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India’s MSMEs are the backbone of the country’s socio-economic development, contributing significantly to the GDP and employing over 40 percent of India’s workforce. And it has become more critical than ever for these entrepreneurs to stay ahead of the curve with digital transformation, led by the cloud. As per Gartner Research, the global cloud revenue is expected to reach $474 billion in 2022, from $408 billion in 2021, proving that most entrepreneurs are quickly migrating to cloud.

The panel discussion ‘Seizing the cloud opportunity: The big picture’, hosted by YourStory and powered by SAP saw stakeholders in the sector discuss the way forward when it comes to cloud and digital transformation for India’s MSMEs.

Emphasising on how digital transformation is today’s reality, Vineeta Hariharan, Chief – Externally Aided Missions, Ministry of MSME said, “The digital revolution has penetrated up to the last mile, right from the ministry to the state governments to the district to the gram panchayat to the MSMEs. The policies formulated by the government of India are all based on digital blueprint and digital platforms. Without it, no program is implemented in the country.”

Moving to the cloud is not an option anymore

Cloud is critical for MSMEs and digital-native startups which are coming of age very quickly, opined Shashwat Singh, Chief Information Officer, Imagine Marketing Services “Affordability plays a key role. When you’re looking at transforming your business operations and making yourself digitally equipped, you cannot be worried about the data centre or about security. It’s best to leave it with the experts,” he said, adding, “The scale at which the startups are growing, it is very difficult for a CIO or someone who is heading the IT arm of an organisation to estimate what size he should be factoring in. Considering this, the affordability cloud offers to start small and pay as we go plays a key role in digital transformation. Most startups are becoming cloud-native first.”

Shashwat also believes that organisations need to have the backing of hardware infrastructure, which can scale as they grow.

Overcoming challenges with the cloud

Echoing similar sentiments, Rishabh Devgan, Solution Advisor Specialist, APJ Industries and Customer Advisory, SAP India stated that the mid-market segment is the growth engine for India’s economy, with the next big corporations coming out of this segment.

But even in their digital transformation journey, the segment faces various challenges. “This is a segment that is most affected by the changing business models. It is essential to go forward in a phased manner – start with a cloud ERP at first, make a solid foundation of your business, and then invest gradually in complementing technology options,” he said.

Another challenge, according to Rishabh, is the limited awareness of cloud technology and its scope, which in turn becomes a barrier to adoption. But the pandemic has made people realise that technology is the answer to rapid innovation and business continuity. “Data security is another aspect where organisations see some challenges and resist moving to the cloud. They believe that data is prone to attacks, but the need of the hour is to look at the bigger picture. The cloud solutions that SAP has are robust and can handle workloads and the security aspect. We need to understand that the biggest companies in the world operate on the cloud,” he said.

The segment also has too many vendors and service providers, often confusing enterprises. “It is critical to have a mature digital partner early in your journey that can help your business move to the cloud. We need to see the bigger picture as to what the cloud can bring to the table. It saves a lot of money. You move to a SaaS model, pay as per the usage and this is the shift from CapEx to OpEx model. The cloud can offer rapid deployment capabilities and it is easy to manage and upgrade the IT landscape,” he said, adding that today MSMEs should watch out for agility, performance, and availability while adopting cloud services.

Shashwat added that all cloud service providers have a high availability disaster recovery (HADR) built in. So the entire problem around maintaining business continuity and therefore the construct that helps enterprises maintain it – such as high availability servers, disaster recovery, near-site, and far-site data center – is a given in the cloud. “It has become extremely affordable and you can sleep peacefully at night,” he said.

The SAP advantage

Shashwat said that they are implementing ERP through SAP S/4HANA under the RISE with SAP program. “This means the hosting part of our implementation is with SAP. AWS is our cloud partner there. Our set up is secure by design and our business users will be accessing our ERP tools. This is something as easy as having a 4G network on your phone,” he said. Rishabh stated that RISE with SAP is a great offering which operates on one commercial model. It is offered as a Business Transformation-as-a-Service which covers everything enterprises require. So it takes away a lot of hassle from the IT side and lets enterprises focus on their growth.

He also added that most companies run on a public cloud model, next is hybrid cloud which is a mix of cloud and on-premise system, and then there is multi cloud, which is a combination of public and private cloud. “There is no single answer as to which an enterprise should choose; it all depends on where they are in their digital transformation journey. The best option is to go with a single vendor who can offer end to end solutions. This removes the risk of any bottlenecks that might arise in the future,” he added.

Key trends to watch out for

Vineeta echoed similar sentiments regarding vendor management. She added that today, not just service sector MSMEs but even the manufacturing enterprises will need to have cloud solutions.

Digitising the operations of MSMEs, the government launched the Government e-Marketplace (GeM) portal through which millions of MSMEs and women entrepreneurs have benefited. Another portal is the CHAMPIONS portal, where MSMEs can share their grievances online and get them addressed immediately. The TReDS portal is also an institutional mechanism set up in order to facilitate the discounting of invoices for MSMEs from corporate buyers through multiple financiers.

Shashwat believes that one key trend that will get unlocked is that enterprises won’t need to have sequential steps such as getting the fundamentals in place first, followed by having cloud ERP, and then focusing on AI/ML and data models. “There is an immense amount of compute available and as you use it, you pay. All of this has enabled us to preemptively do things. It also helps companies grow faster,” he added.

Rishabh feels that as MSMEs are looking to scale, cloud solutions should offer scalability, agility, robustness, and data security. Another aspect is risk reduction where the vendor can take care of the IT landscape and organisations can get the value out of it and act on insights. Summing up the debate, he said, “MSMEs who stay invested in cloud offerings will most certainly get to reinvent their business early and get a competitive edge. Start small with cloud ERP and then expand rapidly.”