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Digital shift shaping the future

By Subramanian Ananthapadmanabhan, VP and Head of midmarkets, SAP Indian Subcontinent

India’s midmarket segment, acknowledged to have been hardest hit during the pandemic, is investing heavily in digital transformation to reinforce its collective role as one of the major growth engines of the national economy.

Most importantly, a recent IDC InfoBrief study commissioned by SAP India shows that the midmarket overwhelmingly views the pivot to the cloud as the single most crucial factor in growth strategy for 2022 and beyond. Data shows that 74% of enterprises will move more applications to cloud, with industries like manufacturing, IT and IT-enabled services showing a greater propensity to move applications to the cloud. In addition, 46% of enterprises will adopt a hybrid cloud strategy, with agility, performance and availability being the key drivers towards adoption of hybrid cloud platforms.

There are six factors cited as the top drivers of cloud adoption in the Indian midmarket: the integration of AI and analytics; the need for greater business agility and innovation in order to deliver enhanced experiences for customers; the need to gain and consolidate a competitive edge; improving the time to market; prioritising better security; and dealing with a talent shortage.

The economic potential of India’s midmarket segment is immense. By utilizing the power of the cloud, they can actualize and increase this potential, thereby emulating the process efficiencies demonstrated by bigger players. SAP is actively enabling the midmarket on its accelerated path towards digital transformation. With our support, we hope businesses of all sizes can harness the power of data, enhance business flexibility, and respond to local market requirements. As an advisor to thousands of small and mid-sized enterprises in India, we are totally committed to creating a climate where digital resilience drives the post-pandemic recovery.

The pandemic perspective

To put this in context, India was hit particularly hard during the first wave of Covid-19 in early 2020, with the central government announcing a nationwide lockdown and prohibiting all non-essential activities. Supply chains were disrupted and enterprises which had the foresight to adopt digital technologies before the pandemic managed to stay afloat, leveraging remote operations.

During and after the first wave of the pandemic across India, enterprises rapidly embraced technology in order to weather future catastrophic disruptions. Businesses that had not prioritized technology adoption earlier began to focus on maximizing what they had in order to ensure business continuity. Those that were ahead of the technology adoption curve focused on digital resiliency, adapting to unprecedented disruptions by leveraging digital capabilities to restore business operations but also to capitalize on the changed conditions.

Now, as 2021 draws to a close, midmarket enterprises making their digital transformation journey have embraced new perspectives. Their top business priorities for 2022 and beyond are to increase customer engagement and satisfaction; increase employee engagement, productivity and skills; create new products and services using technology and data; and to secure business and data by improving security. This has also brought a sharp focus on defining crucial technology priorities: supporting work from home protocols to enable productivity without disruptions; gaining greater insights into business operations, products, and services; as well as a deeper focus on customer experience programs like loyalty programs, personalization, etc; and application upgrades, workload migration to cloud (SaaS).

An interesting trend has also emerged during the move to the cloud. While enterprises are not too keen on increasing their investments in on-premise business applications, they are bullish about investing in the cloud, cybersecurity, analytics and business intelligence, as well as productivity applications, in order to stay competitive. While midmarket enterprises aren’t unique in facing the challenges brought on by the pandemic, many of them have done so with great resilience. These enterprises made smart investments by reimagining their technology adoption early on, and are therefore able now to shift their focus from business continuity to digital resilience.

Broadly speaking, there are six key dimensions in establishing digital resilience:

Leadership and organization resilience

This involves mitigating business and digital technology weaknesses while leveraging strengths for future success. To build a resilient business, it is vital to first build a more digital-focused business, an environment in which CIOs are uniquely positioned to invest in digital technologies.

Leadership priorities in a crisis are identified as: the ability to sense and respond to internal and external environments; a clear mission to enable employee self-direction; emphasising the need for agility, where teams can quickly come together to solve problems; and prioritising innovation to quickly pivot to new opportunities. However, even though enterprises in the midmarket segment acknowledge the role of technology in building digital resiliency, technology strategy itself is not yet a part of their boardroom discussions. Also, 17% of midmarket enterprises in India have no resiliency plans in place, nor do they intend to define any.

Brand and reputation resilience

How an enterprise responds to a crisis is a measure of its planning and processes. Midmarket enterprises recognize the need to be trusted across the ecosystem and, as a first step, are looking at securing their data, endpoints and systems. Compared to 2021, a higher segment (74%) now intend to increase or retain their spend on IT security, governance and risk management in 2022. This in turn reiterates the fact that security is one of the key foundations necessary to build trust among their customers and partners.

Financial resilience

The ability to learn from the past in order to predict potential future financial threats is crucial, because financial integrity is a key part of any company's response to systemic stress. Financial resilience requires the right systems and processes to be in place to deliver timely and intelligent insights. With this in mind, only 26% of midmarket enterprises in India use sophisticated mechanisms like in-depth financial analysis of results and simulations.

The key tenets of financial resilience are recognised as: reporting, analysis, business engagement and interpretation. Reporting is largely the ability to focus on the present by understanding financial resources and immediate financial needs; analysis is the need to look to and plan for the future by identifying drivers and potential threats; business engagement is the ability to respond to potential threats by active engagement and fact-based financial strategy; while interpretation revolves around understanding the performance of complex enterprise systems and processes. To this end, 58% of enterprises have introduced scorecards, visualization and simulations to analyze their financial performance in order to make critical business decisions.

Workforce resilience

Managing the employee experience in times of extreme uncertainty involves dealing with issues such as employee engagement and productivity, retention and onboarding, skills and learning, and health and wellness. Not surprisingly, employee retention was the top people-related challenge for midmarket enterprises during the pandemic. Now, 50% of midmarket enterprises are adopting dedicated company-wide technology initiatives to better engage with their employees and enhance their overall work experience, compared with only 36% in the pre-pandemic era.

Operational resilience

This includes traditional business continuity measures and the use of agile and adaptive planning techniques to build the most effective responses to operations problems. While 58% of companies have an ERP system providing full visibility of operations across different departments; 43% still run most of their operations manually.

Because operational resilience requires digitalized or automated operations, the top priority for midmarket enterprises seeking to ensure customer retention was to have uninterrupted communication with them. As a result, the starting point of automation was customer support and service, followed by employee-related functions and back-end processes to ensure smooth operations.

Customers and ecosystems resilience

This brings into focus the entire engagement cycle – customers, suppliers and partners – and the need to develop, retain, renew, and optimize these relationships in a time of crisis.

40% of mid-market enterprises are adopting an end-to-end approach to manage the customer journey across departments based on customer behaviour and are providing personalized offerings, post-pandemic.

In conclusion

While digital transformation is a key factor in redefining the Indian midmarket, it cannot be considered as the sole catalyst of revival. In the words of Kulmeet Bawa, President and Managing Director, SAP Indian Subcontinent: “While digital transformation can accelerate growth, it is innovative business models, cloud transformations and reconnecting with customers which will determine long-term and sustainable success. The Indian midmarket segment is poised to play a significant role in the country’s quest to become a $5trillion economy. SAP is committed to co-create, empower and enable mid-market enterprises in their digital-first business and growth journey.”

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