Data is the key to unlocking valuable insights, staying ahead of emerging trends and gaining a competitive advantage in the current uncertain, volatile and dynamic global business landscape.
In comparison to other companies, small and medium-sized enterprises (SMEs) face specific challenges on their path to becoming data ready. Limited technical and financial resources, data-centric expertise and an intricate labyrinth of data regulations hinder their ability to make effective data-driven decisions.
Recognizing and addressing data readiness needs is not just important, but a strategic imperative that can drive efficiency, unlock growth potential and propel SMEs’ productivity. So how can SMEs become data-driven enterprises?
Challenges and opportunities of being data-ready
Every SME is unique and recognizing and addressing its specific data needs is an indispensable strategic move to succeed in leveraging data effectively, to drive its operational efficiency and unlock untapped growth potential.
To comprehend the SMEs’ data readiness journey, a recently published report from the World Economic Forum’s Centre for the Fourth Industrial Revolution (C4IR) provides crucial insights.
The study surveyed 111 SMEs, spanning 42 countries and 21 industries and identified challenges and opportunities, which will play a critical role in assisting smaller businesses to harness their data potential and achieve data readiness.
The points described below are not exhaustive, but a starting point that SMEs can take into account and adapt according to their specific business priorities and resources.
Challenges
Lack of data policies and clarity on specific roles and responsibilities: 64% of the surveyed respondents claim to have a data privacy policy and only 50% have a cybersecurity policy.
Obstacles to extracting value from data: 74% of interviewees struggle to maximize the value of their company’s data investments.
Not integrated IT systems: 55% experience varying degrees of difficulty in finding data and 54% in maintaining data in their company's systems.
Missed opportunities in global markets: Out of the surveyed SMEs, only 36% operate in more than one regulatory jurisdiction.
Insufficient monitoring and reporting of sustainability data: Only 25% of SMEs surveyed are somewhat familiar with “carbon disclosure” sustainability reporting systems but are not sure of the business benefits.
These challenges are interlinked and arise from shared conditions, including limited resources, the lack of a clear data strategy, fragmented data systems, inadequate IT infrastructure, insufficient data oversight, data silos and limited data literacy.
These factors impede data management in SMEs, and raise potential concerns around data protection, security and regulatory compliance.
Opportunities
Innovation intermediaries: SMEs, with their agility, and adaptability are well-positioned to become valuable innovation intermediaries in the supply chain ecosystem.
Improving data systems: SMEs should prioritize data readiness by identifying relevant data sources and aggregating them in a way that will help drive stakeholder trust, as well as business productivity, sustainability and resilience. By prioritizing valuable datasets and investing in robust IT infrastructure, SMEs can unlock the potential of their data and enhance their competitiveness.
Data governance: SMEs should establish clear policies and protocols for effective data management, security and privacy, and regulatory compliance to strength stakeholders’ trust and relationships.
Building data skills and to strengthen culture: Prioritizing investments in data proficiency and data management can enhance the workforce capabilities. By nurturing a culture that values data-driven decision-making, employees can harness data more effectively – sparking innovation and securing a competitive advantage.
Multi-stakeholder partnerships: It is vital to foster collaborations among public and private sector organizations, academia, and NGOs to facilitate knowledge-sharing and co-creation resources pooling, and access to specialized expertise (see table 1). These cooperative efforts will stimulate innovation, expand market opportunities, boost economic growth, and foster job creation as SMEs evolve into data-ready entities.
Here are key actions for stakeholders to help SMEs overcome their challenges, and thrive in their data readiness journey:
Other private sector actors (big companies, entrepreneurs)
Share best practices and knowledge on quality management and data governance.
Share access to new technologies, tools, and training, e.g., through digital platforms.
IT service providers can offer tailored solutions for SMEs.
Public sector (governments and regulators)
Simplify regulatory frameworks and provide incentives (fiscal, grants, subsidies) to promote responsible and ethical data management and encourage sustainable practices.
Establish agreements, platforms, and standards to promote open data, data sharing and interoperability.
Develop programs to promote awareness and literacy in data regulation, in collaboration with non-governmental organizations and academia.
International and civil society organizations
Promote data practices that comply with current regulations and safeguard privacy, inclusion, and responsible use of data.
Provide open-source data tools and training resources for efficient and responsible data management at low cost.
Industry organizations can provide guidance for understanding and complying with data regulations.
Academia (universities and research institutions)
Review existing data literacy curricula and training programs for professionals based on business needs.
Develop collaborative research projects to identify internationally recognized frameworks and standards.
Develop incubators and entrepreneurship centres that offer mentoring, networking opportunities, access to financing and shared offices, etc.
SMEs leading the data-driven way
To illustrate the transformative power of data readiness, here are two SMEs that have successfully incorporated data into their operations and strategic decision-making:
U-Earth aims to make clean air a fundamental human right through its flagship solution, Pure Air Zone. Based on U-Earth's biotech solutions and protocols, Pure Air Zone includes a real-time data monitoring system that provides practical information on indoor air quality to safeguard people's well-being and offer strategic guidance on environmental impact.
The company has underscored the crucial role of data management practices in bolstering trust and dependability of air quality solutions. They assert that data is a critical asset that has empowered the organization to comprehend and adapt to dynamic and evolving consumer needs, inform the development of new services and products in response to market demand, and track the company's contributions to environmental, social, and governance objectives.
Suwirun is a grower, manufacturer and distributor of a wide range of premium organic teas in Thailand, which uses data management to improve its business operations, optimize manufacturing processes and reduce waste.
Data management has been essential for the company in increasing the traceability of products and raw materials, underscoring the organization's commitment to corporate social responsibility and sustainability goals. This visibility not only helps them obtain certifications for their products and operations-an essential requirement in today's competitive marketplace-but also reinforces their corporate ethos of fair trade, equitable remuneration and diligence in managing their supply chain, and gives them a competitive edge in their industry.
SMEs key to the future of the global economy
In line with this year’s topic of the World Economic Forum's Annual Meeting of the New Champions 2023 being “Entrepreneurship: The Driving Force of the Global Economy”, the global economy is undergoing a remarkable transformation, with innovation and entrepreneurship at the forefront, driving growth and creating new industry models.
For example, digitally-enabled platform business models, fuelled by frontier technologies like artificial intelligence, immersive technologies and quantum computing, are projected to generate 70% of new value over the next decade.
By embracing the transition into data-ready enterprises and collaborating with vital stakeholders, SMEs can transform their decision-making processes, promptly respond to market trends, streamline operations, capitalize on unexplored growth prospects and ignite innovation across the globe.
We therefore encourage smaller businesses to take into account the opportunities outlined here and adapt them based on their individual business priorities and resources. Such a shift can empower SMEs to flourish resiliently in this digital arena, contribute to the innovation and stimulate sustainable global growth.
Source: https://www.weforum.org/agenda/2023/06/how-can-smes-become-data-driven-enterprises/