How important are SMEs for an economy, especially in a place like the UAE?

Dubai - Among the crucial reasons are that they contribute to growth, innovation and job creation

Small and medium enterprises form the backbone of UAE's economy. They have proven to be the strategic drivers of industries across the country and are expected to play a much stronger role in the years to come. According to the UAE Ministry of Economy, more than 94 per cent of the companies operating in the UAE are SMEs and together, they account for more than 86 per cent of the total private sector workforce as well as more than 60 per cent of the country's current GDP, which is estimated to go up to 70 per cent by 2021.
Essentially, these SMEs contribute to growth, innovation and job creation. Therefore, it is highly imperative to ensure they are empowered with the right tools and support to move ahead into their journey. The UAE government is playing a key role in its ambition to enhance their contribution and performance of the SME sector, and we have seen the government establishing various initiatives and programmes to help them grow further.
Whether SMEs aim to raise funding, boost productivity, streamline operations or enhance its products, we believe technology will be at the core of all this to play an increasingly important role in enhancing their competitiveness in every area.
 
Challenges being faced
As small businesses move forward in their journey to achieve growth and sustainability, they begin to outgrow their existing systems and processes, and start facing a range of challenges including raising funds, maintaining cashflow, improving sales and even enhancing customer services.
However, the bigger challenge they face is keeping all of this together and streamline their processes. They feel disconnected from their own business because of struggling with standalone systems that are not efficient, and are neither able to keep up with continual change.

With systems bearing features like predictive analytics, SMEs can automate and secure their supply chains, and optimise inventory knowing what to replenish, and when. Sales teams can sell smarter through advance analytics features to allow more effective prioritisation of sale leads based on the revenue potential. Customer service staff can monitor all customer interactions to serve better and enhance the experience, as well as deliver insights to the sales teams enabling them to up-sell and cross-sell - throughout the sales cycle.
By connecting data across accounting, sales, purchasing, inventory and customer interactions, SMEs can get a holistic view of the business and chart financial performance in real-time. Financial closes and reporting are accelerated; accounts receivables and payables are streamlined; and reconciliations of accounts are quicker, more accurate, more automated and compliant. And customisation of reports through seamless Microsoft Excel integration helps analyse data across multiple dimensions.
 
No need to spend a lot
The last decade has seen a massive change in how large corporations are tailoring their products and solutions to meet the needs and budgets of SMEs. Technology, especially the cloud, takes lead as the single most-transformative entity since the arrival of computers. It has single-handedly enabled small businesses to enter the market and compete with much larger enterprises. A study conducted by Rapidscale surveyed around 1,000 SMEs across the US and UK, and revealed an average cost reduction of 23 per cent in their IT spending by moving to the cloud.
Not too long ago if an SME was looking to scale up - the cost of infrastructure would be difficult, such as buying expensive hardware for network storage, backup and recovery systems, acquiring more space, human resources, upgrade licences - and so on. Now, with cloud solutions such as infrastructure-as-a-service, software-as-a-service and pay-as-you-go models, this gives business owners the flexibility to work in accordance with their client and budget requirements.
 
Harnessing advantages in no time
The cloud brings great agility to this process, and small businesses could be up and running within hours of implementation. Driven by the increased demand for greater flexibility, SMEs can now take advantage of an increasingly cloud enabled world where technology once deemed complex and expensive for an SME is now affordable and provides invaluable returns to a business.
Security, privacy and compliance are important areas that we must consider. Global research shows that 43 per cent of Cyberattacks target small businesses. Only 14 per cent of SMEs rate their ability to mitigate cyber-risks, vulnerabilities and attacks as highly-effective, and 60 per cent of SMEs go out of business within six months of a cyberattack. These numbers clearly cry out with the need for SMEs to ensure this end is fully covered so their customers can trust them with their data and information.
The writer is senior product manager for Dynamics 365 at Microsoft Middle East and Africa. Views expressed are her own and do not reflect the newspaper's policy.