Tech SMEs need to go niche as industry bifurcates


25 January 2016
Dr Tan Guan Hong of I2R

The ICT business is splitting into two main groups with big global players dominating the infrastructure layer and local companies playing in the fragmented application services layer. With this bifurcation, the way forward for Singapore’s tech SMEs would be to carve out their own niche, especially in areas related to IOT and the country’s Smart Nation initiatives.

Technology-based SMEs make up about 7 per cent of the estimated 183,400 SMEs in Singapore. Speaking at the opening of ITEX Asia 2016, Dr Tan Guan Hong, Director with the Institute of Infocomm Research, said IOT and Smart Nation present these companies with many opportunities for business growth.

To position themselves for these opportunities, tech SMEs have to be mindful of emerging trends and how they are re-shaping the business and technology landscape. And one of the big ones would be the social trends that are changing the face of their employees and customers.

“This is the generation of iPhones and iPads,” said Dr Tan. “Your next generation of customers and workers will be coming from this space. They will be very ‘I’-centric, so the way you manage your staff, manage your customers, will have to change.”

Decision-making processes are increasingly being driven by individuals. He cited the example of tourists who used to travel in structured groups with pre-planned activities. The new tourists, however, are more unstructured and tend to “self-plan” their activities.

This has parallels in the workplace, where staff will resist being herded together. “The mindset is very different. If they find the work mundane, they don’t stay long in the job.”

At the same time, employers taking in fresh graduates or school leavers have to deal with the paradox of the education system. “As our system for educating people gets more efficient, they become better educated but lesser skilled. This is the problem we face when we recruit young people to join the work force. We educate them in a structured way but the world is getting unstructured.”

Another big development is the move from desktop to mobile and cloud. “Look at the kids,” said Dr Tan. “Some grow up never having seen a desktop PC in their life. They grow up with the mobile phone. The computer will be the mobile phone when that generation grows up to become your customer, your employee.”

Mobility, coupled with the cloud, will also transform the applications landscape. “The minute you shift to the cloud, you share data. It becomes easier to transport data from one server to another.”

This will lead to a growth in diverse needs and the fragmentation of the applications landscape. Huge, monolithic applications will become a thing of the past, said Dr Tan. No IT company in its right mind would want to create another Microsoft Office any more.

And indeed, big global companies like Microsoft are moving their offerings to the infrastructure layer. He cited the example of Office 365, the cloud-based version of Office. “Office was an application, but they are now making it available as infrastructure rather than a tool.”

So where is the money in ICT?

Dr Tan urged tech SMEs to look to IOT and Smart Nation initiatives for business growth. “The ‘smartness’ in a Smart Nation does not come from the infrastructure alone – there are a lot of opportunities for smart applications and supporting ecosystems in areas such as urban mobility, healthcare, logistics, manufacturing, energy and sustainability, and retail and advertising, he said.

Growth areas include:

  • IOT: Dr Tan noted that a few years ago, IOT was only a term for techies. “Now it is going mainstream and entering the business and consumer vocabulary. You have to prepare yourselves for the future.”
  • Autonomous systems: There will be a rise in social robots with applications beyond the factory floor. He cited the example of the iRobot, the autonomous vacuum cleaner. More of such autonomous systems will appear as electronics drop in price and volume production picks up.
  • Cybersecurity: “The minute you have more systems, more autonomous systems, and have greater cloud penetration, the potential for cyberattacks becomes greater,” said Dr Tan. “Cybersecurity is a big area for ICT professionals and this is where we also see a lot of opportunities.”
  • Data analytics and machine learning: With cloud deployments breaking down silos and allowing information to be pooled together, more and more businesses are looking to gain insights through data analytics and machine learning. There is also a growing push to do this in real time. “Previously, if you have large data, most of the analytics is post-process. Now we are talking about streaming live analytics. It is a new game altogether, and it gets much more complex.”

“The rollout of IOT and Smart Nation will change the whole landscape in Singapore over the next five years, so you should look for opportunities where you can position yourself to ride the wave,” said Dr Tan.