How can SMEs transform into data-focused enterprises?

Data is critical to generating valuable insights, remaining in touch with emerging trends and maintaining a competitive advantage at a time when the business landscape is relatively volatile and disruptive. Compared to other businesses, small and medium-sized enterprises (SMEs) are experiencing considerable challenges in managing and preparing their organisation to be data-ready. The lack of financial and technical resources, available data expertise and numerous regulations have limited their ability to implement data-focused strategic decisions. 

Addressing the limitations of data preparation is critical and a strategic necessity that can enable higher efficiency, and growth and increase the productivity for SMEs. How can SMEs make the transition and become data-focused enterprises?

Data Preparation: Recognising the challenges and opportunities

Every SME is unique, and understanding its data requirements is critical to progression and success in harnessing data effectively to enable growth and efficiency. To recognise how an SME can prepare for a data-driven future, the World Economic Forum Centre for the Fourth Industrial Revolution (C4IR) created several critical insights. The study explored over 100 SMEs across 42 countries, identifying several challenges and opportunities which influence smaller businesses to capitalise on their data potential.

The challenges for SMEs

A lack of data regulations and clarity on positions and responsibilities: The survey showed that over 60% of SMEs have a data privacy policy, and 50% have a cybersecurity policy.

The challenges of creating value from data: Over 70% of SMEs are struggling to harness the value of their data.

A lack of integration of IT systems: Over 50% have experienced difficulties in discovering data, and 54% struggle to manage their data in their systems.

Securing opportunities in larger markets: Only 36% of the SMEs interviewed operate in more than one regulatory environment.

Lack of monitoring and reporting of sustainability data: Only 25% of SMEs recognise carbon disclosure sustainability reporting systems but lack awareness of the business benefits. 

These challenges are all connected, and for all SMEs, the lack of resources and infrastructure, an unclear strategy, fragmented data systems and limited data literacy are impacting smaller companies. These factors will influence data management in SMEs and raise concerns surrounding data protection, security and compliance. 

What are the opportunities for SMEs?

The potential to innovate: SMEs have the agility and the ability to adapt and are well-positioned to innovate their business plans

Strengthening data systems: SMEs must prioritise data by determining data sources and use them to build trust and increase productivity and resilience. By focusing on valuable data and investing in specific infrastructure, SMEs can find the potential of their data and improve their competitiveness.

Data Governance: SMEs should create clear policies and measures for enhanced data management, security and compliance to enhance stakeholders’ trust and relationships.

Prioritising data skills to improve culture: Investing in data skills can strengthen workforce potential. Building a culture that values data-focused decisions means employees can utilise data more efficiently, increasing innovation and creating a competitive advantage. 

Establishing stakeholder partnerships: It’s critical to build partnerships with other organisations, academics and NGOs to build knowledge and access specific talent. Through collaboration comes innovations, more market opportunities, increased economic growth and job opportunities. 

What actions can stakeholders take to support SMEs facing the challenges?

  • -Share the best knowledge and practices on quality management and data governance
  • -Share access to technologies, tools and training opportunities
  • -Create custom IT solutions for SMEs
  • -Create simplified regulatory frameworks and incentives to support responsible data management.
  • -Create agreements and standards to support open data and data sharing.
  • -Create measures to strengthen awareness and literacy in data regulation.

Following the theme of the World Economic Forum’s Annual Meeting of New Champions 2023 on Entrepreneurship, the global economy is experiencing a major transformation, with innovation and entrepreneurship at the core. Digitally-enabled business models focused on prioritising new technologies like AI, can generate considerable value over the coming years.

By embracing this movement towards data and partnering with crucial stakeholders, SMEs can shift their strategic plans, respond to market movements and harness new growth opportunities and innovation.

Recognising the opportunities available to SMEs can empower smaller organisations to succeed and remain resilient in the digital space, continue to innovate and support sustainable growth worldwide.

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