SMEs at ground zero
Anita Devasahayam , 1-Aug-2001

When it comes to the Internet revolution in Malaysia, small and medium enterprises (SMEs) are at ground zero. Readiness to embrace the technology is not an issue but the willingness to take the technology to the next step is.

According to icFox Malaysia’s COO, David Cheah, companies that see the potential in embracing the New Economy will merely jump in. “It is nothing to do with readiness. What you do not know will not force you to consider,” he argued.

Cheah pointed out that while corporate entities are ready, the infrastructure, power bases and people’s mindsets are not. “Readiness is there. Willingness is another matter. It is the attitude; usually, people’s [unwillingness to change that poses a] problem,” he said.

icFox is a B2B e-commerce enabler for the construction industry. Cheah’s agenda is to encourage SMEs in this vertical to embrace technology and e-commerce through the application service provider (ASP) model.
“We take the [investment or setup] risk away from the equation. Start small, stay away from possible legacy or redundancy issues. You can go full steam ahead when you are ready. Just subscribe and sample what is on offer,” Cheah said.

He added that by encouraging SMEs to start small by placing a small component online is the first step in overcoming the unknown. As they grow, these SMEs will discover that part of the process includes measuring the differences—time, organisational advantages, costs considerations and overall productivity.

While the ASP model is actually created to be simple to deploy and enables SMEs to be self-efficient with minimal training and investment, the situation in Malaysia differs. “Here, we cannot just plug and play. We formulated earlier on to support, educate and assist as much as we can even on basic things and concepts to get people online easily and effectively,” said Cheah.

Goh Kim Huat, managing director of Perak-based SME, Numac Machine Tools (NMT), echoed his views. The tech-savvy, British-trained industrial engineer disclosed that many local companies are still uncomfortable dealing with customers or suppliers online.
“We have had customers who insisted that we courier the original delivery order as they think a fax copy is not good enough. The tendency to insist on this is greater when the amount of money involved runs into the five-figure range.”

NMT is an indigenous manufacturer and assembler of computer numerical control (CNC) machinery supplying modular production systems, precision equipment and robotic systems to the government, industrial and education markets. It began operation last September and has a headcount of 14.

Part of Goh’s charter with NMT is to keep headcount low by automating as many processes as possible. He acknowledged that he is unable to do business without e-mail as most of his correspondence and discussions are done online. However he admitted that the last mile communications, especially with local customers and suppliers, is still very much paper-based.

“One of our foreign suppliers uses a videoconferencing system and is encouraging us to do so—we are considering setting one up,” he said.

Old Habits Die Hard

NMT is one of the few SMEs adopting New Economy tricks to survive the shrinking marketplace. “Many SMEs still rely on handouts or are providing very little value. Though we are new, we are looking at advancing the skills sets within the company to continually upgrade ourselves and stay ahead of the game,” Goh said.

Indeed, the majority of SMEs have yet to shake the stigma of being tightly fisted low-tech organisations operating behind the proverbial bamboo shield. Last year, the Small and Medium Industries Development Corporation (SMIDEC) dished out US$2600 e-commerce grants to eligible companies to encourage them to get online and help them deal with financial and skills constraints in carrying out e-commerce activities.

Sadly, observers noted that a large chunk of grant obtained by successful companies was spent on Web site development instead of human resource training. Some of these companies did not even have proper PCs to handle e-mail enquiries.

However’s CEO Yee Kar Fong defended the SMEs’ position. “Many are busy running businesses and others are perhaps, not focused in the right areas. Many SMEs are unable to see the tangible benefits brought on by adopting technology or by automating processes at the workplace.”

A survey conducted by Federation of Malaysian Manufacturers (FMM) two years ago indicated that the age-old problems plaguing the IT adoption rate still remains. Three key issues are high price of IT implementation, lack of trained personnel and lack of tangible benefits. “When we are confronted with these issues, getting online then becomes not a priority among SMEs,” Yee reiterated. is an electronic portal set up by FMM—of which 50% of FMM’s 2200-strong members are SMEs—last August to bring its members to the New Economy bit by bit. It is charged with the unenviable role of pushing the usability of e-commerce among FMM members.

“We began by setting up communities and will eventually revolutionise the way they do business. Building a community is essential to create a pool for electronic transactions of the future,” Yee said.
After months of hard sell, signed up more than 4000 companies on its portal, yet only one-third have functional homepages. “We offered to set up online transaction engines for the SMEs but many refused. They said if they get an order online, then they have to fulfil it,” Yee revealed.

The lack of confidence among SMEs does not deter from pushing the envelope forth. Yee said: “Since online transaction is not a high priority, we provide a feature that requests for inquiries or quotations instead.”
Yee added that the reticence to secure sales online is not confined to small companies but also a number of big players.

Having acquired the relationship to work with a diverse community, Yee has crafted a three-phase strategy to bring these companies to the new economic realm.

“Now that we have succeeded in building an e-community, we are moving to the second phase of introducing B2B transactions that includes bidding, procurement, sales and auctions being conducted online. This will take us three years to achieve,” Yee said.

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