies (15 percent).
“SMBs have an unprecedented opportunity. However, for them to derive the greatest long-term value, all stakeholders need to come together to address the key issues faced by the industry. This includes government, educational institutions, large corporations, and industry bodies. No one entity can solve these alone. At Cisco, we are proud to be playing our part. From a talent perspective, the Cisco Networking Academy has trained over 2.5 million students across Asia Pacific, Japan and China in various ICT skills since its inception. On the technology front, we have launched a series of curated products and solutions specifically for the SMB sector under the Cisco Designed portfolio,” said Bidhan Roy, Managing Director, Small Business, Asia Pacific, Japan and China, Cisco.
For Asia Pacific, digitalization of SMBs could add between US$2.6 to 3.1 trillion to the region’s GDP by 2024. Asia Pacific’s GDP is expected to grow between US$10.6 to 14.6 trillion, according to forecasts by IDC. Digitalization of SMBs could account for as much as 25 percent of that growth.
The study highlights that nearly 70 percent of SMBs in Asia Pacific are accelerating the digitalization of their businesses as a result of COVID-19. Among the respondents, 86 percent say they believe digitalization will help in developing resilience against crises like COVID-19.
Despite the challenges, the region’s SMBs continue to make progress in their digitalization journeys. According to the study, 16 percent of SMBs in the region are now in the advanced digital maturity stages (3 and 4), compared to 11 percent in 2019. Slightly more than half of SMBs have embraced digitalization to become Digital Observers (stage 2). Only 31 percent of SMBs are still reactive to market changes and have made hardly any efforts to transform digitally (stage 1).
Within the region, SMBs in Singapore, Japan, and New Zealand continue to lead the Digital Observer group, with no changes in their ranking compared to 2019. However, mainland China, Taiwan, and Thailand surpassed Korea, Hong Kong, and Malaysia, respectively. There has been notable progress made by SMBs in Indonesia and Vietnam.
“Digitalization is no longer an option for SMBs – it's a matter of survival. COVID-19 has forced them to move to digital-first, becoming more dependent on technologies to ensure business continuity and resiliency. As SMBs rethink processes, operations, and customer engagements, they are looking at cloud services and cybersecurity first, but have also increased their focus on customer experience, video conferencing and AI/Analytics solutions. Given the rapidly changing market conditions and speed of technology evolution, SMBs should work with the right industry partners to ensure they can maximize their technology investments and thrive in their digitalization journeys,” said Daniel-Zoe Jimenez, AVP, Head Digital Transformation & SMB research at IDC.
This year’s study is a follow-up to the 2019 ‘SMB Digital Maturity Index’ that looked at the state of digital adoption of SMBs across the region. The 2020 study aims to further the understanding of how SMBs can progress in their digital transformation journey and the impact of digitalization among SMBs to drive economic activity.
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