- Data inequality encompasses the ability to perform analytics and pull insights from that information.
- In the pandemic, less digitally-resourced players are struggling to adapt and risk falling out of touch with their markets.
- SMEs need the ability to better understand their customers, react to insights and build new information into their business operations.
As the impact of COVID-19 continues to be felt across the world’s economies, supporting SMEs to maintain operations and employment is rightfully the focus of policymakers and industry-leading businesses. Small and medium-sized enterprises (SMEs) need to remain top of mind in the months to come to ensure the vibrancy, diversity, economic stability and creativity of all industries globally.
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However, today’s focus on the most immediate SME needs risks taking attention from longer-term issues that are also growing at a worrying pace. One concern, in particular, needs renewed interest and attention: data inequality.
Data inequality encompasses not just access to data but also the ability to perform analytics and pull insights from that information. Just as having a bank account is not full financial inclusion for SMEs if they cannot also access capital and other financial products, the act of owning data is not the same as data equality if SMEs do not have the tools and skills to use it.
The rising data economy was already challenged by significant inequalities before the pandemic. At the leading edge of today’s data economy, well-digitalized companies are shaping data into state-of-the-art virtual models across commercial life – creating retail shoppers, product prototypes, marketing campaigns and others – to optimize business outcomes and swiftly adjust to COVID-19.
But on the edges of that same economy, poorly digitalized companies – largely SMEs – are still struggling to implement the basic technology needed to grow towards more mature data use and analytics. Between the two are millions of companies developing their data capabilities at different stages and rates.
This inequality is only going to be exacerbated in the wake of COVID-19. Take, for example, the experience of two different restaurants in China: one is a data-savvy global fast food chain and the other is an SME.
The first enterprise used data and predictive data analytics to rapidly readjust its menu, delivery hours and staffing to meet quarantine conditions – and successfully protected its financials. Conversely, the local enterprise has suffered deep losses and is still relying largely on third-party local delivery apps for business as it waits for in-person demand to improve.
As the backbone of Asia’s economy, SMEs like the smaller restaurant cannot be left behind to solve for data and insights gaps themselves. SMEs infuse countries with fresh ideas, energy and innovation. Local businesses build and support communities with tailored products and services, and opportunities for employment. They must be better supported and protected.
The situation for many of these SMEs is now precarious at best and dire at worst. COVID-19 has hit the markets at a time when commerce is already hyper-customized. Local businesses that have created this experience through in-person channels suddenly need to do the same online. Businesses with existing online strategies suddenly need to scale up even faster to manage their profitability.
In this environment, less digitally-resourced players are struggling to adapt and risk falling dangerously out of touch with their markets – and the information embedded within. As the effects of COVID-19 wear on, their challenges will only compound. With fewer digital tools comes less enterprise resilience and strength. The farther these companies fall behind, the less competitive they’ll become and the more distance will open between them and players with stronger tech.
To help these SMEs, the prevailing wisdom around how to bring them into the digital economy needs to be re-examined.
For years, large technology companies have focused primarily on building access to consumers and delivering this access to SMEs through large retail, sharing economy and delivery platforms. This strategy has driven much digital transformation around the globe but has not fully prepared SMEs for the next generation of digital commerce in which they need more than just virtual storefronts. They also need the ability to better understand their customers, react to insights and build new information into their business operations.
To solve for this in Asia Pacific requires networks of private-private and private-public partnerships across the region, all committed to the following four objectives:
1) Accelerating the democratization of technology
Big technology players need to continue developing platforms where SMEs can gain skills, analyze data and leverage information for their businesses. Much in the same way web development has moved from being solely in the hands of programmers to more accessible platforms, so should today’s more sophisticated data analytics and artificial intelligence tools become widely available. The more people who can understand and use these tools, the more positive impact they can have on economies.
2) Supporting skills training
While much is already being done by policymakers and private players to provide SMEs with the digital skills they need to survive COVID-19, more is still needed. These efforts need to include all enterprise types – from micro-businesses, to NGOs, to governments – and extend beyond the pandemic. A more digitalized economy is a more robust and resilient economy, and that strength can only be built by the individuals who use the technology.
3) Streamlining trade
As SMEs begin recovering from this first wave of COVID-19, they will be looking to protect their businesses from subsequent shocks by building more agile and efficient supply chains and broadening their access to consumers. At the heart of both these economic activities is trade. To better support SMEs in their effort, more needs to be done to make this activity easier and faster, especially across borders. This can be done through the expansion of, and greater interconnectivity between, digital platforms such as Singapore’s Networked Trade Platform and others.
4) Strengthening cybersecurity
As digitalization expands, so do the associated cybersecurity risks. To protect the digital ecosystem and maintain the confidence of SMEs and people in the digital economy, all enterprises should be given access to cybersecurity tools and the knowledge they need to secure their businesses. Larger technology players should also set and encourage the highest industry standards for all players.
In short, for data inequality to not worsen during and after COVID-19, those with strong data and the associated technology capabilities should make a more concerted effort to ensure those without do not get left behind.
What is the World Economic Forum doing to manage emerging risks from COVID-19?
The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.
As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.
To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications - a companion for decision-makers, building on the Forum’s annual Global Risks Report.
Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.
This is not a matter of corporate social responsibility but one of economic necessity and opportunity. The success of all businesses, large and small, are intertwined in today’s uncertain environment. Increasing access to the technology tools and skills that SMEs need to be resilient is one of the most powerful ways to ensure enterprises not only recover from COVID-19 but go on to have an even brighter digital future.