The small and medium enterprises (SME) sector is the backbone of the Indian economy as it employs around 40 per cent of the Indian workforce. With the sector growing at a rate of 8 per cent per year, India has the largest number of SMEs in the world — at 48 million —, second only to China. Ironically, the contribution of this workforce is a huge mismatch of numbers as it contributes approximately only 17 per cent to the GDP.
However, the sector has the potential to contribute to overall economic growth, modernisation of infrastructure and employment generation.
The latest BCG research says that if more SMEs adopted the latest IT tools in India they could boost revenues by $56 billion and create more than 1.1 million jobs in the country. Cloud computing is a technology which has changed the way IT solutions are being delivered. According to Zinnov, a leading management consulting company, the cloud computing market in India is expected to reach $4.5 billion by 2015 and the SME sector is likely to drive growth.
Here are some myths and facts associated with IT solutions.
It’s simple, cost-effective
The myth is that IT investments require purchase of hardware, software, modern networks and personnel with necessary skill sets to operate. Actually, it is simple and cost-effective for SMEs to run IT solutions by having an account with a cloud computing service provider. Cloud solutions help SMEs implement technology quicker so that they gain competitive advantage.
Costs cut down
Cloud computing solutions are considered expensive and beyond anyone’s comprehension. But, actually cloud computing cuts down the cost of investment in hardware and software as these services are provided by the service provider on pay per use basis or subscription basis, which is affordable by cash-strained SMEs. Cloud computing drastically brings down the operating cost and total cost of ownership by reducing the risk of operation.
Data stored in the cloud is not considered to be secure, trustworthy and reliable. But, the cloud ensures a well-functioning, developed and secure network enabled by the service provider requiring high-speed Internet connectivity.
Maintained by service provider
Data maintenance and software upgrades are an expensive affair. Data is maintained by the service provider and the client need not worry about the change in version of software and installation charges of the software.
The need of SMEs is limited but they have to spend on entire software suite. In fact, there are custom cloud-based solutions for different verticals under SMEs.
The myth is that huge volumes of data are present in the old systems and conversion is an issue. Data in the legacy systems can be easily incorporated into cloud solutions without any break in business activities.
Cloud computing helps in collaborative work among various team members in online mode. This enables SMEs get access to new markets with better branding and prompt delivery.
(The author is Faculty, Lean Operations & Systems, Christ University Institute of Management)