Technology for MSMEs: The adoption of software as a service among micro enterprises assumes significance as more than 99 per cent units in India’s MSME sector are micro.
Technology for MSMEs: While Covid pushed small businesses towards the adoption of cloud or software as a service (SaaS), most of the enterprises have clung to accounting or billing software in the name of SaaS usage. The digital transformation of small businesses, therefore, requires adoption that goes beyond digitising accounting to analysing and using relevant data to positively influence business operations and processes and help MSMEs become more competitive globally.
No wonder the digital spend by MSMEs will hence, add to the booming Indian SaaS market which according to a report by the financial services company Motilal Oswal is expected to grow from $2.6 billion in 2020 to $18 billion in 2025 and around $60 billion in 2030. So, along with the right digital tools, what should the SaaS ecosystem must look at to enhance cloud adoption among MSMEs? A panel of experts at the second edition of the ScaleUp Summit organised by Financial Express Digital last month tried to address the concern.
While SaaS helps businesses get immediate access to various solutions online to serve different business purposes instead of investing large amount upfront in building sophisticated custom solutions or buying enterprise software licenses on a per-seat basis, the key question is around the lack of affordability, particularly among micro enterprises. The adoption of SaaS in the micro community assumes importance as over 99 per cent of India’s MSME sector comprises micro units. This also means looking at micro enterprises separately from small or medium enterprises from a cost perspective.
“When we look at MSMEs and their relationship with SaaS, we need to keep the micro, small and medium separate because micro is a different breed altogether. Their expectations are too low in terms of price and too high in terms of utility. It is not about intent, but their pockets are not very deep to adopt SaaS,” said Amit Kumar, Founder and CEO of the advisory platform for small businesses MSMEx.
For instance, a micro enterprise with an average turnover of Rs 2-3 crore and a net profit of Rs 2-3 lakh, which is equivalent to the salary of a professional in the corporate world, certainly won’t be able to subscribe to a solution which is even of a few thousand rupees, explained Kumar.