SMEs and Digital Technology


Jude Ayoka

The Importance of Small and Medium Scale Enterprises (SMEs)

SMEs are very important in the economic development of any country. They are the building blocks of most economies and the fulcrum of industrialization in most developed nations. SMEs also contribute immensely to improving the living standard of people by providing employment to the masses. Studies by the International Finance Corporation (IFC) show that about 96% of Nigerian businesses are SMEs.


In Nigeria and most other developing countries, there is a growing consciousness of the role of SMEs in the diversification and growth of the economy. There is a consensus that SMEs have great growth potentials and that growth of SMEs is one sure solution to unemployment problems in developing countries. However, the mortality rate of these small businesses is very high, according to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), about 80% of small businesses in Nigeria die before their 5th anniversary.


One critical question then is how do we grow the SME sector….? How do SMEs overcome the many challenges confronting them? Yes, we know SMEs are essential to the national economy, but how do we ensure they survive and thrive?


There is a consensus that SMEs have great growth potentials and that growth of SMEs is one sure solution to unemployment problems in developing countries.

The Role of Information and Communication Technology (ICT)

ICT is one factor that can boost the growth of SMEs. ICT is increasingly becoming a dominant part of our everyday life and it is greatly affecting the way we live and do business. ICT affects the way businesses communicate with customers and other businesses; it affects the way payment is made and received; and it affects the way information is received, processed and stored.

Advances in technologies like the internet, social media, cloud and mobile have changed our way of life and the fundamentals of doing business, business ideas that looked crazy in the past are noble ideas today; projects that appeared impossible some years back are very feasible today.

The business landscape has become so digital that businesses depend highly on ICT directly or indirectly, it can be established that there is a linear relationship between the degree of adoption of technology and the rate of growth and profitability of small and medium scale businesses.

The Digital Advantage.

SMEs can gain business advantage by leveraging ICT to increase their productivity and profitability. Information and Communication Technology can enable small businesses play in the same league as the multi-nationals and big corporations.

Business is essentially about profit, and profit is a game of numbers, technology can be of immense benefit in this regard in the following ways;

·         SMEs can increase their turnover by making their process run more efficiently through automation.

·         Small businesses can also increase their profitability by increasing their visibility and turnover using social media and email marketing.

·         Selling online is also a means of increasing customer base and consequently increasing profitability. 


Business Processes Automation.

Automating business process involves integrating processes and applications, reorganizing labor resources and using software applications in a business in order to reduce cost and increase efficiency.

 Processes that are time consuming, reoccurring and tasking can be automated, this will free up time for the entrepreneur and his staff to engage in more strategic and productive activities that will make the business more profitable.  Automating processes can also lead to increased turnover as the business is able to do more than it could have done relying on manual processes. 

ICT tools can be used to handle routine and recurring activities like scheduling of mails/payment to vendors and suppliers. It can also create various required alerts and reminders. This allows staff to focus on their jobs without having to track several activities at the same time and this improves overall productivity.

Computer software can create different schedules with vendors, suppliers, partners and staff. Inventory control software can help prevent shortage or unnecessary surplus hence making the business to run more efficiently.

·         Do you get a lot of emails requesting approval?

·         Do you use a lot of paper forms to track processes and tasks?

·         Do you know there are bottlenecks, but don’t have the data to prove where they are?

·         Do you wish you could change a process, but are buried in hierarchy?

You are experiencing the stress and tension of an un-automated workflow. A business process workflow is simply a predictable and repetitive sequence that work travels through from initiation to completion. The solution is to automate.

The basic step to automation include.

·         Define your business processes

·         Streamline your processes – eliminate unproductive tasks

·         Create Standard Operating Procedure (SOP) for each process

·         Identify recurring tasks that can be done by a machine or computer application

·         Integrate different processes to achieve efficiency and speed.


Marketing with Social Media. 

The Social media creates an online platform for people based input, content sharing and collaboration. It has become a part of our everyday life, about 2 billion people use social media according to The number of social media platforms are increasing greatly, the popular ones include Facebook, Twitter, LinkedIn, Instagram, Google+.


The Social media are no longer tools for just entertainment but have become very strategic marketing tools. Small businesses can use social media marketing to increase their visibility and attract more customers.

Social Media Marketing offers great advantage to SMEs, as it can be done at a lower budget. SME are also more flexible and hence can more easily adapt to Social Media marketing.  Competing with the big corporation for market share is one of the major challenges of SMEs, and the SMEs are disadvantaged when it comes to the traditional advertising methods, however they can take advantage of the social media at little cost to drive traffic to their businesses. They can actively engage and interact with their customers and prospects using the social media.

Marketing with E-mail/SMS. 

Email/SMS is an effective and cost effective means of reaching out to your customers. Once customers subscribe to receive your emails/SMS, send a monthly newsletter, alerts about sales or new products, or special offers. One important factor however is to ensure you send relevant material that add value to the customer otherwise it could be counter-productive as the receiver sees your emails as junk and a disturbance.


Marketing and Selling Online. 

Over 1.1 billion people are involved in online buying according to United Nations Conference on Trade and Development (UNCTAD). As an SME, you can increase your customer base, turnover and profitability by marketing and selling online. You can develop and host your own e-commerce website alternatively you can market and  sell through existing online marketplaces like Amazon Marketplace, eBay, Abuja-ng, OLX, etc


Enhance Customer Service.

No matter what business you are into, you cannot do without Customers. Good customer service ensures that we keep our customers.

Small business can improve their customer services using tools like online chat. Good customer service increases business patronage as a satisfied customer normally attracts more customers. SMEs can use online chat to respond promptly to customers enquires, hence building more customer confidence in their business.   You can also provide frequently asked questions on your site. Customers are eager to transact business when they believe they can easily reach you, hence enhanced customer service will increase your turnover and profitability.