Changing ICT Perspective for SME’s – A SWOT Analysis[/b]
Strengths[/b]: SME’s are often more innovative and nimble than their larger corporate rivals. Low switching cost and availability of short-term loans help them to sniff out the best IT deals available outpacing more leaden-footed competitors.
Weaknesses[/b]: Some SMEs who can justify owning their own hardware and software by showing the sufficient business benefits, however lack the clout to establish direct relationships with technology vendors, and instead buy goods and services through the reseller channel. This results in a drop in the expected levels of service unless they are able to forge a close relationship with the reseller and acquire basic product knowledge and get implementation assistance.
SME’s are avoiding the debilitating expense of software licensing include the use of open-source software, where firms pay maintenance and support costs but the software is free. But the fees for commercial open-source packages such as those on offer from Red Hat, Novell or Ingres, can often equal the total cost of ownership of propriety software over time. Small open-source projects especially have the reputation of being written by geeks for geeks. This is a good reason why SMEs should not trust open-source software for mission-critical applications, unless they have the expertise in-house.
In a nutshell, SME’s suffer from cashflow cycles, limited bargaining power, shrinking funds available for IT investment and a lack of internal resources all look to be daunting obstacles.
Opportunities[/b]: SMEs can explore new ways to acquire and deploy technology to gain enterprise-class capabilities without having to pay top-dollar prices. They could turn to turn to cloud computing and software-as-a-service (SaaS) as the economic malaise deepens. Both models can help smaller businesses to deliver new products and services quicker and at a lower cost. The SaaS model is gaining a lot of traction in the business world, with most large software vendors and application service providers, including HP, IBM, Microsoft and Salesforce.com, now offering business applications such as customer relationship management (CRM), databases, knowledge management and web development software as web-based utilities.
The web hosting market has seen competition among vendors for SME business increase dramatically which will increase their bargaining power. This trend is likely to be replicated in other areas, with SMEs expected to start outsourcing services to other countries in much the same way as larger enterprises do now. This move will be pushed by a number of elements including virtualization, a reduction in computer costs, and the availability of faster network connections due to expanded broadband rollouts.
Threats[/b]:
(1) Being largely dependent on exports, SME’s are easily vulnerable to currency fluctuation like rupee appreciation. Also they face competition from low-cost economies like China, Malayasia
(2) Lack of financial support is a perpetual concern because very few venture capitalists are interested in the lower segment
(3) Cost of operations on the rise because of high attrition rates, inflation, and increasing recruitment and training costs
(4) Lack of market intelligence due to limited ability to gather information regarding upcoming opportunities, new competitors and lack of partnering knowledge