THE DIGITIZATION of small and medium businesses (SMBs) could add up to P1.36 trillion to gross domestic product (GDP) by 2024, according to a study by multinational technology company Cisco Systems, Inc.
Cisco identified four stages of digital maturity in its 2020 study, which covered 1,424 SMBs from 14 countries, including the Philippines, in the Asia Pacific: digital indifferent (stage 1), digital observer (stage 2), digital challenger (stage 3), and digital native (stage 4).
Cisco said the 73% of the Philippine SMBs surveyed are currently in the digital indifferent stage or stage 1 while 26% are digital observers (stage 2).
It added that 50% aspire to be digital challengers (stage 3) by 2024 while 20% said they aim to be digital natives (stage 4). Also by 2024, only 10% of the SMBs expect to be in stage 1 and 30% in stage 2.
Cisco estimated that by 2024, SMBs could contribute up to $28 billion to Philippine GDP because digitally mature businesses often enjoy “higher revenue and productivity growth,” Cisco Managing Director for the Philippines Karrie C. Ilagan said at a virtual roundtable discussion Thursday.
Cisco found that SMBs in the third stage of digital maturity averaged 12% revenue and productivity growth while those in the fourth stage averaged 16% for revenue growth and 14% for productivity growth, against 8% growth in both revenue and productivity among those in the first and second stages.
Artificial Intelligence or analytics (18%) is the top technology investment priority for SMBs in the Philippines, Ms. Ilagan noted, followed by the cloud (15%) and investment in information technology infrastructure software (11%).
Raz Mohamad, Cisco director for small business and commercial for ASEAN, said: “For SMBs to fully leverage technology, all stakeholders need to play a role. The government is already taking the lead and has introduced a range of measures to help Philippine SMBs on their digital journey.”
“At Cisco, we are proud to be playing our part. On the technology front, we have launched a series of curated products and solutions specifically for the SMB sector under the Cisco Designed portfolio and introduced 0% financing for SMB customers in the country. From a talent perspective, the Cisco Networking Academy has trained over 428,000 students in the Philippines in various ICT skills for over two decades,” he added. — Arjay L. Balinbin