SMES SPEAK: THE MOVE TOWARDS PRODUCTIVITY 2014 SME DEVELOPMENT SURVEY SNIPPETS PART 2/3

This article was contributed by:

For 5 years, “productivity” and “innovation” have been the buzzwords of the business community. In the Budget 2015, “productivity” and “innovation” were mentioned about 20 and 30 times respectively. The relentless tempo of today’s business landscape and its loudening demands point towards productivity and innovation as the key to Singapore’s survival. In order to establish our edge in the international front, Singapore businesses need to supersede and keep in rhythm with our surrounding climate.

SMEs – The Key to the Push

SMEs form an important fabric of Singapore’s economy. Today, there are over 182,000 SMEs in Singapore, contributing to nearly half of the nation’s GDP . Innovation adoption and the productivity push in the SME community are thus vital to driving the trend. SMEs possess distinctive characteristics that make them unique, from a broad variety of personality drivers and business practices.

To understand SMEs’ drivers of growth and their challenges, DP Information Group (DP Info) conducts an annual SME Development Survey, reaching out to 10,000 SMEs with a healthy response rate of 30 per cent. Building on the 12th SME Development Survey results, DP Info shares insight behind the reactions of SMEs towards the productivity and innovation impetus.

SMEs’ Take on the Matter

Productivity is driven from multiple angles, commonly through managing cost and output. SMEs chose cost management as a first measure, turning to temporary manpower and cheaper materials. These were amongst the top 3 cost management strategies for SMEs in 2014, as shared in the previous installment. What else are Singapore’s SMEs doing in their efforts to raise their productivity levels?

Improving Productivity

The majority (87 per cent) of SMEs are looking to improve productivity in 2014, a significant increase from the previous year’s 58 per cent.

While most SME leaders (54 per cent) are looking for ways to get the most out of their manpower, automation is an increasingly popular choice for achieving productivity gains, up from 21 per cent in 2013 to 28 per cent in 2014.

An encouraging finding in the Survey is that 75 per cent of SMEs are pursuing innovation of some form. Of these, 41 per cent are looking to implement innovation in the area of process improvements, with the next most common choice being product/service improvements.

SMEs Embrace Technology

It is important for SMEs to innovate, rather than depending on cost suppression, to keep up with today’s competitive landscape. Gaining the sophistication to do things differently is the next determining factor of a successful and sustainable business.

In the last 12 months, 64 per cent of SMEs invested in strengthening their in-house technology, up from 58 per cent a year ago. The most commonly cited benefit from investing in technology is a reduction in operational costs (67 per cent) and the ability to operate with less manpower (57 per cent).

Ninety-three per cent of SMEs that invested in technology chose to upgrade their hardware and software. Another 22 per cent chose to train staff or hire people with technological skills. The increase in hardware and software investment was supported by the enhanced Productivity and Innovation Credit (PIC) scheme and other grants provided by the government.

Fifty-six per cent of SMEs that have yet to invest in Information and Communication Technology in the last 12 months believed that it would not directly contribute to their revenue.

The push for productivity and innovation is a tripartite effort between the government, businesses and employees. With extended government support and the increasing openness of SMEs, Singapore’s economy is on its way to a much-anticipated transformation. Stay tuned to the next issue for a peek into Singapore SMEs and their strategies onto foreign waters.

About the expert: DP Information Group (DP Info) is part of Experian, one of the world’s largest credit reference agencies. A veteran of close to 4 decades, DP Info uses its unique knowledge of Singapore’s business community to provide research, ratings and rankings that help clients make better decisions. DP Info’s key services include:

• QuestNet - An online information portal used by 98% of Singapore’s financial institutions and 75% of leading law firms.
• DP Credit Ratings – a proprietary credit rating model that reliably predicts the probability of company default.
• DP SME Commercial Credit Bureau – a member-based platform where the payment records of each members’ clients and suppliers are shared.
• DP Bureau – an ACRA-appointed SME service centre for both start-up and established firms.
• DP Credit Bureau – which analyses the credit records of millions of Singaporeans to assist financial institutions make lending decisions.
• The Singapore 1000 Family of Awards – Singapore’s most prestigious definitive corporate awards, honouring the nation’s best performing companies.

DP Info is an ISO/IEC 27001 Information Security & Data Management certified company.

For more information visit www.dpgroup.com.sg