SME Dilemma: Scale IT Or Expand Business

In a one-on-one with Biztech2.0, Deb Deep Sengupta, VP, SME and Channels, SAP India, talks about the Indian SME sector and IT’s role in bringing it to the one billion mark.

What is your take on the transition of SMEs over the years?

If you look at the Indian economy, companies we considered as SMEs three years ago might have today become large enterprises. A company, which was a 100 crore company three years ago, might be worth about 500 crores today. This growth brings a host of challenges to SMEs in terms of scalability, sustenance and building the organisation.

Most SMEs are in the process of doubling or tripling their turnovers. They are also increasing their workforce and facilities irrespective of the vertical. Technology solutions such as those from the likes of SAP can help them to scale up their business processes and also support growth.

More from Biztech

Future Group - Reliance Retail Deal approved by CCI RBI ban on cryptocurrencies takes effect; prohibition could force investors to tap the black market

How has IT helped the SME sector?

If you look at Suzlon as an organisation, which is into the non-traditional business of wind energy, when they interacted with us a few years back they were probably a 100 million dollar company and today they are worth more than a billion dollars. They have used a variety of technologies to streamline their processes, align business and IT strategies and to fuel growth. There are many similar examples in the retail, automotive, and various other sectors.

Do you think that the SME sector is making optimum utilisation of its existing IT infrastructure?

Most SMEs start by investing small and look at getting a quick RoI. For instance, if they have invested in a SAP solution, they would want a quick implementation. Post such an implementation, they go on a benefit realisation phase during which they streamline their processes and look at how they can fuel business growth over the next couple of years. Having done that, they go into the next phase of business expansion, which looks at different functions such as SCM, CRM etc. This new phase helps them interact with their customers and suppliers to streamline operations not just within the organisation but also in the extended network.

What are the key IT challenges in the SME space?

The key challenge that most SMEs face is whether to invest in the scalability of IT resources or the expansion of the business as they have limited funds and resources at their disposal.

Where do you see the SME sector headed in the future?

The fastest growing segment in India is the SME segment. From a SAP perspective, I can say that last year we had grown more than 100 percent and likewise our customers are also growing at the same pace. They are witnessing double and triple digit growth rates year after year. At this stage, the SME sector is contributing a significant chunk to the Indian economy.