Challenges to Adoption of ICT among SMEs

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Challenges to AdoptionofICTamongSMEs

• Presented by Hayden Charles

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Outline of Presentation

• Introduction
• Challenges
• Culture and Availability of Resources
• Infrastructural Deficiencies
• Government Initiatives

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Introduction

• Small- and medium-sized enterprise (SME) sector
  crucial to attaining long-term and sustainable
  economic growth
• Increasing the viability of SMEs is now central
  to many overall economic development strategies
• ICTs have proven to be vital in improving the
  efficiency and expanding the market reach of SMEs
  as well as in establishing new ways for SMEs to
  obtain and make the most effective use of
  business information
• While exploitation of information and
  communication technologies (ICT) is critical to
  building the knowledge economy, a myriad of
  adoption challenges are faced by SMEs which are
  both technological and human-centric in nature

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Culture and Availability of Resources

• Technology-Skill Complementarities
• Organizational Change
• Size of Firm
• Ability to use ICT efficiently and effectively
• Financial Institutions and Intermediaries
• Low level of Awareness/Information

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Technology-Skill Complementarities

• Skilled or more-educated labor is more
  complementary with new technology or physical
  capital than is unskilled or less educated labor
• Lack of ICT skills and business skills are
  widespread impediments to effective uptake once
  adoption decisions are made
• Technological change induces the demand for
  better-educated and skilled workforce
• Governments have major roles in providing basic
  ICT skills in compulsory schooling

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Organizational Change

• The introduction of ICT results in the
  flattening of hierarchies and promotes greater
  involvement of the workers in management
• Firms therefore have to deal with technological
  and organizational changes simultaneously putting
  a demand on their resources for technical skill
  and organizational upgrading at the same time
• Satisfying these demands also necessitates
  overcoming business culture and organizational
  politics

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Size of Firm

• Complexity of ICTs adopted is limited by the size
  of firm
• Firms with larger sizes of operation usually
  adopt modern learning processes
• Smaller firms with lower levels of operation have
  neither the resources nor are they in a position
  to appreciate the full benefits of new
  technology-based learning processes

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Ability to use ICT Efficiently and Effectively

• Success of adoption of ICT depends on
• Ability of firms to use them efficiently and
  effectively
• Appropriability of benefits of new technologies
• Capacity utilization of new methods of production

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Financial Institutions and Intermediaries

• Despite the best efforts, if financial
  institutions are slow or unwilling to support
  e-business, such initiatives by SMEs will get
  nowhere

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Low Level of Awareness/Information

• Awareness of productive potential of
  e-business/ICT
• Lack of objective information regarding the
  benefits and costs of adoption of ICT

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Infrastructural Challenges

• Physical Infrastructure
• Legal/Regulatory frameworks, security and
  Privacy/Trust Infrastructure/Business Environment

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Physical Infrastructure

• Poor telecommunications infrastructure, Internet
  connectivity, high costs of investment and low
  access to the necessary hardware
• Broadband connectivity is a key component in ICT
  development, adoption and use
• It accelerates the contribution of ICTs to
  economic growth, facilitates innovation and
  promotes efficiency

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Business Environment and Legal/Regulatory
Framework

• A healthy business environment is fundamental for
  firms to thrive and benefit from ICTs
• Without the appropriate regulatory
  infrastructure, there will be no trust security,
  privacy and consumer protection
• Essential are a culture of security to enhance
  trust in the use of ICT, effective enforcement of
  privacy and consumer protection, and combating
  cyber-crime and spam

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Government Initiatives

• Intellectual Property
• Intangible Investments and Assets

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Intellectual Property Protection

• Lack of satisfactory protection of ICT
  innovations and digital content products of
  innovative small firms
• Inadequate provisions for mitigating cost of
  obtaining, maintaining and enforcing intellectual
  property rights.

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Intangible Investments and Assets

• Lack of provisions for/recognition of intangible
  investments and assets (skills, organization,
  software, networks) for competitiveness and
  growth.
• Need to encourage SMEs to develop and use systems
  which recognize and report intangibles in ways
  that can be reliably used by investors, valued by
  capital markets and guide better management
  practices

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Governments Role
While the responsibility for adoption of ICT lies
with all stakeholders, government has a key role
to play in the creation of an enabling
environment and is ideally suited to provide
encouragement as a model-user or standard setter.
Governments role will be highlighted in the next
presentation.
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Thank You!