Long before the pandemic prompted enterprises of all levels to pivot to a digital-first business model, small and midsize businesses in the ASEAN were already ahead of the curve.
Nine in 10 establishments (88%+) in the ASEAN are classified as micro, small and midsize businesses. The region relies on this high-potential segment as a growth engine. Empowering them with the right tools and a clear roadmap for digital transformation is thus vital to spurring productivity and prosperity.
The concept of innovation at SMBs, however, is far from being just another catchphrase of the Industry 4.0 era. Despite often having smaller technology footprints, SMBs are finding creative ways to keep up with the demands of consumers today, and cloud has played a critical role in their innovation.
“Prior to the pandemic, SMBs were already adopting technology and cloud. Smartphone and internet penetration, digital payments, ecommerce, as well as Artificial Intelligence and Machine Learning, are all catalysts for innovation,” said Gunish Chawla, Head of Mid-Market and SMB, ASEAN, at Amazon Web Services.
“What we observed during the pandemic was that SMBs turned to the cloud to rethink their operating models in the new business environment in order to serve customers more effectively,” Gunish told People Matters in an exclusive interview.
How cloud breaks down barriers to transformation
While technology can be a key enabler for businesses, the top barriers cited by SMBs are accessibility and affordability. However, cloud computing can help SMBs overcome these challenges.
“Cloud has helped democratise technology by providing access to thousands of SMBs across ASEAN,” Gunish said. “SMBs can reap the benefits of cloud architectures and applications; they don't have to invest the time and expense in building it themselves. Customers can ramp up resources as they need them, and even deploy hundreds of servers in minutes. SMBs can very quickly develop and roll out new applications.”
This benefit also allows customers to stay agile and experiment. “For example, if you want to experiment and that experiment fails, you can always de-provision the resources without any risk to your business,” Gunish said.
As for the challenge of affordability in building up their technology stack, cost savings through cloud makes a compelling case.
“With cloud, SMBs do not require upfront capital for servers and data centres. Plus, they can take advantage of the Pay-As-You-Go approach to pricing. As SMBs are only paying for what they consume, it becomes a variable expense for SMEs, and this is much lower than what virtually every company can do on its own,” Gunish said.
AWS, for instance, passes on cost savings from its economies of scale to its customers. “We did a global cloud economics study with over 1,000 customers, and the respondents reported a 27.4% reduction in cost-per-user after adopting AWS. As we see increasing cloud adoption among SMBs in the ASEAN, we expect these blockers around accessibility and affordability to be addressed over time,” he said.
Cloud migration and the culture of innovation
Lifting technology barriers for SMBs paves the way for a culture of innovation to flourish.
“Creating a culture of innovation fosters a new mindset that helps organisations become agile and proactively meet customer needs. And it prepares staff to be resilient, especially in the face of ambiguity and change,” Gunish said.
“If you think about the past two years especially – when we think about leaders and how they can initiate the shift towards innovation – many challenges that organisations face are not technical in nature, but are actually more about people and culture.
“If you look at organisations that talk about innovation and move to the cloud successfully versus those that don’t, it often comes down to four factors,” he said.
“First, the leadership team needs to be aligned and truly committed that they want to move to the cloud. They need to set clear directions and these expectations need to be aligned with the rest of the organisation. So, everyone’s on the same page and working towards shared goals.
“The second factor,” Gunish said, “is that successful organisations typically have an aggressive top-down goal because that forces the whole organisation to move faster than they would have organically.”
The third thing is building capability among users. “It’s really important that all staff are trained on the cloud and are comfortable with the concepts as part of the process, especially as we look to transform organisations digitally,” Gunish said.
“Finally, it’s important to think about the roadmap, so you need to conduct a portfolio analysis, essentially, for each application you have in the organisation; define a plan for what to move in the short term, medium term and long term.
“This typically helps organisations get the benefit of cloud for many applications much more quickly, and it also helps better inform their long-term migration and transformation plans.”
Reflecting the diverse ecosystem of SMBs, different organisations in the sector are at different stages of digital transformation. For Gunish, every roadmap will be different, so leaders should take time to identify their transformation goal and chart their journey accordingly.