Presented by SAP Africa

SMEs must prioritise planning in pandemic response

By Dumisani Moyo, Head of Mid-Market: Southern Africa at SAP

As the coronavirus pandemic strengthens its hold on the global economy, businesses of all sizes are facing multiple challenges in a fight for survival. A looming global recession, dented consumer and business confidence and the general disruption of lockdown measures have put every business in a precarious position.

For SMEs, however, there is arguably greater urgency to adapt to the new realities and take bold steps to ensure their business survival.

A recent StatsSA survey found that 90% of SMEs reported lower-than-usual turnover, with more than a third saying they will reduce their workforce in the short term to get through the immediate impact of the lockdown. A staggering 93% of businesses stated they will not survive the lockdown if it continues for more than three months.

In a sector where liquidity and cash flow are perennial challenges, the ability to quickly acclimatize to this new normal can be the difference between survival and absolute disaster. Indications are that the current state of disruption will continue for months.

The crisis is forcing SMEs to fundamentally rethink their business models within this new normal, especially how they manage remote workers and interact with suppliers and customers while managing widespread uncertainty.

Beyond navigating financial and operational challenges, SMEs are also confronted by material challenges such as business continuity, workforce productivity and weak demand for their products and services. All of which have only become more challenging due to the pandemic.

Technology enabling resilience to disruption

SMEs need to act quickly to make their businesses more resilient. Technology can empower SMEs to make credible decisions to adapting to a dynamic business environment.

The common misconception that technology in business is only for large companies is misplaced. SMEs can also benefit and, through technology, drive better efficiencies, innovation and growth. In fact, compared to larger companies, SMEs are well placed to take advantage of technology. Because of their size, SMEs are more agile and are able to make decisions faster and respond to changing market conditions quicker.

The cloud in particular removes many of the obstacles to digital transformation by allowing SMEs to pay for services as they consume them and to easily integrate new services as and when they need them. In the context of SMEs, digital transformation is often misunderstood, and its benefits shrouded in mystery, despite the near-endless applications of technology that deliver direct business value.

In times of heightened uncertainty, such as what we’re currently experiencing, one standout technology for SMEs is enterprise resource planning (ERP).

Enterprise-grade tech for SMEs

Formerly reserved to large enterprises with the financial and talent resources needed for large-scale technology deployments, modern enterprise resource planning (ERP) tools are now available for mid-market companies at competitive price points.

The purpose of implementing an ERP solution is to provide an end-to-end information management system that connects the right information, to the right people, at the right time. It helps companies manage the countless processes that make the business function effectively, such as finance, human resources, supply chain, procurement, and customer relationship management.

Integrating such processes to an ERP solution enables the smooth flow of information across the business and gives decision-makers a real-time view of the overall health of the business, with potential risks and weak spots more easily identified.

However, ERP implementations are often still seen as expensive, difficult to manage, and with high barriers to entry for smaller firms. This unfortunately ignores the tremendous strides made by technology providers to level the playing field for small and mid-size organisations by adapting enterprise-grade ERP solutions for the SME market.

Here are the top five benefits that SMEs can expect from implementing an ERP solution:

Benefit 1 – An integrated business management approach

An ERP system by its nature streamlines, automates and integrates multiple sources of disparate company information and various business processes. This supports planning efforts by, for example, matching raw material purchases to accurate sales forecasts to minimise wastage in the supply chain.

With this information readily available across the organisation, SMEs can improve their planning and ensure precious financial resources are not wasted on unwanted inventory.

Benefit 2 – Greater transparency, efficiency and cost-savings

ERP solutions enable organisations to store information once and without duplication. This reduces overall costs and removes inefficiencies since the entire organisation is working off a single source of truth for the business.

Without an ERP system, valuable insights, for example production information used to calculate profitability and margins, may be stored in multiple silos and remain inaccessible to many within the business, leading to inefficiencies and potential wastage of time and other resources.

Benefit 3 – Improved compliance, governance and data security

If data is the new oil, then organisations need to take reasonable steps to safeguard their data, both from a security perspective as well as to comply to regulations. SMEs striving to comply with the POPI Act or Europe’s GDPR, for example, can leverage their ERP solution to ensure sound governance and compliance by standardising processes across the organisation and maintaining the correct levels of access to data for various stakeholders within the business.

Benefit 4 – Decisions powered by predictive analytics and business insights

With the ability to combine company data with external data sources, SMEs can leverage their ERP system to model accurate forecasts and ultimately make better, more informed decisions. This conversion of cold data into valuable insights is itself a potential point of differentiation and may reveal new areas for competitive advantage and even new revenue streams.

Benefit 5 – Accessibility of business-critical information

When the ERP system is cloud-based, business leaders can access critical business information anywhere and at any time. In our current state of disruption, having the ability to tap into a real-time view of the total health of the business  is invaluable to decision-making. The ability to securely access information about the company’s operations from any device, anywhere and at any time is also an important component of business continuity.

According to Oxford Economics, there are four key areas that SMEs should focus on to manage the disruption that COVID-19 has brought about; specifically, the challenges that they face today and those that lie ahead.

I thought you would be interested in reviewing these recommendations, which are available in the recent Oxford Economics study Is Your Business Prepared for What’s Next? Crisis Management for Small and Midsize Companies.”

This report analyses midsize businesses that emerge stronger from times of disruption and uncertainty and comprehensively outlines their best practices for transparent financial operations, flexible work arrangements, operational resilience, and responsive customer experience.

This article was published in partnership with SAP Africa.

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SMEs must prioritise planning in pandemic response