IT developments and business environment

Andrew Grove, the co-founder of Intel Corporation once said that the Internet will become so pervasive that in the future every business will be an Internet business or no business at all. He was right as we presently see businesses critically dependent on information and communications technologies. The ability of enterprises to collect, process, and use digital information place them on a leading niche.
The dawn of the Internet in Pakistan, during the last decade enabled companies to achieve and sustain competitive advantages. For this IT has played a key role in propelling and accelerating the globalisation of business. Recent IT developments in Pakistan are changing and will continue to change the business environment in the future.
Miraculously the Internet creates a global and cost-effective platform for businesses to communicate and conduct commerce activities. Internet facilitates smaller businesses by bridging the information gap to gain the efficiencies and perform cost effective marketing which were only available to big businesses in Pakistan. Small and innovative business initiatives turn the Web as an icon of success and coined a new term Technopreneurship. SMEs around the world are embracing e-business and spending increasing amounts on information technology in different regions. The Malaysian SME sector is the brightest example in Asia, where 89.8% SMEs are from manufacturing establishment and 98.8% SMEs are in service sector with $14700 per capita income.
SMEs, where Internet is used as a business process tool generate higher revenues. The Internet provides access 24 hours a day, seven days a week - any time anywhere. Thus, time and place are no longer the binding factors for managers and owners of a small firm. Inherently, the Internet is allowing businesses to enter niche markets at no additional cost. Hence many SMEs are now tailoring their B-packages to match the individual business needs. And now with phenomenal advances in mobile internet technology one can have the business place in his/her pocket.
Over the years, Pakistan has substantially moved from the agriculture economy to a manufacturing economy. Service sector contribution in economic cycle is also significantly high. At present, SMEs are recognised as the backbone of the country's economy by representing nearly 90% of all the enterprises in Pakistan. SMEs form a significant portion of the manufacturing and services sector. According to the Lahore Chamber of Commerce and Industry's report the labour force today is divided in agriculture 43%, manufacturing 13%, construction 7%, transport 6%, and services 14% and the other head carrying the rest of the burden. The total workforce in Pakistan is 102.7 million; out of which 50.79 million people are employed in 2010; this labour force will increase to 154.4 million by 2030 with the growth rate of 2.05. SMEs provide 80% employment of the non-agricultural labour force. In Pakistan small and medium enterprises offer diverse employment and production and share 40% in the annual GDP of Pakistan.
As the SME sector of Pakistan constitute the majority of business activities and their contribution to economic growth is considerable, various efforts should have been channelled to ensure their entrance in the global market and to remain globally competitive. They must maintain their competitive edge by adopting new models of growth followed in other developing economies. SAARC countries may provide the best model to be replicated in Pakistan. SMEs owners and managers should develop a global network of product exchange and establish a wider international network through affiliate marketing. However, these activities also require a concrete GoP trade platform. Entrepreneurs may also involve in a networked economy, one of the new challenges that are faced by SMEs today. Many SMEs are left behind in the race towards a networked economy. The challenge is in getting SMEs on board the Internet agenda by working around their resource and skills shortages. If we ignore the SMEs sector, our economy will suffer greatly.
Academic researchers have identified some factors required to implement the ICT in SMEs, which includes, in-house IT expertise (human capital), availability of IT (infrastructure and technology), IT implementation (top management commitment) and organisational culture (resistance to change). Logically, people are the most valued assets to an organisation. People with the knowledge of the Internet, e-commerce and e-business play a more important role in SMEs which plan to be involved in a networked economy.
In Pakistan's cultural milieu, it has been noticed that SMEs owners do not trust new technology while others are not able to afford it.
Does it make any rationale to the way forward? When SME managers make high-level technology-related decisions what makes them comfortable with technology? In order to address these questions, technopreneurial activity should be initiated. It is suggested here that SMEDA, which has a significant contribution in SME development in Pakistan, should come up with the awareness campaign in collaboration with B-Schools and industry and design integrated business strategy courses specifically for SME owners and managers, which fulfil the objectives. Recently, IBA offered a BBA program in Entrepreneurship and LUMS and Sarhad University have established Entrepreneurship Development Centers at their campuses.
Entrepreneurs of SMEs will compete successfully in the dynamic environment, when they are aware of the networked economy and they are ready to adopt e-business processes.
Many entrepreneurs show e-readiness in Pakistan and are ready to embark on the e-business journey. However, the readiness to adopt e-commerce and digital technology still needs improvement. In general, infrastructure and technology has impact on SMEs' performance and cause increase in profitability, quality and market share. Particularly, top management commitment has the momentous impact on SMEs e-readiness. Lastly, there is a great need that government should come forward to promote ICT in SMEs sector. As Dr S. M. Taha views, Professor at University of Karachi, entrepreneurship is the only way of combating poverty at the grassroots level, he, thus suggested government intervention to promote network economy in SME sector for its sustainable and competitive growth.
(The writer is Lecturer in Faculty of Management Sciences at Institute of Business and Technology - Biztek, Karachi.)