The power of the internet

Updated: Feb 11 2013, 09:01am hrs
The growth of the internet has opened up a vast arena for small to medium-sized enterprises to sell their products and services to a global audience than they would have been able to afford to reach using the traditional methods

Small and medium enterprises (SMEs) worldwide, and particularly in India, face a number of problemshigh cost of growing sales into new geographies and customer segments, weak record-keeping of sales and support activities and inadequate creation and maintenance of electronic marketing materials.

While the internet holds out great promise to address these problems to some extent, most isolated efforts simply end up in failure. For example, a businessman may decide to take advantage of the internet by soliciting more global customers using email. Within a few days, his email account will likely be blacklisted by spam control sites on the internet. Similarly, efforts to organise sales records by keeping them in an internet based cloud folder simply invite a myriad of security risks and data theft possibilities which the average businessman cannot resolve. Finally, attempts to organise marketing materials on a common file share in the organisation inevitably run into disorder caused by lack of integration with databases of record. How many files must be changed if the businesss phone number changes

Despite all these roadblocks, interest in using the internet among SMEs in India remains high. According to the Google Survey, 2010, SMEs using internet for demand generation is about 57% of the total registered numbers. With the total numbers of registered SMEs at 15.5 lakh, the conservative estimate of internet-enriched SMEs is at an astounding 7,00,000. The most commonly accepted estimate of the unorganised SME market numbers is 2.5 crore, and with this added size, it is a moot point on the incisive and effective role the Web and e-marketplaces play in shaping potential businesses in India.

Further, business to business (B2B) e-commerce remains a huge driver of economic activity and growth. According to the report by Eprobe Research, B2B e-commerce market size (in terms of transaction volume) as on year-end 2008 was around $77.9 billion. B2B e-commerce market has been increasing at a rapid pace, reaching about $89 billion by December 2009, at a CAGR of 8.77%.

To plug this gap between huge potential and somewhat weak reality, the ubiquity of internet technologies needs to be complemented with some key elements:

* Businesses need to be able to find each other as buyers and sellers

* Communicate securely in context of commercial transactions

* Keep records of sales and support related business communications

* Create and maintain electronic marketing materials and supporting documents

These elements come together in a vision that can be best described as a business search engine, that not only provides a vast searchable database of businesses by keyword, in the usual sense of full text search, but in a supply chain driven manner. Thus, someone searching to sell buttons, should get results that include garment makers (as potential buyers of buttons). The supply chain maintenance need also be user driven, thus crowd-sourced.

The business search engine should not stop at helping sellers find buyers (or vice versa). It should also facilitate structured buy/sell communications between those searching, and those found. A critical success factor for these communications is compliance with international spam control laws such that individual parties are never at risk of violation or penalty.

As a deeper enabler of sales and support activities, the business search engine must not only enable communications between counter parties, but also archive them in a secure, access controlled manner. A neutral, privacy protected archival of communications history helps make business relationships life-long and efficient.

Finally, the above communication facilities should be deeply integrated with a document library capable of providing data-bound templates for business communications which pick up core data as per fields placed in them, and need not be edited everytime (for example) the legal address or phone number of the business changes. Thus, sales people may reliably send a standard, up-to-date business introduction letter in the first interaction, and an equally polished follow-up letter in the next; likewise quotations, estimates, thank-you notes, etc.

According to a paper published by the Associated Chambers of Commerce and Industry of India (Assocham), SME sector is growing at a rate of 35% per annum and it will increase to 40% in the coming years. As per the report, 60% of SMEs are moving towards the technology based infrastructure to increase their productivity with the reduction in their input cost. It is also helpful to bear in mind that there are close to eight million small and medium size businesses (SMEs) in the country, of which about 1.5 million are addressable by IT.

With SMEs contributing for almost 50% of the GDP of the nation and accounting for around 40% of the countrys industrial output; and 35% of direct exports of small enterprises, the potential play of IT-enablement at this critical fiscal inflexion point of history is indeed nothing less than monumental.

As SMEs move to the centre stage of economic growth, they have the potential to become bellwethers for the strength of the economy. It is through carrying on innovation, meeting the headwinds of economic and environmental change with resolute business acumen that India should once again emerge unscathed from these downturns. Using cost-effective, globally replicable, safe and secure tools, small and medium enterprises can adapt to challenges and come out winning.

The writer is the CEO of Saralweb, a business search engine