Digitalisation to drive SME revenue rise: UOB

The push to digitalisation will help SMEs in the long run.

The COVID-19 pandemic has pushed the need for small and medium-sized enterprises (SMEs) to digitalise their operations which could benefit them in the long run, UOB reported.

UOB's SME Outlook 2021 Study found that two in five SMEs (41%) implemented digitalisation initiatives in 2020. These businesses reported better revenue growth in 2020, whilst the remaining 59% of SMEs that did not digitalise reported a decline in revenue.

"Digitalisation offers businesses many opportunities, from improving their processes and reaching out to new customers to having a direct and measurable impact on their revenue...The digitalisation journey is a long one and we urge SMEs to stay the course to see their efforts pay off when they emerge stronger through the pandemic," UOB's head of group business banking Lawrence Loh said in a statement.

Those that digitalised also reported a more optimistic outlook for 2021, with 58% of digitalised SMEs expecting revenue growth.

The following sectors reported an increase in productivity and efficiency: business services (49%); manufacturing and engineering (46%); community and personal sercvices (44%); consumer goods (42%); technology, media, and telecoms (42%); construction and infrastructure (37%); wholesale trade (32%); professional services (27%); and real estate and hospitality (22%).

Six out of 10 of the SMEs surveyed reported that they prioritised technology investments to weather the impact of COVID-19.

Small businesses found it more difficult to digitalise than medium-sized businesses due to expenses, cybersecurity fears, lack of digital skillsets in their employees, lack of funds, or found it hard to justify the expenses of digitalisation.

The top priorities for digitalisation are marketing and inventory management, payroll, and accounting and sales. With more demand for electronic payments during the pandemic, more SMEs have also prioritised electronic payment and invoicing.

Sectors that put greater emphasis on digital tools for marketing are consumer goods, professional services, real estate, and hospitality. Inventory management, consumer goods, and construction and infrastructure sectors are ramping up their adoption.

The UOB is working with the government on its Star Digital Programme to help companies digitalise by defraying setup costs for the first 12 months. It also offers, through UOB BizSmart, additional revenue channels for the digitalisation of small businesses.