The country’s GDP (gross domestic product) by 2024 stands to gain between $26 to $28 billion with the digitalization of Filipino small and medium enterprises, according to the 2020 Asia Pacific SME Digital Maturity study commissioned by networking hardware maker Cisco.
Based on the results of the study, 100% of Philippine SMEs said they need digital transformation since digitally mature enterprises benefit more in terms of revenue and productivity.
Four stages of digital maturity were mapped out through the study conducted by analyst firm IDC: Digital Indifferent, Digital Observer, Digital Challenger, and Digital Native.
In the first stage, businesses are reactive to market changes and digital efforts do not exist. When companies begin to develop a strategy incorporating digital technologies and become more proactive in market responsiveness, they are considered as a Digital Observer. When the focus shifts to continuous innovation, these companies can then be considered as Digital Native.
Although there are already multiple cases of companies undertaking their own digital journeys in the country, 73% of Philippine SMBs are still stuck in the first stage or being Digital Indifferent. Despite this, the respondents are seeing the advantages of digitalization in areas concerning customer experience, service delivery, and marketing and sales.
Moving forward in the post-Covid 19 economic recovery stage, SMEs will play a critical role since they account for 99.6% of all businesses, contribute 36% to the overall GDP, and takes up 62% of the country’s total employment. Even though this sector was the hardest hit by the pandemic, leveraging technology for continued operation became its saving grace.
“As the Philippines continues to overcome the current situation, and consumer and business activity starts to pick up, digital transformation of SMEs will play a pivotal role in their recovery and contribute to the country’s overall economic growth. At Cisco, we are committed to work with SMBs to help them emerge stronger with the right digital solutions and strategy,” said Karrie Ilagan, managing director for Cisco Philippines.
For the entirety of the Asia Pacific region, Singapore, Japan, and New Zealand remain the leaders for the Digital Observer group. Korea, Hong Kong, and Malaysia lags behind mainland China, Taiwan and Thailand. Meanwhile, SMEs in Indonesia and Vietnam are also making notable progress.