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SMEs and the digital technology imperative

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IMPACT OF DIGITAL TECHNOLOGY ON SMALL AND MEDIUM ENTERPRISES

By Blessing Odume

 

The rise of Digital Technology as a discipline has also coincided with the capitalization of various intellectual capitals of organizations.  Digital Technology comprises the analysis and organization of business information through the application of technology. As such it blends core concepts of management, operations and information systems theory with computer science and engineering methods and technologies to manage an organization’s data. It also relates to how information and communication technologies (ICT) can be deployed to improve business processes and enhance the organisation’s value chain networks, which organisations use to acquire, produce, and deliver goods and services all over the world, through the efficient, effective and competitive use of ICT. Recently, Digital Technology has turned into a significant discussion subject among various businesses and academic groups who are of the opinion that by utilizing information systems, organizations can maximize their competitive advantage in the midst of their competitors.

Nigerian Small and Medium Enterprises (SMEs) have been the focal point since the succession of the current government. The emergence of SMEs has contributed to the rapid industrialization and development of Nigeria and its economy but since its emergence most of the enterprises have never implemented Digital Technology.

 

Identifying the reasons why and how organizations implement technological advancements and more specifically Digital Technology is a basis for guaranteeing a successful developmental process. Research shows that SMEs are the pivot of most economies of various developed countries. According to a 2005 study by the European Commission, it was found out that SMEs in Spain are responsible for 70% of the employment even as 99.8% of SMEs in Europe were accountable for two-thirds of the turnover and business employment across the region.

SMEs in Nigeria have aroused attention because of their seemingly enthusiastic strength. Though they possess lesser resources and face more survival stress than their large counterparts, they possess flexibility and have the ability to adapt to all kinds of weather. Some SMEs in developed countries spend plenty of funds on the development and implementation of Digital Technology.

Strategically, Digital Technology either reduces the cost of production or attaches value to the product or service. Inasmuch as large enterprises have enjoyed the benefits from the development of Digital Technology, SMEs have also begun to utilize the prospects of the system and there have been some disclosures that some of these SMEs use Digital Technology to add value and play a vital role in innovation.

In comparison with large enterprises, SMEs have lesser financial resources, lower expertise in technology and poor skills in management and one of the important truths is that many SMEs only started to use information technology recently. This fact that SMEs started to use information technology recently gives enlightenment as to the inadequate amount of research about Digital Technology and success in SMEs especially in developing countries.

For Nigerian SMEs to succeed and generate the required increase in productivity, their business strategy must be aligned with IT strategy. The aligning of the business strategy with the IT strategy helps the company achieve higher profitability, growth and get improved operational effectiveness as their key business processes would be automated and also give them the ability to explore newer kinds of activities which includes distribution, client relationships, business intelligence and increased competitive advantage.

 

 Basic Process of Digital Technology

Many SMEs in developed countries have invested heavily in having Digital Technology integrated into their business processes and have had both success and failures. Digital Technology development is a decisive resource for modern businesses as it sustains and uses a major amount of an organization’s capital and as a result of this, it must be managed wisely

BENEFITS OF DIGITAL TECHNOLOGY FOR NIGERIAN SMEs

The following are the benefits of implementing Digital Technology solutions by Nigerian SMEs:

Digital Technology links and Enables Employees

Using digital technology in SMEs gives employees the ability to link and enable themselves either within functions or between divisions. This linking and enablement is usually done through knowledge repositories, databases, e-mail, teleconferencing and this has enabled most organizations achieve information efficiencies and synergies

Digital Technology Codifies the Knowledge Base

Digital Technology has facilitated most effectively the organizational memory of organizations and allowed them to capture, use, store, assimilate and retrieve tacit knowledge and turn same into explicit knowledge. The codification of knowledge has enabled organizations to acquire information efficiency and has allowed them the ability to apply past and current knowledge experiences to solve issues facing the organization

Digital Technology Increases Boundary Spanning

Digital Technology does not only allow access to knowledge due to the codification of knowledge but also allows new knowledge relevant to the problem at hand to be sought for and understood. This can be done when employees of an organization are provided with communication links like internet and intranet access, audio and video conferencing, and fax machines

Digital Technology Increases Efficiency

In the communications process, effective digital technology would help SMEs to be efficient as it gives the capability to commune effortlessly and less expensively regardless of the factors of time and geographic location. Digital technology also would also enable efficiency in decision making like the capability to store and retrieve large amount of information quickly and cost effectively

CHALLENGES FACING DIGITAL TECHNOLOGY DEVELOPMENT BY SMEs IN NIGERIA

Inadequate Infrastructural Facilities

Issues concerning the SME sector in Nigeria and its development have been treated with levity by the government. There has been infrastructural lack as a result of neglect by the government. The state of infrastructure causes a significant hindrance to the development of Digital Technology by SMEs in Nigeria.

Cost

This is defined as the overall amount it would cost SMEs to develop an Digital Technology. Many Nigerian SMEs still struggle with the huge cost of Digital Technology implementation thus they ignore it. Many SMEs also try to verify the return of investment due to the fact that Digital Technology developments are executed over a long period of time.

Inadequate Funding

Inadequate funding has hampered the growth of the SME sector in Nigeria. There is a need for SMEs to have access to adequate fund as access to funding, good utilization of Digital Technology and the capability to accept change can motivate the expansion of SMEs in the country. The establishment of a centralized agency like a Small and Medium Development Agency by the Nigerian government would be significant as the agency would be able to collate information and SMEs could be able to get applicable information on the sector.

Lack of Awareness

Managers of SMEs in Nigeria do not know the significant benefits of developing Digital Technology. The characters of managers of SMEs are vital in the implementation of digital technology. Thus, managers of SMEs should be eager to implement an effective Digital Technology as it would serve as a motivator for employees. Lack of skills in computer usage also affects the development of an Digital Technology. Training programmes should be organized by managers for employees of their organizations so they would have the skills and enlightenment associated with the implementation of Digital Technology

In conclusion, it is pertinent to reassert the fact that for Nigeria to move forward in terms of development, SMEs that are pivot to this vision should try and implement digital technology. There might be barriers due to the fact that technology in Nigeria is still not fully developed; this does not stop managers of Nigerian SMEs from implementing digital technology. Digital technology goes a long way in ensuring that SMEs contribute their own quota in making sure that Nigeria makes that leap to become a power house in technology.

 

Blessing Odume, an ICT practitioner writes from Ebute Metta, Lagos

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