SMEs in APAC were least fazed by the pandemic, finds SAP

• Businesses in the Asia Pacific (APAC) region are well-positioned to capitalize on the advantages of digital transformation – if they stick it through

Small and midsize enterprises (SMEs) in the Asia Pacific (APAC) region are in a unique position to adapt to the changing workplace this year.

At least, that was what was uncovered in a new Oxford Economics study commissioned by SAP exploring SME readiness for a ‘new economy’.

Among the 832 APAC respondents of a total 2,000 from Australia, China, India, Japan, New Zealand, Philippines, Singapore, and South Korea, more than two-thirds (77%) of APAC said they had successfully adjusted to remote working arrangements during the pandemic, taking the edge on European (75%) and North/South American (71%) counterparts.

APAC businesses adjusted well to the technical challenges of switching to remote work. Nearly three-quarters (73%) invested in IT and collaboration tools to support staff who were working from home, including providing adequate training so employees could pick up the necessary skills to operate remotely; 68% responded in developing new channels to distribute products and services during that time.

Many regional businesses pivoted to e-commerce for the first time, and many also looked into establishing supply chain alternatives when traditional routes and supply chain mechanisms were interrupted– 68% of companies in APAC explored new ways to fulfill their supply chain needs.

Many APAC SMEs said they’d made moderate progress toward digital transformation (39%), and 21% have made substantial progress or completely adapted their operations to embrace digitization. Encouragingly, another 19% expect to have completely transformed their business digitally within the next three years, despite the setbacks during the past year.

The findings are reassuring considering the APAC region still lags behind its Western counterparts when it comes to embracing digital transformation initiatives, but there are still challenges to overcome: small businesses in APAC pointed to changing customer needs, stiffer competition from larger organizations, and a quickly evolving marketplace as the biggest external hindrances to the success of their business (40%, 39%, and 27%, respectively).

Those setbacks are not holding back SMEs in the region from adopting transformational technologies, however. APAC respondents reported that these technologies are either in use in some applications/projects or are already in use at scale, with HR/Talent management software adoption the farthest along (66% of APAC organizations), followed by Governance and Cybersecurity software (63%) and Finance and Risk management software (59%).

APAC SMEs are actively considering emerging tech like AI/ML and the Internet of Things (IoT) as their main investment priorities moving forward, while ERP solutions and the development of business processes to handle mobile deployments are already being rolled out as pilot projects by a significant number of APAC companies.

“The present economic situation is a generational challenge that is testing the resiliency of businesses on multiple fronts, from cash flow and supply chain to unpredictable shifts in consumer demands,” said Claus Andresen, SVP & Head of General Business (SME) and Emerging Markets Growth, Asia Pacific & Japan. “Instead of adopting a conservative wait and see approach, forward-thinking businesses should use this downtime to transform and pivot towards an all-digital future.”

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