What are SMEs?
Small and medium-sized enterprises are a relatively vague concept, usually defined from the two dimensions of the number of employees and the scale of income.
There are about 18 million small and medium-sized enterprises in the EU, accounting for 99% of the total number of enterprises, nearly 70% of the employment, and the output value created is about 60% of the EU's GDP. The European Union's rough definition of SMEs is:
Medium-sized enterprises (Medium-sized)
No more than 250 employees and no more than €50,000,000 in revenue.
Small business (Small)
No more than 50 employees and no more than €10,000,000 in revenue.
Small and Micro Enterprises (Micro)
Have no more than 10 employees and an income not exceeding €2,000,000.
In the United States, companies with less than 500 employees are usually called Small and Midsize Businesses. There are about 30 million SMEs in the United States, accounting for 99% of the total number of enterprises, creating 50% of jobs, and creating more than 30% of export value .
In recent years, SBA (Small Business Administration) has updated the SME classification standard in order to promote better support for SME. Based on NAICS (North American Industry Classification System), SBA divides 20 industry categories into 89 subcategories and 1036 subdivision industries.
SBA formulates small business standards mainly based on three indicators: operating income, assets and number of employees. Among the above 1,036 industries, 526 industries use operating income as the criterion, 505 use the number of employees as the criterion, and only 5 industries in the financial and insurance industry use assets as the criterion (the average value of the four quarters of the previous year).
Only one criterion is used for each industry. Taking the manufacturing industry as an example, it includes 360 sub-industries, all of which are classified as small enterprises by the number of employees. Different sub-industries adopt different judgment levels: if a malt manufacturing enterprise has less than 500 employees, it is considered a small enterprise; Small enterprises with more than 750 employees; shoe manufacturing enterprises, small enterprises with less than 1,000 employees; paper-making enterprises, small enterprises with less than 1,250 employees; oil refining enterprises, small enterprises with less than 1,500 employees.
The situation in Canada is similar to that of the United States. In terms of employees, small businesses with less than 100 employees accounted for 97.9% of the total number of companies, and medium-sized companies with 100-499 employees accounted for 1.9% of the total. According to the statistics of Statistics Canada, in the past ten years, the proportion of new small and medium-sized enterprises has been around 1%-2% every year, that is, more than 100,000 new businesses are created every year, and about 0.7% of the businesses are closed every year. about.
China divides small and medium-sized enterprises into three types: medium-sized, small-sized, and micro-sized. The specific standards are formulated according to the indicators of employees, operating income, total assets, etc. According to the "Small and Medium-sized Enterprise Classification Standard Regulations (Revised Consultation Draft)" formulated by the Ministry of Industry and Information Technology:
Industrial enterprises (including: mining, manufacturing, production and supply of electricity, heat, gas and water), transportation, storage and postal services
Small, medium and micro enterprises with less than 1,000 employees and an operating income of less than 2 billion yuan. Among them: micro-enterprises with less than 20 employees and operating income of less than 20 million yuan; small enterprises with less than 300 employees and operating income of less than 200 million yuan; less than 1,000 employees and operating income of less than 2 billion yuan. medium-sized business.
construction industry
Small, medium and micro enterprises with operating income below 800 million yuan and total assets below 1 billion yuan. Among them: micro enterprises with operating income of less than 8 million yuan and total assets of less than 10 million yuan; small enterprises with operating income of less than 80 million yuan and total assets of less than 100 million yuan; operating income of less than 800 million yuan and total assets of 1 billion yuan The following are medium-sized enterprises.
According to statistics from relevant departments of the State Council, SMEs contribute more than 50% of my country's tax revenue, more than 60% of GDP, more than 70% of technological innovation, more than 80% of urban labor employment, and more than 90% of the number of enterprises.
Overall, in most economies, SMEs are a large and dynamic group.
SMEs in digital transformation
main challenges
For a long time, constrained by factors such as small scale, flexible management, changing business, lack of talents, and less investment, little consideration has been given to overall digital planning and enterprise architecture design. Which refers to where" way. With the development of the global digital economy and the impact of the epidemic, the willingness and investment of SMEs in digital transformation have changed a lot. Therefore, the core challenges of SMEs in the digitalization process have also emerged. There are mainly these aspects:
1 ► Lack of proper architecture and best practices
Large enterprises already have many reference models and practical experience in digital architecture design. Generally speaking, there are two schools of architecture design. One is the traditional best practice, that is planning school guided by classic enterprise architecture (EA) theories such as TOGAF and DoDAF. Continuous operation; the second is the agile development school from the Internet industry , focusing on the "business-centric agile delivery model", focusing on creating MVP (Minimum Viable Product) rather than pursuing perfection, focusing on data applications and functions fast iterations. Generally, small and medium-sized enterprises are mostly engaged in physical businesses such as manufacturing, trade, and services, so they have both fixed processes and flexibility. The so-called fixed process mainly refers to the internal financial, production, supply chain and other processes of the enterprise. The so-called flexible refers to the speed and ability to respond to market changes. In this case, if the EA methodology is adopted, it feels a bit like a cannonball attacking mosquitoes, and the rhythm of opening up the posture is not suitable for the development speed of most small and medium-sized enterprises. If the strategy of agile development is adopted, after the overall sorting out, there are actually not many places that need agile, not to mention the cost of building or hiring an agile development team will not be too low.
2 ► Lack of suitable products and tools
Digital transformation, on the premise of not doing major surgery on the business itself, is generally based on specific application software, supplemented by necessary hardware facilities, and accompanied by management changes and business model improvements. Therefore, application software is the key to digital transformation. The core of the business is the so-called software-defined business.
Due to the complexity of the design of large-scale packaged software, the application cost is high and there are certain requirements for business standardization. Therefore, only a small number of small and medium-sized enterprises have better conditions and capabilities for using large-scale packaged software. Applications that use a large number of vertical functions can easily create many isolated islands of information. Small and medium-sized enterprises can't even afford the platform-based self-development approach. Some tool software is similar to panacea. Technically, it seems that it can be used in any scenario, but it lacks the support of business content, and there are many problems in actual application. Therefore, most small and medium-sized enterprises are in a barely usable state in terms of information systems. In this case, small and medium-sized enterprises cannot talk about the overall digital transformation.
3 ►Lack of suitable talents and organizations
Digital transformation requires both an understanding of digital technology and a deep grasp of business skills. Such talents are rare even in large companies, so they become "theoretically possible" in small and medium-sized enterprises.
4 ►Input and output are not necessarily balanced
Expensive large-scale software discourages small and medium-sized enterprises, but cheap or free software puts forward relatively high requirements for the application skills of small and medium-sized enterprises. Therefore, it is a huge challenge for most small and medium-sized enterprises to build digital talents with reasonable investment and choose suitable products.
Inossem's practice and research
Inossem has entered the North American SME market with ProcessGo since 2019, aiming to help customers realize process automation. It has done a lot of research on tens of thousands of SMEs and has provided high-efficiency solutions for thousands of them. operating system.
Most of the enterprises we serve are small businesses (Small Business), with a variety of business forms. Generally speaking, they are mainly in the two major industries of service and circulation , and the average business cycle of enterprises is more than 10 years.
We summarize the basic characteristics of these enterprises:
The bosses have mastered their core competencies and built competitive advantages, or have a fixed customer base, or have a specific license, or have accumulated rich resources and excellent reputation in the long-term operation, or can provide specific services for the community And products, or the ability to create specific value on the Internet, etc., there is no too complicated process of research and development, production, sales and so on.
Therefore, such enterprises have specific requirements for digitalization in the process of stable operation and excellence. It can also be said that this type of enterprises most need digital transformation. Through digital technology, bosses can be freed from tedious daily operations and focus more on core business operations and improvement of core skills. In general, the digital transformation of SMEs can be divided into three levels:
1 ►Fundamental _
From a basic perspective, small and medium-sized enterprises need core functions such as accounting processing, salary calculation, order transaction, inventory management, tax calculation and declaration to support background operations and business operations, while meeting the government's basic compliance requirements for enterprises. To do a good job in basic digitalization, the system must have out-of-the-box features. Create an account, enter basic information, and start using it immediately. The traditional method of giving enterprises a tool to perform a large number of complex settings and verifications based on business characteristics is basically unworkable.
2 ►Process automation (Automation)
Basic digitalization usually brings many operational tasks to enterprises, such as data entry, bill verification, compliance inspection, data upload and download of third-party systems, etc. This is a big obstacle for enterprises to apply basic digitalization. Therefore, process automation has become a key capability, starting from bill recognition to automatically complete all operations, to achieve automated integration with public systems such as bank taxation, to interconnect with necessary Internet platforms, and even to use IoT technology to connect with related equipment and The material realizes the automatic acquisition of data and the automatic sending of instructions , etc.
3 ►Operation intelligence (Intelligence)
In order not to make operational intelligence become a "vase", we must work hard on practicality, rather than pursuing the advancement of technology. Automatically track the execution progress of orders to improve service levels, monitor inventory levels to control business risks, analyze sales data to improve products and services, simulate tax rules to achieve reasonable tax avoidance, intelligent business portraits to obtain bank credit, etc., such intelligence It can help business owners to better apply data to manage and operate the business.
For the digital transformation of SMEs
ProcessGo Plus product family
In the past few years of deeply cultivating the North American SME market, we have done a lot of communication and practice with our direct customers and institutions that provide various professional services around these customers, such as banks, offices, taxation, and Internet platforms. Based on automation technology, a scalable cloud-native architecture that can be flexibly deployed has been developed, and a complete set of functions has been formed.
As a module of basic data management and compliance control, KYC/AML can continuously improve the data of regulatory agencies, help small and medium-sized enterprises to achieve compliance in the business process, and save money when conducting transactions with public departments such as banks and taxation A lot of work.
Accounting and Payroll are basic business operation modules, based on data such as billing vouchers, working hours, employee information, etc., to automatically complete the recording of basic business and the production of standard reports. The design goal of Accounting and Payroll is that enterprises can complete related business operations without hiring financial and HR staff, rather than providing a system function for the financial department and HR department of the enterprise.
Supply Chain is a core business module designed after highly abstracting the business of various types of enterprises. Whether the enterprise is selling or purchasing, whether it is tangible goods or intangible services, it can be managed in this module.
Omni X is a module that realizes the connection between enterprises and various partners in the business value chain, such as: connection with e-commerce platforms such as Shopify, Amazon, Temu, Wayfair, Bestbuy, connection with offline sales terminals such as Costco, Walmart, etc. Connection with various logistics service organizations such as UPS, FedEx, USPS, Canada POST, etc.
Omni X not only realizes data docking, but also realizes a business-driven cross-platform operation mode.
The Hyper-Automation module is the soul of the whole system. It integrates the two technical components of BPMN and process robots to realize the automation of the internal operation process and external collaboration process of the enterprise.
Most customers will subscribe to our services from Accounting (Bookkeeping) or Payroll. Therefore, the combination of Accounting and Payroll is called Essential Operation. Some of the larger and more complex businesses then began to subscribe to services such as Supply Chain and Omni X. We call this combination Growth Business . In our cooperation with these customers, we have conducted more in-depth business research, and will soon launch Engagement Service (INOSSEM E) , aiming to provide customers with more convenient and rich services, such as: providing data services for customers and banks, joint Banks provide online payment services, etc.
Generally speaking, in the competition with giants such as Intuit, Sage, and Xero in the North American market, we continue to innovate the concept of digital transformation for small and medium-sized enterprises, and continue to iterate product research and development. More and more customers have gained more benefits from our products and services.
From Fundamental to Automation to Intelligence, our design concept of integrating technology and business, system and operation can be used out of the box and unattended operation, which is profoundly changing the market of small and medium-sized enterprises in North America, and then we will also expand from North America to Promote globally. For more exciting content, please search Inossem supply chain.