By Subramanian Ananthapadmanabhan, Senior Vice President and Head of Midmarket Business, 51����Asia Pacific Japan (APJ)

The pandemic and current geopolitical landscape are creating considerable disruptions across the global supply chain ‒ and for India, its business community could soon face rising demand for components and materials such as chemicals, electronics, semiconductors, and batteries.

While large enterprises have the operational and financial flexibility to cater to this surge, there aren’t enough of them in the Indian corporate sector to optimize its response. This, in turn, opens the door to a remarkable opportunity for the nation’s tens of thousands of smaller businesses to step into – not only to cater to the domestic market but also central to fulfilling India’s national ambitions of becoming a globally competitive player.

Fostering growth in the right places

Today, few firms populate the Indian economy’s most vital and dynamic segment ‒ ““. The nation currently has 600 large Midmarket enterprises with over $500 million in yearly revenue, and thousands more small businesses generating under $50 million a year. And in between is a gap in competitors (the missing middle), challenging the economy’s ability to scale up and maintain a trajectory of ongoing growth quickly.

To fill the vacuum of the missing middle, there is an immense opportunity for thousands of companies to rise from being small to midsize with the intention to grow into large Midmarket enterprises over time. Then, additional firms can move up as well, creating a dynamic marketplace that fosters innovation and adapts to change quickly to fuel meaningful financial progress.

To make that leap, businesses need to adopt a digital strategy. The , reported that 68% of midsize companies in India intend to retain or increase IT spending between 5% and 10%, prioritizing employee and customer engagement, security, and modernization to improve processes.*

Raising the game with Digital Innovation

The IDC finding makes it clear that midsize companies across India understand that technology is vital to their business continuity and resilience. With the right technology investments, they can increase operational agility, improve innovation, and accelerate time to market while overcoming significant challenges in talent shortages and cybersecurity. More importantly, cognitive capabilities, such as artificial intelligence (AI) and predictive analytics, can be embedded into applications to deliver enhanced employee and customer experiences.

Take, for example, . The leading innovator in automotive lighting replaced its paper-based HR processes with integrated, to make work more personal, satisfying, and empowering for its 9,000 employees. The digital transformation effort delivered a secure and stable system that eliminated information silos locked in e-mails, spreadsheets, and disconnected systems and established a single, self-service destination for employees to access HR, payroll, and learning resources.

In addition, employees, regardless of role, can gain new insights to expand on Lumax’s legacy of innovation. As a result, organizational compliance efforts, including payroll and purchase taxation, are more streamlined. More impressively, Lumax’s application of AI and industrial psychology to measure employee talent and make predictive talent decisions is helping the organization run more intelligently and improve the overall employee experience.

While technology adoption can help small and midsize or midmarket businesses gain a competitive advantage similar to that of Lumax, they must overcome challenges such as cybersecurity, the availability of digitally fluent talent, and in some cases, the cost of adopting and integrating new technology into the existing infrastructure. Even though freeing up capital is a substantial hurdle for many firms, digital transformation is no doubt a priority for getting operations back to normal.

According to IDC, nearly three-quarters of surveyed Indian midsize companies have planned or are planning to move to the cloud. The key to overcoming the cash crunch is migrating to a hybrid cloud environment. Nearly half of the respondents favored the agility, performance, and availability of matching the targeted workload to a public or private cloud. In addition, 11% preferred the flexibility to interoperate applications across different clouds as needed.*

Eliminating the missing middle

India has an ambitious goal to emerge as the hub that satisfies the world’s needs. This requires the nation’s companies to take immediate action and digitally transform themselves to take their place among midsize and larger competitors ‒ and eliminate “the missing middle” from India’s business vocabulary.

In 2022, 51����dedicated its energy and resources toward empowering small and medium companies throughout India to realize their full potential on the world stage with the initiative. In a journey spanning over 7,000 kilometers and 13 cities, 51����engaged over 10,000 businesses to see firsthand how cloud technologies can help prepare for a future of high-growth potential.

After this journey, starts the journey of the next million. The Transformation Express now premieres in the metaverse. Learn how to develop the right business models, gain efficiencies, fund innovations, and transform mission-critical systems with .

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What started initially as the ‘’ in FY20 with an intent to help businesses upskill digitally and become globally competitive, quickly brought together 50,000 members on Growth Matters Forum, the Midmarket Community in India. The value creation chatter in the community brought to life the possibility of taking 51����to the corners of India that were yet to reap the benefit of technology and innovation. Further, the commissioned in Q3’21 revealed that 74% of businesses intended to move to the Cloud in FY22. From this game-changing paradigm of the partnership was born the Transformation Express in Q2’22 to drive sustainable collaboration with our customers, prospects, and partners.

The mobile express touched 7,500 businesses in 13 cities over 45 days and has revealed the real pulse of the market. And we believe this holds the potential to alter the value conversation we have with our consumers. While some expressed the need to understand data, many customers and prospects were interested in managing talent, and many more wanted to grasp the dynamic nature of evolving business models. However, most conversations that surfaced focused on the front office and the benefits of building a customer-first culture.

Indraneel Chitale, an S/4 HANA customer and the keynote speaker at the Mumbai Premier Night of the journey, remarked they wish their consumer brand to be noticed and be present in the minds and emotions of their customers all the time. And, the sale was nothing but a by-product for them. Separately, the COO of a major cement enterprise remarked about the need to leverage data to predict customer behaviour.

The MD of an E100M Electronics company wanted the edge-to-core capability of IoT and the use of real-time data from the shop floor to reduce process inefficiencies and downtimes. The CEO of a small business in the recycling industry in a Tier 2 city aimed to grow 2x in the next three years and wanted best practices in HR processes to hire and retain talent. True everywhere we go, the in Q1’22 revealed that more than 50% of SMEs are finding it difficult to find staff replacements and qualified candidates, and often realise a mismatch of skills for available roles. In addition, more than three-quarters (77%) of SMEs said that workforce volatility had impacted their ability to innovate and drive their digital transformation plans.

With hundreds of such stories, feedback, and enquiries, the Transformation Express has laid bare the essentials that organisations are stoked about today. Here are four broad themes:

1. The evolving and dynamic customer presents the most potent challenge. The product is only a vehicle to disrupt. However, the starting point is customer analytics.
2. While innovation is central to existence, it requires more than creativity and ideation. Instead, those need to be coupled with process-level innovations that focus on execution and speed, to secure quicker wins and better time-to-market.
3. is real. Equally so is the reality of Great education. Increasingly, there is a need to define a unique Employee Value Proposition (EVP) that can attract and retain talent and keep transformation tracks intact.
4. Finally, mature organisations are approaching transformation with a digital acceleration mindset – emphasising the pursuit of smaller, realistic goals and continuity of the process, while steadily advancing towards longer-term, sustainable transformation.

These insights, right from the heartland of India, motivate us to recommit ourselves to the transformation efforts of our customers and prospects. So, with the Cloud-on-wheels ending the road trip, we embark on its digital twin in the metaverse for immersive virtual experiences to continue the partnership – beyond India’s shores – through our digital avatars.

As they say, a journey of a million miles begins with a single step, and while we have physically traversed over 4,000, here’s raising a cheer for the next million in the metaverse!

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Unlike digitally native start-ups, MSMEs have different practices and processes and generally show a lack of technology adoption. MSMEs aren’t as agile in their responses to disruption compared to their digital peers and lack the right ecosystem to address the challenges they face. But with , the central theme of India’s economic recovery, this mindset may just change.

Setting the Stage for High-growth Potential

MSMEs are beginning to realize the criticality of digital transformation when surviving and adapting to changing market conditions. According to��,* midsize companies are strengthening their competitive position with rapid digitalization and business formalization. More than a quarter are moving forward with plans to deploy business applications with artificial intelligence to surface insights, accelerate decision-making, and operate with greater resiliency and agility.

For MSMEs, technology adoption enables greater agility and faster decision-making. While developing the right ecosystem of IT providers and service partners, they can bridge the information gap to improve the transparency of their supply chains and financial performance and seize opportunities once reserved for startups. Meanwhile, larger corporations can onboard Indian MSMEs more confidently by fully understanding their value, operational performance, and compliance standards.

The good news is that this momentum toward revenue growth and global expansion is within reach for every MSME. However, there is one caveat: their operations must keep up and adapt to a marketplace that evolves every day.

Growth begins with Fast-paced Operational Change

The principal challenge of Indian MSMEs is boosting the production of smaller batches for a marketplace that values individualization and contributing to a more extensive supply network that expects consistent regulatory compliance and credible sustainability. With the steady stream of new product configurations, government mandates, and green initiatives, the traditional concept of reskilling and upskilling the workforce is not enough to pivot operations fast enough to address every nuanced update.

Instead, MSMEs need to harness the power of their data to make in-the-moment shifts in their entire operation, such as scaling up or down inventory, redirecting critical supplies, and addressing customer expectations. But more importantly, they need an interconnected system built to manage all these business elements together with data and intelligent technologies – such as artificial intelligence – to drive the best outcomes.

Take, for example,��. The business recently pivoted its business model from just selling mattresses to becoming an end-to-end home furnishing brand and retailer, sparking a rapid expansion of its inventory and manufacturing capabilities. As a result, the midsize business experienced over 200% revenue growth during the pandemic. However, its supply network was challenged to scale fast enough because its 20 manufacturers and warehouses used their own set of business systems.

Although the pandemic hit Indian businesses hard, Wakefit continued its growth trajectory by improving its productivity with increased scalability and visibility. The company brought its growing network of assets, plants, warehouses, and innovations under a��. It also eliminated long-term reliance on multiple stand-alone systems that not only impacted employee productivity but led to compromised accuracy in critical areas such as financial reporting.

With the support of a local partner throughout this digital initiative, Wakefit is now on a connected cycle of extracting insights. As a result, all departments, manufacturing locations, and warehouses can access the same set of advanced technologies and real-time analytics to acquire information on any device, foster high scalability, adjust to changing demand, and reduce development costs. Best of all, the company achieved concrete outcomes and improvements within only four months of the initial deployment.

Preparing for a future of game-changing growth

The current economic recovery is unquestionably affected by price pressures, labour shortages, supply chain disruptions, and inflationary risks. But Indian MSMEs can still keep up – as long as they have the right mindset and technology backing them.

The key is to think like a startup, pivoting operations in real-time to take on opportunities and mitigate risks as they emerge. With a digital transformation journey that follows their timeline and pace, companies can navigate around today’s and tomorrow’s challenges and fulfil their customers’ changing needs – signaling the performance of a prosperous, productive, and growing business.

Find out how your business can pivot with the resilience and agility of a startup. Check out and share the IDC paper, “,” sponsored by SAP, for additional insights on the road ahead.

*, an IDC Info Snapshot, sponsored by SAP��

May 2021��|��Doc. #US47674721

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With approximately����currently contributing to approximately����towards India’s GDP through national and international trade, this robust growth is welcome news after last year’s contraction of 24.4%. However, this level of success cannot last forever.

MSMEs must capitalise on today’s red-hot economy to rebuild their operations for sustained resiliency like any other company. But equally important, according to��, is their ability to anticipate risks and initiate change while avoiding adverse consequences along the way.

Finding the Way to Business Success

One of the biggest challenges facing MSMEs is increasing production capacity or expanding market reach to satisfy worldwide demand. But investing more money in existing facilities and building new ones is not enough. Companies should also plan their future digital strategies – whether gradually migrating their existing IT landscape to the cloud or immediately adopting new forms of digitalisation.

For organisations that have never fully embraced technology, this moment is a critical differentiator as they enter the national and world stages.

A�� already recognise the importance of an intelligent, data-driven platform to enable speed, innovation, and increased efficiency in every aspect of the midsize businesses.

For example,����quickly shifted from one-on-one, face-to-face meetings with customers, partners, and other stakeholders by using collaboration and self-service tools that help ensure continuous communication and order-taking in various languages.��, on the other hand, accelerated its digital adoption plans to make daily work more efficient by automating simple activities, such as transferring money. And��, which was already underway in its digital transformation before the pandemic, maintained 24×7 continuity and growth.

While such success stories can be exciting, this is not where the impact of digitalisation ends.����revealed that 28% of surveyed midsize companies plan to deploy artificial intelligence (AI) within their business applications to automate processes.

Such����is important for MSMEs when you consider half of them lost revenue in 2020. By transforming operations with the cloud, AI, and other intelligent technology, companies decrease their chances of experiencing further loss by as much as 10%.

Building Agility with Experience and Guidance

��helps MSMEs optimize the advantages of the cloud to drive business agility. For example, our����and����programme empower Indian MSMEs to nurture self-actualised professional and personal success. Organisations can develop business agility by observing and learning from businesses that share their challenges, demonstrating new ideas, and proving new possibilities. Over time, they gain a level of resilience that enables them to proactively fend off risks and disruption better than their competition.

Ready to renew your sense of resilience? Read the IDC paper, “,” sponsored by SAP.

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