IBM’s Ajay Mittal: MSMEs not far behind in tech adoption, it’s just that focus areas, scale are smaller

Technology for MSMEs: MSMEs are quite agile in terms of technology adoption and takes decisions faster since they don’t have legacy issues as compared to their enterprise counterparts, believed Ajay Mittal — IBM India Chief Digital Officer & Director-Digital Sales & Commercial. The technology major has been providing offerings to MSMEs, others that span cloud-enabled AI, data, security, integration, video, etc., via the IBM public cloud to help businesses have access to the capacity, security, and services they need to keep their operations running. As a result, small business has been an important segment for IBM’s growth in India. “We’re very optimistic about the potential of this segment which is evident by our double-digit growth last year,” Mittal told Financial Express Online’s Sandeep Soni in an interview. Edited excerpts below:

Do you think tech penetration among MSMEs has been negligible as many remain averse to the latest tools? What can be done to speed this up apart from the government’s efforts?

MSME sector has not been too far behind in tech adoption. It’s just that their focus areas and scale have been smaller due to business requirements. For example, a 2019 survey conducted by Tally and Kantar shows that 35 per cent of MSMEs have adopted business management software and 45 per cent intends to adopt business applications like financial tools and CRM solutions in the near future. The uncertainty triggered by the pandemic has created a new normal, where adopting digital tools that will enhance remote working capabilities is the most critical need along with keeping the organization financially afloat. SMBs are relooking at their own IT setup to ensure that they fix the gaps which could hamper their ability to operate remotely while minimizing costs. This focus will further accelerate the pre-Covid trend of public cloud adoption since it offers the capability to address multiple issues without the need for large upfront investments. Technology is the new SMB backbone – not merely a ‘good to have’ – but a ‘Must Have’ imperative for survival and future success.

But aren’t MSMEs too complacent with their way of doing business?

MSMEs are quite agile in terms of tech adoption and takes decisions faster since they don’t have legacy issues as compared to their enterprise counterparts. In many companies, IT is a C-suite priority and sees faster growth owing to the incremental adoption of technology. The Commercial business unit in IBM that caters to this segment saw double-digit growth in 2019 and is one of the fastest-growing IBM units globally. For their business transformation, clients will start accelerating the adoption of tools and processes that will improve their connection with clients, employees, and partners while maintaining financial stability. They will need to work with technology implementation partners who can bring in the cloud, Software-as-a-Service (SaaS), and automation models without compromising affordability.

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Do you think there is a further need to incentivize tech adoption for MSMEs?

The government has already introduced special schemes for MSMEs like collateral-free automatic loan worth Rs 3 lakh crore and the sector will definitely benefit from such initiatives. However, industry progress is a holistic process and it needs the ecosystem including tech providers, service partners, and SMBs to come together in driving digital transformation. Mid-size companies need to constantly re-evaluate their tech infrastructure and consumption models to build agility, resilience, and improved monetization. The industry ecosystem needs to bring innovative solutions that can make tech adoption affordable.

But despite all that, high cost and lack of tech talent or expensive tech talent are the other two bottlenecks. Could corporates or tech providers literally handhold them at every step and provide affordable technology?

Yes, it is important to acknowledge the bottlenecks for tech adoption among SMBs but they also have a wide range of partners who can help them overcome such challenges. In the post-Covid scenario, companies will need to focus on two key things – strengthening their infrastructure and enabling business transformation. They’ll need to adopt robust platforms for remote working including VPNs, an automated helpdesk for real-time troubleshooting, and upgraded cybersecurity protocols. To manage these challenges, companies will need to engage with technology partners who can give them access to the relevant technologies and also can help address all these requirements through robust processes and management tools and practices.

Then there is data security that no tech provider can fully guarantee. How IBM addresses this while explaining its solutions to MSMEs?

The threat is real. The number of security incidents has increased by over 40 per cent due to the move to remote working and the use of personal devices for business-related activities. IBM Cybersecurity follows a very strong business continuity practice. This is evident through the SLA levels that we offer through our delivery centers across the globe. IBM built and manages a Security Operations Centre for New India Cooperative Bank that has the capability to monitor all their devices’ security logs, report any suspicious activity, and identify lapses before they are breached and helping the bank fix it in time. This has allowed the bank to be completely secure while focusing on increasing reach and delivering innovative services to the customer.

Since remote working has been the new normal, would the pandemic have a long-term impact on MSMEs with respect to tech adoption akin to what demonetization and Covid did to payments?

In the short term, apart from the increased adoption of remote collaboration tools, companies will revisit service models and look to leverage self-help/self-healing tools which will allow every single user to continue working without significant intervention. This will also lead to the adoption of automation solutions. Security will attract investment as cybersecurity issues will be enhanced due to a large number of users are accessing data remotely, as opposed to a controlled-access environment earlier. The long-term challenges will be adapting to the new normal in terms of inventory management, store strategy, etc. Accelerating digital transformation and uptake on analytics and AI-driven decision making are going to address the long-term challenges. Within the SMB space, we will see technology adoption at a faster rate, and companies aiming to complete larger projects in a shorter span of time.

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How is IBM innovating solutions for MSMEs, which are cheap, flexible to adopt and use and have a very shallow learning curve, with clearly measurable returns?

IBM is at the forefront of technology innovation and is invested in tools and processes to ensure business continuity for our customers from the segment. In the next chapter of cloud-led digital transformation, clients will increasingly need more advice on the cloud. As more workloads move to the cloud (and only 20 percent have done so to date), clients need solutions that minimize risk and ensure end-user performance and satisfaction. Companies will take more advantage of cloud benefits in terms of faster time to market and they will need solutions to help them build cloud-native environments, including applications. After this stage, they will need solutions and support to manage on the cloud. Specifically, for Auto Industry, there are many solution approaches starting from touch-less retail, supply chain agility, data security, etc which can help address some of the emerging concerns/business requirements. Keeping these in view, IBM has created specific solutions meant to address the detection of temperature elevations, contact-less screening of large numbers of workers, monitoring workplace crowding, etc. We offer our expertise in management support through IBM Garage and uses IBM Garage Methodology remotely to help clients address their emerging business requirements.

How does IBM treat MSMEs’ data and in what ways? Also, what’s your take on data storage to remain only in India?

IBM’s data policy remains the same irrespective of the size of the organization. We believe that our clients’ data is their own, and that government data policies should be fair and equitable and prioritize openness. Our client agreements are transparent; clients are not required to relinquish rights to their data—nor the insights derived from that data—to benefit from IBM’s solutions and services. IBM is fully committed to protecting the privacy of our clients’ data. While there is no single approach to privacy, IBM complies with the data privacy laws in all countries and territories in which we operate; we support global cooperation to strengthen privacy protections.

Lastly, what’s the share of MSMEs in IBM’s overall customer base and contribution to business growth?

As per policy, we cannot share target figures, but we’re very optimistic about the potential of this segment which is evident by our double-digit growth last year. We have over 1,000 customers who use our Public Cloud in the commercial business which largely caters to mid-market customers.