Digital transformation is one of the strategies for scaling up SMEs. Adoption of digital technology in business activities can help to decrease operational business costs, open new markets, and allocate capital access for SMEs. The digital transformation of SMEs can be accelerated by government and nongovernment support in various forms. On the government side, the support of the digital transformation of SMEs can be implemented by training or technical assistance to use social media/e-commerce for business and allocating toolkit such as free internet access.
According to a study between the Ministry of Communication and Informatics & Institute for Economic and Social Research, the University of Indonesia in 2021, summarized the digital profile of SMEs in the digitalization index of SMEs. This digitalization index of SMEs reflected the readiness level of SMEs to accept digital intervention that becomes scaling up of SMEs. It consisted of five components such as business scale, strategy and organization, process and governance of business, business environment, and technology. Five aspects could be classified into 14 indicators.
This study has a primary goal to identify technology interventions that are needed by SMEs. Therefore, survey instruments were arranged based on that goal. Then, this study grouped SMEs into four quadrants or levels as stated in their score indexes. List of digitalization indexes namely leader, adopter, observer, and beginner level. Furthermore, a group of digitalization indexes can be applied as guidance to arrange the strategy of digital interventions by SME's characteristics at every level.
Beginner-level SMEs are still maintained traditionally by using minimum technological requirements. Interventions of digital technology must be focused on basic access push for example internet access, basic digital literacy, basic entrepreneurship, and conditional cash transfer/financing. While observer level, means SMEs are managed relatively modern but low level of technology adoption. The facilitation of this level through digital push strategy. Intervention forms can be implemented including basic digital technology, Point of Sales (POS) systems, aggregator applications, etc.
Third, adopter level, SMEs have high adoption level and technological knowledge but traditional business management. It can apply business push strategy thus digital promotion, business coaching, promotion ads, virtual expo, and business incubator. Last, leader level, technology interventions for this level are directed at sustaining and deepening through advanced digital training like Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), cloud computing subsidies, financial technology, innovation labs, and the introduction of industry 4.0.
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