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Digitalization of SMBs could add as much as US$3.1 Trillion to Asia Pacific’s GDP by 2024 accelerating economic recovery

28 Jul, 2020
  • 94 percent of SMBs in Asia Pacific say they have become more reliant on technology to ensure business continuity during COVID-19
  • Nearly 70 percent say they are accelerating the digitalization of their businesses as a result of COVID-19
  • Digitally mature SMBs enjoy higher revenues and increased productivity contributing to their growth and overall economic recovery
SINGAPORE - July 27, 2020 - The digitalization of small and medium businesses (SMBs) in Asia Pacific could add US$2.6 to 3.1 trillion to Asia Pacific’s GDP by 2024 and contribute to the region’s economic recovery post COVID-19, according to the 2020 Asia Pacific SMB Digital Maturity Study. Asia Pacific could add between US$10.6 to 14.6 trillion to its GDP by 2024, according to forecasts by International Data Corporation (IDC). Digitalization of SMBs could account for as much as 25 percent of that growth. The study, based on a survey of SMBs from across the region conducted by IDC and commissioned by Cisco, shows that SMBs that are more digitally mature enjoy twice as many benefits in terms of revenue and productivity compared to those that have an indifferent approach to digitalization. It highlights that nearly 70 percent of SMBs in Asia Pacific are accelerating the digitalization of their businesses as a result of COVID-19. Among the respondents, 86 percent say they believe digitalization will help in developing resilience against crises like COVID-19. “SMBs suffered the hardest impact in the current crisis but are expected to bounce back the fastest. This is not just because most of them have had to rely on technology to continue to deliver to their customers but also because of their agility and adaptability to innovate. As the region starts to emerge from the pandemic, this trend will play a pivotal role in the economic recovery. Cisco is committed to work with SMBs to help them emerge stronger with the right digital solutions and strategy,” said Bidhan Roy, Managing Director, Small Business, Asia Pacific, Japan and China, Cisco. The results of the study show that cloud (15 percent), a foundational pillar for digitalization, is the top technology investment priority for SMBs in Asia Pacific, followed by security (12 percent) and purchase or upgrade of IT infrastructure software (12 percent). However, SMBs are also facing challenges on this front. According to the respondents, shortage of digital skills and access to talent is the top hurdle (17 percent) for SMBs in their digital transformation efforts. This is followed by the lack of necessary technologies to enable digital transformation (14 percent). “SMBs have an unprecedented opportunity. However, for them to derive the greatest long-term value, all stakeholders need to come together to address the key issues faced by the industry. This includes government, educational institutions, large corporations, and industry bodies. No one entity can solve these alone. At Cisco, we are proud to be playing our part. From a talent perspective, the Cisco Networking Academy has trained over 2.5 million students across Asia Pacific, Japan and China in various ICT skills since its inception. On the technology front, we have launched a series of curated products and solutions specifically for the SMB sector under the Cisco Designed portfolio,” Bidhan added. Despite the challenges, the region’s SMBs continue to make progress in their digitalization journeys. According to the study, 16 percent of SMBs in the region are now in the advanced digital maturity stages (3 and 4), compared to 11 percent in 2019. Slightly more than half of SMBs have embraced digitalization to become Digital Observers (stage 2). Only 31 percent of SMBs are still reactive to market changes and have made hardly any efforts to transform digitally (stage 1). Within the region, SMBs in Singapore, Japan, and New Zealand continue to lead the Digital Observer group, with no changes in their ranking compared to 2019. However, mainland China, Taiwan, and Thailand surpassed Korea, Hong Kong, and Malaysia, respectively. There has been notable progress made by SMBs in Indonesia and Vietnam. “Digitalization is no longer an option for SMBs – it's a matter of survival. COVID-19 has forced them to move to digital-first, becoming more dependent on technologies to ensure business continuity and resiliency. As SMBs rethink processes, operations, and customer engagements, they are looking at cloud services and cybersecurity first, but have also increased their focus on customer experience, video conferencing and AI/Analytics solutions. Given the rapidly changing market conditions and speed of technology evolution, SMBs should work with the right industry partners to ensure they can maximize their technology investments and thrive in their digitalization journeys,” said Daniel-Zoe Jimenez, AVP, Head Digital Transformation & SMB research at IDC. This year’s study is a follow-up to the 2019 ‘SMB Digital Maturity Index’ that looked at the state of digital adoption of SMBs across the region. The 2020 study aims to further the understanding of how SMBs can progress in their digital transformation journey and the impact of digitalization among SMBs to drive economic activity. Additionally, the study is expanding globally to eight countries across North America, Latin America and Europe. Results will be revealed in the September timeframe. Additional Resources: About Report Methodology  The 2020 Asia Pacific SMB Digital Maturity Study gathered and analysed data from over 1,400 SMBs across 14 markets in APAC to assess the challenges and opportunities the companies face in their digital transformation journey. The 14 markets are Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, Taiwan and Vietnam. The SMB Digital Maturity Index is made up of four dimensions: Digital Strategy and Organization, Digital Processes and Governance, Digital Technology, and Digital People and Skills. Each dimension targets an essential aspect of digital mastery and can be assessed independently as a measure of the relative maturity of a specific aspect of business functionality and performance, providing goals for SMBs to target on their digital transformation journey. Four stages of digital maturity ●      Stage 1 – Digital Indifferent: A company that is reactive to market changes and digital efforts do not exist ●      Stage 2 – Digital Observer: A company whose digital efforts have started but remain tactile and in bite-sized initiatives ●      Stage 3 – Digital Challenger: A company that has a strategy for the use of digital technologies and is more proactive in market responsiveness ●      Stage 4 – Digital Native: A company that has an integrated digitalization strategy and is focused on driving continuous innovation About Cisco  Cisco (NASDAQ: CSCO) is the worldwide leader in technology that powers the Internet. Cisco inspires new possibilities by reimagining your applications, securing your data, transforming your infrastructure, and empowering your teams for a global and inclusive future. Discover more at newsroom.cisco.com.
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