Вы находитесь на странице: 1из 25

Making Indian SMEs Globally Competitive through ICT Adoption Introduction Information and Communication technology (ICT) is perceived

to play a crucial role in transforming not only big but also small-and-medium enterprises (SMEs). ICTs are technologies and tools that people use to share, distribute, and gather information and to communicate with one another, one on one, or in groups, through the use of computers and interconnected networks. In addition ICTs are mediums that utilize both telecommunications and computer technologies to transmit information. ICT environment helps in fast and accurate decision-making by the SMEs due to increased mobility. The critical components before SMEs are speed of services, access to information, empowering employees in terms of skill and delivering highest valued services at competitive cost. SMEs need ICT-based solutions in terms of multi-tasking, expanding customer base, raising productivity, controlling cost, working remotely, fast and accurate decision-making and facilitating collaboration. In recent years, organizations have implemented thousands of large and small innovations in software applications, work process, business organization, enterprise resource planning & management, supply chain management, customer relationship management and business intelligence & agility. ICT adoption in the Indian SME sector can be evaluated by using, a 4 stage model. These stages are, Stage I-Basic ICT Infrastructure, Stage II-Functional Automation, Stage III-Business Automation, and Stage IV-Business Integration. This model can also be used for benchmarking ICT adoption among different industry sectors.

Stage I-Computerization in selective roles, Basic level computerization and LAN for Office Automation, Communication/Promotion purposes (e.g. Word Processing, Spreadsheets, Database, Drafting, Graphics, Intranet, Email, Web site, Product Catalogues, etc.) Stage II-Computerization in selective functions (e.g. Financial Accounting in Accounts, Material Accounting in Stores, Payroll in HR, Invoicing in Sales) - mainly non cross functional. Stage III-Computerization in core business processes, process automation & integration (DSS+ERP) Stage IV-Computerization in business networks (DSS+ERP+E-Commerce)

In countries around the world, the Internet is helping small companies with big aspirations realize their dreams i.e. stage IVby minimizing barriers of space and time, connecting them to customers near and far, and improving their business processes. But the benefits of the Internet vary on the basis of a firms size, geographic reach, and products and services supplied. Many small and medium-size enterprises (SMEs), for instance, lack the resources necessary to absorb and apply new technologies effectively. These same SMEs contribute significantly to revenue and employment in India. They could grow by leaps and bounds in the right business and regulatory environment and with the right technological tools, chief among them, the Internet. The following graph explains IT adoption when compared to large companies. While SMEs are contributing in par with large enterprises in terms of industrial output, their IT demand contribution domestically remains low constantly.

Internet technology can be instrumental in SME growth in developing countries, as evidenced by the success of e-commerce companies like Alibaba.com in China and Flipkart.com in India. A recent study in Australia shows that small businesses that use the Internet extensively earn twice as much as those who use it less. How much businesses use the Internet is in part a reflection of general useand Internet penetration rates have been increasing worldwide. Between 2001 and 2011, the number of individuals using the Internet increased by about 15 percentage points.

When developed countries are using internet extensively our SMEs located mainly in developing country such as india using internet at quite low level. This results in SMEs facing difficulties in reaching out to global market. Generally Internet use by government

and SMEs is lagging behind over the years. In 2011-2012, the amount of Indias GDP attributable to the Internet was modest 1.6 percent, amounting to US$30 billion. Of this US$30 billion, the government contributed only 7 percent and the private sector 27 percent, compared to 33 percent by individual users and 33 percent by net exports. The following graph explains what benefit can the internet give, if adopted.

Source: FICCI Review of literature Use of ICT in SMEs According to a study by the IDC (waiting to connect-2008) about IT adoption in the manufacturing sector, there is strong empirical evidence that IT usage by Indian businesses would lead to greater profitability and employment. The study revealed that IT using manufacturing businesses revealed better performance indicators in terms of profitability and labor productivity than those that did not use technology. The study also mentioned that IT contributing to about 32% change in value addition and is the second largest contributor to increasing operating profits after plant and machinery and before transportation equipment.

ICT intervention can also help SMEs get better access to real time market information and help them understand what kind of products and services are actually needed by the market, how big/small is the market for these products and services, provide an understanding of an opportune time to launch these products and services in the market and how are they to be delivered. Online presence and other ICT tools can also ensure access to wider market and audience for these SMEs. Appropriate usage of ICT tools can also aid SMEs in their business dealings with large scale players. Another area where ICT intervention can assist MSMEs is in improving internal communication and customer management. With the increasing focus on customer service and customer management, the importance of CRM systems cannot be underestimated. These systems have proved successful in providing cost savings and efficiency in customer development and customer retention activities. Usage of Internet and e-commerce solutions help reduce transaction costs and increase the speed and reliability of transactions. Bharath Beedi is a classic example of an SME that graduated from using MS excel and desktop based solutions to adopting cloud based CRM to drive business benefits. Bharath

Beedi Works Ltd. is a market leader in the tobacco business with sales coverage of over 2000 towns in India. The company has 50,000 staff strength with pan-India presence. They also export products to over 16 countries across the globe. It caters to a vast clientele that demand a strong, wide-spread and decentralized sales team. This, in turn, necessitated close coordination across various internal and external divisions. The organization was facing the following challenges: Simplification of highly transactional sales cycle. Synchronization between production, logistics and transportation, warehousing, sales and distribution management. Tracking market scenarios and easy monitoring of sales volume fluctuation. ROI on marketing campaign. Reduction in duplication and easy communication flow across the sales and distribution network. The organization then decided to adopt a CRM that captured all production information, transportation and logistics details and sales data right from the wholesalers to the last mile resellers and provided inputs to different stakeholders using email and SMS reminders. RFID integration was also carried out with the CRM for ease in uploading data. Customized online reporting to management and staff process leads was facilitated by the solution and innovative practices to automate task flow, competition information, market details, product feedback and marketing campaign monitor were adopted. This majorly helped improve the sales channel productivity. The below mentioned infographics shows that some SMEs have slightly started to adopt E Business model in order to go global.

Small and medium enterprises (SMEs) in and around Coimbatore have said they are witnessing a sharp rise in job orders from overseas customers. A cross-section of industry

representatives have said this was mainly due to the adoption of e-marketing, which they took up as a cost-control measure during the global financial crisis. The initiative has not only started bringing down marketing costs, but also increased job orders from overseas customers. Coimbatore houses over 50,000 SMEs and micro units mainly in the engineering sector, including automotive components, textile machinery and pumps, among others. J James, district president of Tamil Nadu Association of Cottage and Micro Enterprises (TACT), said during the financial crisis the units started looking at various cost-cutting initiatives to make their products more competitive. What we thought would be a cost-cutting measure adoption of e-marketing has yielded more profits, said James. According to the association 15 per cent of the units in Coimbatore now have their own websites, which has helped the industry to report 10-15 per cent growth in job orders from overseas customers. K Raja, who runs an engineering unit in Coimbatore, said, Overseas customers are paying 50 per cent more compared to domestic customers for job orders. Raja, who started his companys website in December 2009, secured a job order for the first time from a German customer in January this year. It is important to get your business noticed by selling in various marketplaces. The Internet is the right mode at a relatively low cost. By spending time creating effective content and building links, you can gain valuable traffic, said Raja. M Saravanakumar, who owns Coimbatore-based Auto Engineering Works (a company that develops valves), said 40 per cent of the orders for his unit was from overseas customers and he was planning to accept only these orders in the next one or two months. Orders are pouring in, and since I am not able to take up all of them I am passing on some to my colleagues in the industry, said Saravanakumar, who also uses e-marketing successfully. Saravanakumar recently added five machines in his unit, costing Rs 26 lakh each. I can pay the bank loan in three years by taking up orders from overseas customers, he said, adding that profit margins in the domestic market were a fraction of those on foreign orders. E-marketing gives businesses global reach, lower cost, measurable results and personalisation, and makes possible creation of interactive campaigns and ease of purchase, which adds value for the customer and improves the organisations marketing effectiveness, according to marketing experts. They added that this would enable SMEs to

perform as efficiently as large businesses in the global market. Current usage of ICT in SMEs: In India, technology is viewed as a means to save time and effort, as well as stay updated, but only tech adopters credit technology with providing a competitive edge and a path toward business innovation. They associate more strongly with hardware/technology products such as gadgets, devices and durables, than they do with technology as a service, which they view as the internet, email and other services such as filing taxes. Apart from mentioned above, SMEs use various software application for their various business functions. Below showed graph shows their percentage of usage for various functions.

Inspite of numerous benefits of adopting ICT, very few micro, small and medium business are able to access efficient and affordable IT solution that can work for them. Penetration of ICT in Indian SMEs is still quite low as demonstrated below.

Source: FICCI Surveys have shown that the ICT penetration within the more matured large enterprises is far more than in small and medium scale enterprises that are still using IT majorly for documentation purposes. Now medium scale enterprises have started automating their business functions to increase efficiency and effectiveness within the business operations. After implementing these solutions, it had perceptible effect on their business performance as demonstrated below.

Source: FICCI Evaluation at various sector level

Auto Component Sector As per PwCs studies, within small scale sector of Indias auto component industry, majority of the companies have only the basic level computerization and hence fall within stage I of ICT adoption. Computerization of standalone functionalities and integration within different functional departments has started within some of the small scale enterprises. However, none of the companies in the small scale sector of Indias auto component industry have started using IT innovatively to drive their business. Within the medium sector Indias auto component industry, majority of the companies fall under stage I of ICT adoption, with just the basic level computerization in place. For a large number of medium scale enterprises, standalone functions such as Material Accounting in Stores, Payroll in HR, Invoicing in sales etc have been automated. Very few medium scale enterprises in the Indian auto sector are using IT innovatively and can be assumed to have reached the fourth stage of ICT adoption. Garment Sector: The current usage of ICT in this sector is at a very basic level, but because of its unique cluster pattern, it has a very high scope of ICT adoption. Drugs & Pharma Sector: The ICT penetration is quite low for small scale units of Indias drugs and pharma industry. Only about 10-30% companies have the basic IT infrastructure in place and fall under stage I of ICT adoption. A few enterprises within this segment have started using point applications aimed to automate selective business functions. For medium scale units of Indias drugs and pharma industry, 30-50 per cent companies are having ICT enabled accounting systems and a small number of companies are moving towards using IT systems innovatively to drive their business. Leather Sector: Surveys conducted by PwC show the following status of ICT usage in the Leather Sector in India: None of the small scale units are into Stage III and Stage IV of ICT adoption. Only basic IT infrastructure is being used within small scale units in the Indian leather sector Within the medium scale sector only about 10% units are in Stage III of ICT adoption. There is a huge scope for usage of ICT in medium scale industries in this sector particularly in the area of e-Business. Surveys conducted under Project Vikas (a five year project to make SMEs more competitive, started by Microsoft, along with the NMCC and other stakeholders) for various clusters also show huge gaps in ICT deployment for the MSME sector. Areas such as supply chain management, designing, customer relations, order management, resource and

capacity planning, marketing, managing inventory etc could specifically benefit from ICT intervention. The following observations were made during the various cluster surveys: Ahmedabad pharma cluster has been observed to be slow adopters of ICT being extremely price sensitive due to their size and lack of requisite infrastructure and budgets. Footwear industry in Agra does most of the work by hands and hardly any mechanization exists. All process control is manual and all records are kept manually. Tirupur Knitwear cluster was found to lack the ICT vision for an integrated business and there was a limited knowledge on latest technologies. Ludhiana textiles cluster was found to be abysmally low in ICT investments due to lack of ICT knowledge, high software costs, high skilled personnel salaries etc. Pune Auto Cluster showed that tier I suppliers are providing greater emphasis on e-business interventions to demand planning and management, engineering design and procurement. However tier II and III suppliers use computers only for accounting, stores, orders and delivery related activities. Areas of Significance Use of Internet by SMEs is of particular importance at the IV stage of ICT adoption now, which stands to gain or lose competitive position as a result of their own action at the global level. Several conceptual models have been proposed concerning the adoption of ICT and Internet technology and a growing number of empirical studies shed light on SME practices. There is a huge unexplored market in India and the existing security offerings are scarce and fragmented. SMEs in India are under a great deal of pressure from the bigger customers to create a secure e-biz infrastructure. SMEs are increasingly seeing the benefits arising from e-Commerce as expanded geographical coverage giving them a larger potential market into which they can sell their products and services. Some of the key industries that have high potential for early adoption of e-Commerce are the financial services (stock exchanges and banks), automobiles, retail, travel, IT and manufacturing sectors etc. However for the SME sector, some of the concerns with e-Commerce revolve around fear or eroding their existing customer base and technical issues arising out of lack of computer expertise and the cost of necessary hardware and software. These are some of the preview highlights of a survey conducted by NASSCOM to determine the status of Internet and electronic commerce proliferation in India. The proliferation of business-to-consumer eCommerce activities has created a need to understand how and why people participate in e-Commerce activities. Through an empirical study of 73 firms (some of them SMEs), Subramanian and Nosek identified three factors that were found to create strategic value in:

operational support, managerial productivity, and strategic decision aid. In each of these factors they utilised different items that were found to have high convergent validity and reliability. Their factors seem to be applicable to e-Commerce. The following diagram gives the conceptual framework of how the latest technologies can be utilized in different functions of SMEs.

Performance of the SMEs depends on overall competitiveness in terms of financial, customer/market and operational parameters. Confederation of Indian Industry (CII) and PricewaterhouseCoopers (2010) in its report, Creating Competitive SMEs, indicated that the increase in ICT adoption and knowledge infrastructure can provide a boost to the growth and maturity of SMEs. The report identified areas such as operations, logistics, marketing and sales, human resource development, technology development, procurement where ICT can make a difference. Dili Ojukwu (2006) demonstrated that the more an organization increases its Investment in both its Business and Information Solutions, all other things being equal, it would record an appreciable and noticeable increase on the level of Growth. Madasamy Moni (2009) specified areas of MSME business that can be

improved with the innovative use of ICT, which are: (a) user profiling, (b) supply chain, (c) value chain, (d) customer relation management (CRM), (e) SME networks, and (f) supplier cooperation. All of these activities could be converged in the form of e-Commerce technology. E Commerce: Tool for the Global Reach E-Commerce applications is the one thing which can make it easier for the SMEs to better integrate with their global markets, the e-Marketplace for their products and services. The following benefits can be advantage for the SMEs to reach their global market. These are, e-Commerce can provide substantial benefits to small enterprises via improved efficiencies and raised revenues. e-Commerce enables small business entrepreneurs to gain access to better quality information, and thus empowers them to take informed decisions in their businesses. Most importantly, e-Commerce can give a competitive advantage. It can help strengthen market position and open up new business opportunities with the potential to improve profits. Benefits of e-Commerce can arise in the following ways: Cost Reduction Benefits: Reduced travel costs: by using a mobile phone, email and other ICTs to substitute for journeys. Reduced cost of materials: more information means better choice of suppliers and more competitive prices. Reduced marketing and distribution costs: for example, publishing a brochure online can reach an unlimited number of potential export customers and allow regular update. Reduced sales costs: the Internet provides unprecedented opportunities for businesses to reduce the costs of trade locally and, even more, across borders. More efficient supply chain management: can eliminate the need for middlemen leading to lower transaction costs (including marketing, sales, transaction processing), reduced overhead, and reduced inventory and labour costs. Improved internal functions: cutting down on meetings, improving the exchange of critical knowledge, eliminating red tape, and streamlining communications. Market Benefits: Greater reach: a web presence can allow entrepreneurs to reach out to customers far beyond their immediate location. More brand awareness: offering new avenues of promotion for products and services. Improved customer service: providing more responsive order taking and after-sales

service to customers; this, in turn, can lead to increased customer loyalty. Increased market awareness: entrepreneurs can become more aware of competition within their market and more aware of market changes, which can lead to product/service innovation or quality improvement. Other Competitive Benefits: Increased efficiency: e Commerce not only reduces costs but it can also increase the speed of transactions; both buying and selling. Continuous trading: suppliers and customers, if they wish, can access a 24-hour/7-day sales service particularly important when trading through time zones. Specialisation: e Commerce can help entrepreneurs focus their activities making it easier to build relationships with other enterprises and communicate their needs to support agencies. Many of these benefits can be gained through relatively modest investments in new technology and systems. Greater benefits may accrue as the enterprise moves up the eCommerce adoption ladder. It is important to realise, however, that the benefits outlined are not exclusively tied to e-Commerce. For example, market benefits may be achieved more effectively through better business networking and the building of personal business relationships, rather than through use of the Internet. This emphasises the importance of adopting an approach towards e-Commerce that puts business objectives first, rather than believing that technology alone can deliver the benefits described above. EMarketing: Acquiring Customers worldwide E marketing technologies, if done regularly, by appointing exclusive employee for this purpose, can give SMEs good business from worldwide. Moreover enterprise will get a good exposure among international customers. SEO: Search Engine Optimization (SEO) is perhaps the most important online marketing tool. Since an estimated 80% of Indian search happens through Google, it makes sense to optimize for being found online. To take the mystery out of SEO, the idea is to identify certain keywords and keyword phrases which will attract your target audience and optimize the site for those words and phrases. To start with get the person making the site to do SEO upfront, and moving on to specialized vendors as SEO is an ongoing activity. Emails: You can reach majority of consumers through emails and SMS. Email has become an integral part of todays Internet savvy people. Typical email campaigns could have conversions rates of .1 to 1 %, not bad, as sending an email will cost close to nothing. Affiliate marketing: Look for online sites which attract a similar audience as yours e.g. if you are selling HR services look to tie-up with HR blogs and offer them money for lead generation or converted leads to get listed on their site.

Get a Facebook page: Facebook though really a friend network, allows you to create a FB page for free. Start collecting likes and building a community around your business. Create a LinkedIn profile: LinkedIn allows you to create your business profile for free. Also join LinkedIn groups which are relevant to your business and post in them. MNCs use LinkedIn quite frequently to generate business leads. Get on YouTube: Use your handycam to create some interesting content about your product or services and put that up on YouTube. Put that link in your site for video content. Blogging: Nothing works like putting up articles and content in the online space. This is perhaps one of the best tools for branding and becoming a thought leader. Contrary to popular belief of withholding information, be generous and give out value information to your prospective and existing customers who can really use it. This also goes a long way in gaining consumer trust. There is of course paid online advertising: For B2B use LinkedIn effectively and there is the traditional Pay Per Click on Google. Provide something free is important: Use the various social media, email and your website and give out a freebie to attract traffic and get conversions. This also allows you to get email-ids and contact details of prospects which you can use for email marketing. List in directories: Try to list your business in various online relevant directories, some of which are free and some paid, but all add to online presence. SMEs can improve their business prospects by focusing more on online marketing, and yet stay within budgets. Consumers in India are popularly using the internet for information, doing business, and shopping. SMEs can use online marketing to effectively and quickly communicate with their consumers, highlight their key business, attract new customers and keep customers interested in your business. Other benefits include: Cost effectiveness: Traditional marketing tools like print, television, and radio has always proved to be costly, and also is of short-duration. Internet marketing tools like emails, blogs, and websites are much cheaper and sometime free Tracking success: With Internet marketing, you can track and keep record of all of your marketing activities. You can easily calculate your returns on investment (ROI) by using Google Analytics, which is a free traffic analysis tool. Location based marketing: Interest and requirements of consumers varies by locality.

You can easily apply different strategies to communicate with consumers. Product branding: You can create and maintain a positive brand image and manage your online reputation. A well organized and regularly updated website can keep your consumers interested all the time. Cloud Computing: Boon for the SME Sector The challenges faced in ICT adoption by SMEs have several dimensions including customized applications, price affordability, availability of support systems and skill sets and training issues. This has given way to IT firms thinking out-of-the-box to create products and services which are more relevant, affordable and address the real-life challenges of the SME users. Faced with similar challenge of addressing the needs of low income consumers and converting them into customers, FMCG firms examined the usage characteristics, needs, lifestyle patterns and paying capacity of the low income consumers. These insights made the FMCG firms realize that converting low income consumers into customers required a radical shift from the traditional low price low quality paradigm of low income consumer products. This re-think gave birth to the creation of sachets of their products. In the same way, telecom firms did a good job of tapping low-income customers who needed to gain control over their spending, by introducing prepaid connections and schemes such as pay per second tariff plans to cater to their needs. Following the league, the big and giant web based companies like Google, Amazon, Salesforce.com similarly came up with a model named Cloud Computing the sharing of web infrastructure to deal with the internet data storage, scalability and computation for catering to customers like SMEs looking for more affordable IT solutions. Cloud computing is an online service model by which hardware and software services are delivered to customers depending upon their requirements and pay as an operating expense without incurring high cost. Basically cloud computing is a set of services that provide software and infrastructure resources using Internet media and data storage on a third party server. It has three dimensions known as Software level service, Platform level service, Infrastructure service. The main cloud computing attributes are pay per use, elastic self provisioning through software, simple scalable services, virtualized physical resources. Models, such as cloud computing based on Virtual technologies enables the user to access storage resources and charge according to the resources access. Cloud computing platforms are based on utility

model that enhances the reliability, scalability, performance and need based configurability and all these capabilities are provided at relatively low costs as compared to the dedicated infrastructures. Benefits provided by cloud computing ranges from cost savings to speed and flexibility to enhanced performance. Target customer bases of such an arrangement are SMEs that cannot afford a full-blown onpremises software system but would like to take advantage of such systems if they are available to them. The features described above make Cloud Computing an attractive model for using IT services for SMEs that want high performance and effective services at affordable prices. The solutions specific to this sector have to necessarily have: Simple but necessary functions A quick learning curve, user friendly UI and of easy to maintain A short implementation period incorporating best practices and at the same time allowing flexibility. A low demand for hardware (not very hardware intensive) Possibility of being used as a service/ licensed model Possibility of being run over shared hardware infrastructure Cloud computing provides cost effective ways of automating their organizational processes by allowing the SMEs to share software (SaaS), platform (PaaS) as well as Infrastructure (IaaS). These have been briefly described below: Software as a Service: SaaS allows individuals to use applications that have been developed and deployed on the Web as a service without having to buy the package. Models such licensing as well as those similar to monthly rentals is popular. This considerably reduces the capital expense, a MSME has to incur in using these applications to manage their business. Salesforce, CRM on demand, enterprise spend management, e commerce, workforce performance management (WPM) are some such popular applications apart from the basic Google Apps package of word processing, spreadsheet and presentation software which are available for SMEs to begin with. These are the most commonly used application on SaaS model. Enterprises are fast ramping themselves up to match the efficiencies of big industries using such facilities. These applications are efficient, can be implemented quickly and doesnt mandate additional hardware need to permit user access. The systems are scalable as well as reliable and maintenance costs can be completely saved. Business benefits of SaaS for MSME segment include: Faster deployment time and reduced time-to-market Reduced IT infrastructure acquisition and maintenance costs Greater ease of use and added business value

Reliability and scalability. Platform as a Service: Platform as a Service (PaaS) is a model in which a computing platform is made available over the web/cloud. This might not very often be very useful to SMEs as very few are involved in software development activities. In case they do, hassles like setting up hosting, servers, databases, user interaction process and frameworks are prepackaged and taken care of. Business benefits of PaaS for SMEs include: Requires no up-front investments Minimize operational costs Centralized information management Enhanced productivity Easy collaboration Secured and customized access.

Infrastructure as a Service: Virtualization is the key word here. Complete infrastructure can be outsourced to a service provider. Clients can access and use network equipment, servers, data center space etc without having to make any large investment. SMEs will have access to high quality ICT infrastructure with limited investment. SMEs will have to concern themselves with only accessing the service. All activities such as maintaining the underlying hardware, operating system and network Infrastructure resources etc are managed. Billing mechanism is easy and convenient. Business benefits of IaaS include: Dynamic scaling Usage-based pricing Reduced capital and personnel costs Access to superior IT resources

Challenges in adopting ICT SMEs are facing difficulties by the way of poor ICT infrasture available to them domestically. Globally when internet penetration increasing, domestic internet penetration lagging behind. This is due to the poor internet infrasture available to SMEs domestically. The following graph indicates india is one the country among the countries having low internet penetration.

According to recent research report, only 4% of SMEs who are aware of the cloud computing have adopted the technology. Ratio of awareness to adoption seems to remain in the range of 25% with SMEs having 11-49 employees have awareness to adoption ratio of 30%. Among the industry vertical, the awareness to adoption ratio is high among manufacturing sector. It is interesting to note that the IT segment has a high awareness but a low adoption when compared to verticals like manufacturing.

Awareness of cloud by employees type 100-499 11-19 employees employees 12% 30% 18% 10% 20% 10% 1-10 employees 8% 12% 4% Awareness of cloud among MSMEs 2012 2013 Increase

Govt & Private Role for SMEs ICT adoption Indian Government, on its part, should play facilitator role in order to help the SMEs compete globally, by way of providing good ICT infrasture in general, Internet in particular. As of now, government has implemented the following programmes to help the SMEs, through MSME ministry. The programme titled Promotion of ICT in MSME sector under the National manufacturing Competitiveness programme(NMCP) has been implemented in view of helping SMEs. The broad activities planned under the scheme included, identifying target cluster for ICT intervention, setting up of E-readiness infrastructure, developing web portals for clusters, skill development of MSME staff in ICT application, preparation of local software solution for SMEs to enhance their competitiveness, construction of e-catalogue, e-commerce etc. and networking MSME cluster portal on to National level Portal in order to outreach SMEs into global markets. Deliverables: The following deliverables will be from the scheme:

100 potential cluster across the country will reap the benefit from the scheme. Forward and backward integration. Reduction in inventory level. Increased value addition in the product. Increased in indirect labour productivity. Improved Competitiveness. Enhanced market share in domestic & export market.

Private sector, on its part, should play proactive role in customizing software applications to fit SMEs unique needs. Indian IT companies are in forefront in offering solutions worldwide for industry bellwethers, but at the same time they overlook the domestic market as they are not that attractive clients in terms of their investment capacity. Industry body such as NASSCOM should encourage their players to actively participate in domestic IT business in order to fill domestic requirement. May be a consortium of indian IT companies formed by NASSCOM to help the indian SMEs to get first hand at E Business. Later they will be familiar with this activities, this, in turn will increase the IT services requirement domestically. Conclusion This paper discussed, in detail, of the current usage of ICT in indian SMEs, How they can upgrade ICT to compete globally using E business model, and in what way they can do all these. Adoption and assimilation of ICTs by SMEs is critical in this era of globalization. SMEs are the major drivers for economic growth of indian economy. The major determinants of ICTs adoption by SMEs are competition and access to international markets. ICTs adoption by SMEs increases the productivity process, efficiency of internal business operations and connects SMEs more easily and cheaply to external contacts locally and globally. Although ICTs adoption will increasingly empower SMEs to participate in the knowledge management economy, still SMEs are faced with many challenges which impede SMEs not to adopt ICTs in their business processes. These challenges are underscored below. ICT firms have not provided goods and services tailored to SMEs in the past; ICT products available in the market are too complex and expensive. The result is a vicious cycle of limited supply and limited demand that ultimately excludes SMEs from the benefits of ICT. As can be noticed from the above, ICT adoption in various sectors, the penetration of internet in Indian MSMEs is quite low. This can be attributed to many reasons. Some of these reasons are stated below: Limited internal IT expertise and Managerial Knowledge: Very few employees of a

typical SME gain relevant expertise in IT during their education (largely vocational training) ICT budget: Most SME firms do not have a formal IT budgeting process and hence dont plan for ICT investments. Affordable solutions: While hardware prices have been declining recently, software and IT service costs have not shown any downward bias. Developing and maintaining e-Business solutions: The cost of developing and maintaining e-Business solutions is quite high. Customization of ICT solutions: Currently available applications especially in the area of core manufacturing processes often require extensive customization before deployment and involve significant changes to the existing business process of the firm. Network Infrastructure Issues: Reliability and affordability are key network infrastructure concerns for majority of SMEs Qualified ICT service providers: The large technology service providers who possess a national coverage capability typically do not service the smaller SME market segment directly, as it increases their cost of sales. Awareness of ICT benefits: The management in most SME firms possesses a manufacturing background and is often without a good understanding of ICT and its benefits. Local language software: Most of the manufacturing workforce in smaller firms is composed of rural migrants who are predominantly non-English speaking. Training Issues: Very few MSME employees undergo IT training during the course of their employment. In addition, most SMEs owners/managers do not understand the benefits of ICTs adoption, lack of legal framework and inadequate infrastructure. As per the National Association of Software and Services Companies (NASSCOM ), Indian small and medium-sized enterprises (SMEs) lack proper strategies to remove the impediments which constrain them to adopt Information Communication Technologies (ICT). Most SME firms lack formal ICT decision making structures and in majority of the firms, the responsibility for ICT decision making is often with the firms owner. If SMEs can overcome all these impediments discussed above they will be in a position to implement E business model. Thus E commerce, E marketing and Cloud Computing Holds the potential to alter the MSME landscape and to become globally competitive by the silent drivers of a nations economy. The limitation of this paper is that it is a preliminary work that needs to be contrasted with empirical findings to give a holistic view on ICTs adoption by SMEs. In addition, there is need for triangulation methods to be applied so that one can make concrete conclusions on

the determinants, benefits, barriers and strategies to resolve ICTs adoption and assimilation in SMEs.

Reference 1. Annual Report MSME Government of India Ministry of Micro, Small and Medium Enterprises(2012-2013) (http://www.dcmsme.gov.in/ANNUALREPORT-MSME2012-13P.pdf) 2. Journal of Computing, Volume 2, Issue 5, May 2010, Issn 2151-9617 3. CII Paper:- The Gujarat vision: Making SMEs globally competitive 4. Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 5. Technology Capacity Building for Internationalization of SMEs By DR. S.P.AGARWAL PROF. & HEAD, CITT, INDIAN INSTITUTE OF FOREIGN TRADE, NEW DELHI, INDIA. 6. SME Ratings Agency of India (www.smera.in) Review of Literature: Jamshed Siddiqui (2013) in his paper on a framework for ICT adoption in Indian SMEs; Globalization has made huge impact in todays scenario of business organizations SMEs are the most needed sector to be aware about the development and changing trends of the technology. Information and Communication Technology(ICT) plays critical role in growth of SMEs. Various aspects of ICT adoption issues and challenges are highlighted in context with government, Managers and ISPs role in it. According to RedSeer Opines on SMEs (2013) Shifting Gears: Changing IT Adoption among Small and Medium Enterprises (SMEs) While growing rapidly in size, SMEs in India have so far not fully embraced the power of IT. RedSeer Consulting evaluates Why.


Siksha O Anusandhan University, Bhubaneswar, India, PIN- 751030

, Uma Sankar Mishra 2, and P K Mishra 3.

3,*Corresponding author: Email: pkmishra1974@gmail.com, 1E-mail: bbmishra@hotmail.com 2E-mail: uma_mishra_mba@yahoo.co.in Tel: +91-9437001529; Fax: +91-674-2350642 [Received-11/08/2011, Accepted- 12/05/2012] Information and communication technology (ICT) has brought about a complete change into every walk of life today with business not being an exception to it. Organisations are increasingly embracing new generation business tools like the eCommerce and e-Business for attaining their goals. E-Commerce is emerging as a new way of helping business enterprises to compete in the marketplace and thereby contributing to their economic success. In an increasingly competitive and globalised world, SMEs need to compete more effectively to boost domestic economic activities and contribute toward increasing export earnings. SMEs also continue to play an important role in increasing employment and thus contributing to poverty reduction on a sustainable basis. With spread of technology and infrastructure, rural businesses will be the biggest beneficiaries of e-Commerce. The Internet can help small enterprises to present themselves to the world. With this backdrop this paper tries to present the e-Commerce scenario in the SMEs of Orissa, the prospect of future growth and the empirical analysis of the factors influencing the adoption of eCommerce. Through a survey of sample organisations it was found that, although the rate of adoption is not satisfactory, but the entrepreneurs/ managers are quite optimistic regarding the e-Business applications. This paper also tries to state an analytical view of the e-Commerce adoption scenario by revealing the relationship between the factors like Organisational support, Managerial Productivity, Decision Aids and Organisational Readiness, External Pressure, Compatibility, Perceived Ease of Use & perceived Usefulness with the perception of these SMEs owners/managers. Statistical Data Analysis like Multivariate data analysis through Canonical

Correlation Analysis (CCA) is done to test empirically the Average scores of variables under perceived strategic value and adoption across present position (in years), Average scores of variables under perceived strategic value and adoption across type of industry to test the significance of these factors. Finally a model is proposed for the adoption of ICT & e-Business technologies, by considering the overall business scenario of the state which includes both the internal as well as the external business environments of the sample organisations. Keywords: ICT, Environments. e-Commerce, SMEs, CCA, Multivariate Analysis, Business

1.Jamshed Siddiqui (2013): A Framework for ICT Adoptation in Indian SMEs: Issues and challenges, International Journal of Information Techonology and Management Information System(IJITMIS), ISSN 0976-6405 (Print) Volume 4, Issue 3, Sep.pp.

2.International Journal of Advanced Computer and Mathematical Sciences ISSN 2230-9624. Vol 3, Issue 2, 2012, pp 227-236 http://bipublication.com