COVER STORY qatartoday
Some
do iT many don’t
The digitalisation challenge SMEs face By Ahmed Lotfy & Ahmed Galal
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Any keen observer of Qatar’s progress and promise in the last five years will testify that tahdeeth (modernisation) and tatweer (development) have been the anchor for the State’s ‘Yes-We-Can’ mantra. These two differentiators will help the country transform into a knowledge-based economy, with a vivid, high-performing business sector – spearheaded by Small and Medium Enterprises (SME). To reach there, the country’s SME sector has to make the shift to digitalisation to sustain competitiveness and reap the endless merits of every next generation technology. In simple terms, businesses digitalise to contain cost, enhance labour efficiency and scale up to competition – it consists of integrating applications, restructuring labour resources, and using software applications throughout the organisation. But SMEs in Qatar are in stark contrast to the rest of the world. SMEs still contribute a very tiny share to national GDP in Qatar, though they number over 15,000. Globally, SMEs account for up to 50 percent of world’s fortunes. Experts agree that local SMEs, if properly digitalised, can reduce cost up to 20 percent, double revenues and increase share in the GDP. But achieving that is not without challenges; and although the country is credited for doing its bit, diverse legacy-based and conception-driven hurdles exist. Qatar Today investigates the landscape to know where local SMEs are heading in technology terms.
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“Qatar needs world-class IT expertise to ensure that improved infrastructure truly delivers benefits to businesses. But, we at Meeza, see an upward trend as more businesses take a focus on IT as a strategic advantage.”
Rashid Al Naimi, Chairman of Meeza
Going the extra mile
Digitalising SMEs
Qatar is in the quest to reinvent its family-dominated, legacydriven SMEs sector into a digitalised, technology-conscious major job creator and a crisistime stabiliser. This is not a short-term process nor does it involve a few parties or a handful of dimensions. It is an open multi-channel confluence of business owners, technology providers, financial institutions, technology regulator...you name it. The current scene of technology adoption in Qatar’s SMEs can be spotted on a long continuum, from zero digitalisation to world-class automation, between enterprises fully running on ICT and ones with barely a clue! The State, however, is giving priority to the empowerment of that sector, particularly on the e-readiness and knowledge-driven economy fronts – where an unbreakable bond of the PrivatePublic Partnerships (PPP) has never been more crucial. According to a study by the Qatar Chamber of Commerce and Industry, SMEs face diverse challenges, primarily the lack of financial resources, economies of scale, limited management capability and absence of efficient marketing tools.
Reinventing legacy Some small enterprise owners are content with their legacy of ‘getting things done’. And while these people turn their back on technology for various reasons, experts concede that it is no longer possible to do so, given Qatar’s think-big mantra – Vision
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2030. “The integration of ICT into SMEs’ core business is the only guarantee to do well in an emerging knowledge society,” says Khaled Tawfeeq, Acting Executive Director for Market Development, at the Supreme Council of Information and Communication Technology (ictQatar). ictQatar takes on a regulatory role over the ICT sector in Qatar and supervises the state’s technology master plans. “ictQATAR looks forward to working closely with SMEs across Qatar to help them realise the benefits of ICT adoption. “We plan also to work with various segments of small and medium business sector to develop tailored solutions for their operation,” adds Tawfeeq. Microsoft-Qatar’s Lead of Private Sector and Distributors (SMS&P Lead) Mamoun Beshtawi asserts that, refraining from technology and digitalisation keeps SMEs from scaling to high demand and spares a prominent pool of profit. “Digitalising business processes delivers huge gains when it comes to efficiency and cost saving. A recent study found that up to 20 percent cost reduction across the business can be achieved with a successful implementation of business solution software,” notes Beshtawi. “Further, the strategic use of IT can be an important asset to growing businesses, as it helps companies to quickly target new markets, implement new initiatives and diversify. It is all about reinventing our
current processes,” he adds.
The big picture The level of digitalisation at Qatar’s SMEs is a ground for contrasting views, as experts see shades of grey within the sector. “Qatar has made steady progress in the adoption of information and communication technology (ICT) across all sectors and the country is well on its way to building a networked nation,” says Tawfeeq. “SMEs have a significant potential for growth as Qatar advances towards a knowledgebased economy. So, the successful integration of ICT into core business helps enterprises be more innovative and competitive globally.” This is exactly why the government here gave high priority to the enhancement of SMEs. “Qatar is giving priority to empowering the SME sector, particularly on the e-readiness and knowledge-driven economy fronts. Entities like ictQATAR, the Ministry of Business and Trade and Qtel are playing an important role in that, through various programmes, support structures and service offerings,” notes Mohamed Takriti, CEO of Dohabased iHorizons. “Now, Qatar enjoys an extensive, highly-developed technology infrastructure, allowing businesses to take advantage of a state-of-the-art information and telecommunication technologies.
Tremendous range Carnegie Mellon Qatar’s Associate Dean Dr Bob Monroe sees the
“The lack of adoption of technology and digitalisation solutions keeps most SMEs from scaling to high demand and misses out on a prominent pool of profit.”
Mamoun Mostafa Beshtawi, SMS&P Lead, Microsoft
level of technology adoption in Qatar from a different angle. “There is a tremendous range of IT sophistication in SMEs here. “Some small and medium businesses have invested heavily in IT and others run almost completely without it. As with large businesses, the value of an organisation’s IT investments depends much less on how large an investment it makes, than on how well those investments match the business goals. “Companies that make smart, focused, and strategic investments in IT generally get the most benefit from their investments in automation,” adds Monroe. “Generally speaking, automation solutions are more available for big companies who can afford the relatively high cost of such solutions and whose business is quite complicated and needs to use such solutions. I believe that automation solutions optimized for SMEs are not widely available or difficult to find since solution providers focus more on serving the needs of big companies and institutions,” says Dr Adnan Abu Dayya, Executive Director, Qatar University Wireless Innovations Center (QUWIC). “The more the technology becomes sophisticated and diversified, the better the opportunity will be to create innovative applications and services. This will in turn translate into creating new employment opportunities,” he adds.
But is change rapid enough? The Chairman of Meeza, Rashid Al Naimi believes that, in recent years, the local investments in
Educating the Market According to the 2009 Qatar’s ICT Landscape Report, the biggest obstacle to adoption of ICT among SMEs was a perceived lack of benefit, lack of ICT skills and cost of ICT. Meeza is educating the SMEs market about the solutions available for them. “In our recent ‘IT Matters’ summit in Doha, several clients described how they are using IT to improve the efficiency of their business. “Meeza’s continued investment in IT infrastructure, such as our data centres, and world-class IT skills are helping SMEs adopt the latest technology as well. “We are committed to offering world-class managed IT services and solutions to the Qatar market. In our first year, Meeza has seen significant growth and invested heavily in developing and offering new services to Qatar and the region; such as Cloud Services and M-Vault 1, Meeza’s Tier 3 Data Centre.” “To help address this,” says Tawfeeq, “ictQATAR has conducted numerous events for SMEs on the value of ICT to business and how to incorporate technology into a successful business plan. “ictQATAR is also liberalising the telecommunications market in Qatar to help improve choice and cost for a variety of ICT services, and has been mentoring numerous SMEs, especially tech-focused enterprises.” The General Manager of Ali Bin Ali Technology Solution, Mohammad Nayel agrees on the need of the local market for the right education. “If that market sector (SMEs) received the right education and direction on how to benefit from automation opportunities, they will have good leverage for their position either on the international level, or with their own market challenges,” says Nayel. “The first impression always is ‘technology is complicated and very expensive’. SMEs need to have a culture shift. This is not an easy ride, but a reachable aim.” People have to know that technology does not replace people. “Technology actually pushed people to be more innovative, and enabled them to think more about what they should be doing and leaving the actual doing to technology.”
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“There is a tremendous range of IT sophistication in SMEs throughout Qatar – some have invested heavily in IT and others run almost completely without it.”
Dr Bob Monroe, Associate Dean, Carnegie Mellon Qatar
iHorizons:
Tailored Offers for SMEs iHorizons has developed several technology solutions that target small businesses. One example is its service, PublishArabia, which provides a one-stop-shop content management solution including the software application, the hosting service, and the 24X7 managed operation and support. The company uses an effective model for these services, as businesses don’t have to buy any software or hardware or contract with any hosting provider. Now iHorizons is working on providing the same for office collaboration (ERP and CRM) solutions, which will be on offer in this year. Multilingual Support iHorizons solutions are all available with multi-lingual support out of the box. So they support Arabic on the application level and on the user interface level. “With our 15-year experience in the Qatar market,” says Takriti, “we understand the real-life challenges that surround technology adoption and implementation. “Those are a mix of legal, cultural and logistical issues. Thus we are able to provide a very high success rate to all of our projects. So it is not only the software, it is the ability to implement solutions successfully given all the challenges mentioned.” iHorizons helps global technology vendors access the market by working with them to localise their solutions. iHorizons is focusing on SMEs by simplifying technology choices for them and providing easy, cost effective alternative to outsource IT and focus on their core business.
Digitalising SMEs
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technology took the fast lane. “The recently introduced technologies in Qatar, such as networking, storage, software and solutions, have enabled faster scalability for businesses. That helped Corporate Qatar remain competitive and focused within rapid growth times.” “Yet this is not enough,” Al Naimi reiterates. “The improvement of IT infrastructure in Qatar is not everything. The country needs world-class IT expertise to ensure that such improved structures truly deliver benefits to businesses. “But after all, we at Meeza see an upward trend as more and more businesses take a focus on IT as a strategic advantage.”
Obstacles down the road When a small or medium enterprise decides to get digitalised, it comes at higher cost than just money – digitalisation is always perceived as a highly demanding and sophisticated process. “Once the technology has been purchased, the business needs to install it, configure it, learn how to use it, and adapt its business processes. “That generally takes a lot more effort, time, and re-focus from the main business than most SME owners and managers expect. “Fortunately, once an organisation has undertaken a project of this sort successfully, it is more likely to succeed with its next IT project, and it is also likely to be able to complete it more quickly and more effectively. “One of the goals of our programme in Information
“Qatar is giving priority to empowering SMEs, particularly on the e-readiness and knowledge-driven economy fronts – entities like ictQATAR, the Ministry of Business and Trade and Qtel are playing an important role in that framework.”
Mohamed Takriti, CEO, iHorizons
Systems is to teach students how to make these investment decisions, and then how to take the next step to use technology to improve business operations, or create entirely new businesses,” he adds.
No ‘One-Size-Fits-All’! Tawfeeq says, sometimes it is not practical for SMEs to devote large amounts of their budget to expensive ICT solutions and they have to explore all options available. “We stress that there is no one-size-fits-all solution for SMEs, when it comes to ICT, including automation solutions. These enterprises should not assume they are too small to benefit from high-level solutions. Awareness is key to that and ictQATAR is taking proactive measures to raise the awareness of the business sector about the benefits of incorporating ICT into business operations. “One emerging option is the implementation of more virtual ICT services, such as cloud computing, which provide a high level of benefit at lower cost and little need for specialised IT labour and expensive hardware,” he adds. “The ‘software as a service’ (SaaS) trend is another solution as it allows businesses to access a range of solutions at a fraction of the buying cost.”
quality while controlling cost. “This is necessary to survive and grow in today’s market. This pressure is coupled with the new pressure of globalisation – with multinationals that are naturally better equipped to take advantage of modern information technologies. “This makes it critical to local SMEs to make an initial investment and stick to internal development programmes and look at rewards further down the road.”
Staggered approach Al Naimi thinks obstacles will always be there, but advises enterprises to be after innovation and automation, through a staggered plan. “SMEs can focus on automating non-core business processes as a first step. That includes functions such as HR, Finance and payroll that support the core business. When automation and increased efficiency is achieved in these functions, they can move onto automating core functions for even greater gains. “For example, a construction company can automate their core processes through CAD (Computer Aided Design) software or a retail company can automate their front-end retail processes through POS (Point of Sale) software.”
Persistent pressures
Cloud Computing: The way ahead
In Qatar’s highly competitive market, Takriti says, clients are gaining more and more control over the cost and quality of service, putting SMEs under increasing pressure to better
Meeza has a focus in ramping up the level of technology adoption in Qatar through providing Cloud Services. Cloud Services are simply IT solutions delivered as a service
using internet technologies. These offerings give a great chance for SMEs to resolve traditional technology adoption issues. Al Naimi says the adoption of IT, though much praised for new levels of revenue and efficiency, can be an obstacle to SMEs. “If a business is focused on building their own data centre, hiring IT people, data and application backup, security, bandwidth, software upgrades,
In Qatar, the need of the hour is, banks should play a proactive role in educating the SMEs client base, communicating the benefits and cost-saving aspects of digitalisation solutions.
change management, and scaling infrastructure, the company will likely lose focus on core competencies. And that brings additional layers of challenge to growing revenue. “The cost of purchasing a server, installing and maintaining it is a significant investment; add to this the changing business demands on technology; let alone the man hours required to meet that varying needs,” he says. “One of the first Cloud Services offerings from Meeza is ‘software-as-aservice’ which initially includes Hosted Microsoft Exchange and SharePoint offered on a per user subscription basis. These give SMEs an easy, cost-effective access to the software they need. FEBRUARY 10
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“The successful integration of ICT into core business helps enterprises be more innovative and competitive globally.”
Khaled Tawfeeq, Acting Executive Director, Market Development at ictQatar
boosting capabilities T
Quick Facts
Digitalising SMEs
Qatar has over 15,000 small and medium enterprises (SMEs). Experts forecast they can double their revenue and share in GDP, if properly digitalised. In Qatar, investments in the SME sector doubled since 1985 to QR25.4 billion, still a relatively low share of national GDP.
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he ‘conventional wisdom’ holds that large banks generally don’t take the interest in serving small-and-medium-sized enterprises, while niche lenders disrupt the market by serving the unserved. Banks here seem to have reversed that rule as part of their steadfast belief in what Qatar is doing. “The banking sector in any country should take on a robust role in supporting the economy’s backbone – i.e., small and medium enterprises, says James NelsonParker, Chief Operating Officer, IBQ. “Qatar is no exception, especially when we compare the share of SMEs in GDPs of advanced countries with that in Qatar,” says Parker, adding, “At IBQ, we believe the SME sector is well poised for sustained growth in Qatar and here banks’ support fits.” Doha Bank’s CEO R Seetharaman believes, the role of banks goes much deeper as they ideally serve as a sustaining stimulus for that small-andmedium-sized sector. “Banks have a proactive role to address every emerging need,” he
notes. “In Qatar, banks should play a proactive role in educating the SMEs client base, communicating the benefits and cost-saving aspects of digitalisation technologies and solutions. “The direct role of banks centres on communicating the risk mitigating mechanism entailed in digitalised solutionsbanks have to promote digitalisation as a wealth-creating technology,” adds Seetharaman. “The needs of SMEs are huge here, and banks can cater to that by adopting web-based cash management tools and credit and financial risk control tools, or by offering e-payments and e-invoicing, multi-channel access, aggregation services and customer relations management.”
Verticals of value IBQ’s Parker says, his bank takes focus at a slew of verticals in supporting SMEs performance in Qatar. “We help SMEs optimise their business in multiple areas, i.e., automation of payroll and payment support via corporate banking online offerings. “Such expert technical guidance and support has had considerable
“Automation solutions are more available for big companies who can afford the relatively high cost, and solutions optimised for SMEs are not widely available or difficult to find,”
Dr Adnan Abu Dayya, Executive Director, QUWIC
impact on the processing burden of SMEs, which typically lack the manpower to handle high-volume transactions.” Seetharaman says, his bank has taken leaps helping automate back-office systems and rendering more control within Qatar’s SMEs. “Through integration of internet banking into the back-office systems of companies, we render a tighter control on working capital, financing and investment needs.” Beyond that, however, Seetharaman sees an oftenneglected area, which is really ripe for significant improvement-the account opening process. “Automation,” he maintains, “can offer wide-ranging improvements and benefits in areas such as customer experience and retention, costs and efficiency, and compliance. “We have introduced automation within account opening, using a targeted, manageable, iterative approach. This helped reduce the time consumption in entire cycle of account opening and the Turn around Time (TAT) to respond to customers. “We have been planning to centralise and automate alternate channel registrations like Online Banking, SMS Banking, Phone Banking, Remittance etc. We have been able to achieve better response time to customers by reducing operational time as well as handle more transaction requests and processing time for the same. “We took a giant step introducing an E-Mall Concept called Doha Sooq for our business customers to facilitate them to
do their B2B transactions or B2C transactions by registering either as a merchant or as a consumer.”
Component of prestige? Experts believe digitalisation is no longer an ingredient of corporate prestige, as it continues to drastically influence the bottom line. “Digitalisation pushes the rates of productivity, quality of offered products and services, minimises production cost, betters financial standing and after all helps expand business areas and activities,” notes Parker.
Resistance may hurt! Seetharaman admits that, Qatar’s business community at large, and SMEs in specific, still show some resistance to the advent of trendsetting technology. “That resistance is there in Qatar. People, to a certain degree, decline from taking the transition to automated solutions, and this itself has a significant impact on the economy. “The government, due to this very reason, has launched a robust Information and Communication Technology (ICT) agenda with a strategic attention. This agenda aims at extending the new opportunities brought about by ICTs to all economy sectors, rather than just the energy.”
Magnitude of Reliance: Dramatic differentiator Parker, on the other hand, sees Qatar government’s efforts to make technology available to SMEs as a positive sign for strong reasons. “The rule simply is, a country’s
Quick Facts
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SMEs contribute 50 percent to world’s GDP, and are 99 percent of all international business activities. SMEs, 9 percent of total GCC investments in manufacturing, absorb 52 percent of the industrial workforce – a major hurdle vis-à-vis digitalisation, given the misconception that technology replaces people.
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“We help SMEs optimise their business in multiple areas, i.e. automation of payroll and payment support – an expert guidance considerably impacting the processing burden of that sector.”
James Nelson-Parker, Chief Operating Officer at IBQ
Digitalising SMEs
Quick Facts PC penetration rate in Qatar businesses is one of the highest worldwide: 67 percent (30 points less than the average of European Union), yet business process automation and utilising the new generation of the web is lagging far behind.
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investment in automating its SME sector depends on how much the economy relies on that sector. “In countries such as the UK, US, and Australia, where the economy stands heavily on SMEs, the government played a large role in supporting the shift to automation through funding and education. “In other economies, such as India, the private sector has played a major role, leading the transition to digital processing, by offering services that fit the unique needs of the economy. “In GCC, due to the overweight of oil and gas, the significance of SMEs is still not in the same league, which holds true for Qatar, too. “But, as Qatar takes brave strides towards diversification, there are clear signs that the government pushes forward the agenda of that slice of the economy – to which process, automation is fundamental.
Challenge of scale: Banks take it too... Banks and financial institutions have one of the fastest technology adoption rates across business sectors in any given economy, their quest to stay current, though, is not without challenges. Financial Institutions often face unprecedented pressures, competitively and internally, to improve. “The biggest challenges we face in our goal for change are legacy systems, higher cost of new technology and greater pace of technology innovation that renders today’s solutions obsolete,” remarks Seetharaman.
“Overcoming the challenge of integrating new technologies with existing systems is critical. And at times, convincing customers that their funds are secure while using newer methods may be challenging!” Parker agrees that, changing an age-old legacy turns to be difficult at different levels. “One example is, banks in Qatar still rely on cheques as a method of payment, vis-à-vis electronic payment systems.”
Why automate then? Parker says, banks are by default pushed to absorb new tech in order to process the growing volume of transactions. “This is the only way to stay within the right risk profile and meet regulatory requirements and remain competitive. “In general, banks need to adopt technology much faster than other kinds of institutions for multiple reasons – be it driving down unit cost; improving customer service efficiency; meeting compliance demands of regulators; and processing high volumes without increasing manpower, which allows us to remain agile and flexible. Doha Bank’s CEO believes, in the last few years, customers’ openness towards technology has shown some improvement, especially with the younger generation coming up and the broadband revolution, which altogether, usher a new era of digital and e-banking. “Today’s growing number of customers expecting round-theclock banking model,” says Parker, “makes the move to greater automation not only efficacious,
“Banks can cater to the huge needs of SMEs by adopting web-based cash management tools, credit and financial risk control tools, e-payments and e-invoicing, multi-channel access, aggregation services and customer relations management.”
R. Seetharaman, CEO, Doha Bank
but inevitable. “Globally, banks have become the standard bearers of adoption of automation due to the huge volume of same transactions that they process,” adds Parker.
Bottomline: Another reason... Parker asserts that IBQ’s growth, as a retail and corporate bank, over the past two years, has been driven to a great extent by the continued efficiency of its back office – constantly monitoring the scope for process improvement and increased automation. “In 2010, we expect all our growth in transaction processes to be easily absorbed into our systems due to improved automation processes that we have been putting in place.” The General Manager of Al Haya Waste Management Company Venugopal says, what Qatar and Qatari banks did towards localising technology and integrating automation in official dealings helped SMEs reap better return on investment. “We are in a better position with automation solutions, and the amount of enhancements we saw here over the last five years, foretells much about where Qatar is heading.”
Controllers, not processors Banks also adopt edge-cutting technology to stabilise the need for specialised staff for various processes- itself changing the
way staff are regarded. “Technology and automation made it possible to change the way banks look at their staff resources from processors of transactions to controllers of the entire process,” affirms Parker “So the staff is now able to take on more analytical responsibilities and functions, making the overall style and experience of jobs just richer and deeper. “With that in practice, the banking environment, as a whole, became less repetitive and routine, as we move from large volumes of the same transactions completed by the same staff to more analysis, process improvements. And the sharper focus goes to customer requirements.” In Qatar, this trend is well supported by the refined education system. “With the availability of graduates well-versed in technology and computing, we are able to extend the bank’s operational hours to a 24-hour ongoing system with services such as online banking, telephone banking and ATMs,” adds Parker n
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Up to 20 percent cost reduction can be attained with a successful implementation of business solution software, says a study. SMEs’ contribution to the region’s GDP remains low at 10 percent – due to under-diversified economies and a set of obstacles.
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