Russian Small and Medium-sized Enterprises Forum SME Digitalization: Digital Development and Digital Inequality
KEY CONCLUSIONS
Small and media-sized businesses are ready for digitalization
“Of course, they are ready. Moreover, they realize there is no surviving without it. At the same time, there are more opportunities for digitalization now,” Maxim Parshin, Deputy Minister of Digital Development, Communications and Mass Media of the Russian Federation.
“A short answer is yes [SMEs are ready for digitalization, – Ed.]. I base my answer on figures, as we do surveys. Just a month ago, we took our fifth survey on SME digitalization. It showed that this index was up,” Nadiya Cherkasova, Deputy President - Chairman of the Board, Otkritie Bank.
“In my opinion, ready or not is a pointless question. Because the environment and the game atmosphere make you ready. If you are not ready, you do not exist in the market,” Alexander Chernoshchekin, Senior Vice President, Head of the Medium and Small Business Unit, Promsvyazbank.
There is a need for a unified digital environment and digitalization training, including those based on government programmes and professional associations
“People are probably the most important aspect – there is no money, and there is a constant need for some training courses that would show how things should be done. <…> We need to promote it more and show the opportunities and what they [entrepreneurs, small businesses] will gain. Yet, there is a need for money. The main issues are money and a unified digital environment: if I lived somewhere in Tomsk, I would have the same opportunities to develop my business as in Moscow,” Yulia Shishkina, Department for the Implementation of Special Projects, Chamber of Commerce and Industry of the Russian Federation.
“Secondly, training and support programmes are frequently run by non-profit organizations. I believe it could be an interesting idea for our country. We have OPORA RUSSIA, as well as other business associations that could take this function upon themselves,” Alexander Svinin, Trade Representative of the Russian Federation in the Republic of Singapore.
“Small and medium-sized businesses demonstrate a different level of preparedness for digitalization, while the need for it is obvious. Big players are ready to help with that,” Karolina Sokolova, General Director, EVEREST Sales House.
PROBLEMS
Vulnerability of digital resources and systems
“We have highlighted five major blocks. It is definitely the use of Internet as a sales tool, which is the part I will skip. The second big block is information security - this is actually <...> the most vulnerable place. This is where we have the clearest idea of what exactly to do, other than to restore the antivirus. The third big block is information storage and transmission channels. The fourth block is the use of different CRM and analytics, because small businesses does not necessarily understand that the gold is under their feet: there is a lot of information, it allows them to work with this data and reach a new level of their own business. And the last, fifth block is digital skills training", Nadiya Cherkasova, Deputy President - Chairman of the Board, Otkritie Bank.
"With your electronic digital signature, they can open literally anything. We still have very little digital culture. It may be another five to ten years before we finally get it all," he said. Alexey Logantsov, Chief Executive Officer, Logasoft.
"The priority is to make money. The priority is to get new clients, to enter new market niches. Certainly, everyone goes online with their eyes closed. In huge numbers, they start making mechanics and transactions that can later lead to all sorts of situations," Lyubov Pshenichnikova, Director of Strategic Partnerships Development, Mail.Ru Group.
“Overall, digital security and cybersecurity are very important. We have to pay attention to it every day,” Alexey Logantsov, Chief Executive Officer, Logasoft.
Small businesses lack resources and staff to develop digitalization
"The focus should probably be on microbusinesses and the self-employed: this is the most unprotected area of entrepreneurial activity. They really do not have any money today. They live between cash gaps on a daily basis. And allocating even a small amount of money to implement IT tools is critical for them," Alexander Svinin, Trade Representative of the Russian Federation in the Republic of Singapore.
"They are not willing to spend their own money. Why are not they ready to spend their own money? Because we still have a parallel state policy of digitalization, and they are obliged to implement those mechanisms <...> They simply do not have any money left to digitize their business from the inside, there is simply no possibility <...> The second problem is human resources, it is in general one of the most important ones for small and medium businesses now. Now there are no people who will develop these processes. They exist, but they cost a lot of money, and small businesses cannot afford them,” Yulia Shishkina, Department for the Implementation of Special Projects, Chamber of Commerce and Industry of the Russian Federation.
“Small business competes not so much one against another, it competes with big business and with state business. <...> Is it ready? Ready, but often times there is no resource, because there is no money. They got to pay wages, to pay rent, and it is very difficult to allocate any resources or free funds for digitalization,” Maxim Parshin, Deputy Minister of Digital Development, Communications and Mass Media of the Russian Federation.
“In any discussion about small businesses, it is important to clearly understand the portrait of the person we are talking about <...> most businesses are really very, very small, often consisting of one or two or three people, and you understand why they have no time to study. They are running around in circles. They are dealing with their domestic problems. They have to deal with the tax office, the landlord, the cashier who did not come to work. They have to go to the wholesale market in the evening to buy and deliver the order tomorrow <...> they have an internal protest against [digitalization], because there is no such problem,” Roman Chernin, Head of Small Business Services, Yandex.
SMEs depend on the rules of e-platforms
“Without platforms, small businesses will soon not be able to sell anything at all, and access to platforms is now determined by the platforms themselves. If you register as a self-employed entrepreneur <...> In essence, platforms today are the systems that determine people's right to do business <...> If you are discredited in some marketplace, you are banned from registering, then after a while you cannot sell your products anywhere at all. And this is governed by the internal rules of this marketplace,” Alexander Chernoshchekin, Senior Vice President, Head of the Medium and Small Business Unit, Promsvyazbank.
“We need to learn to listen to the needs of our developers and help them to develop not only in Russia, but also in foreign markets <...> Today we all know that there are various attachés at trade missions, for example, cultural attachés. But why is there no digitalization attaché? That is, a person who will be responsible for promoting Russian IT solutions in international markets. <...> We have quite a few competitively capable solutions,” Elena Volotovskaya, Vice President for Investments at Softline; Head of Softline Venture Partners.
SOLUTIONS
It is necessary to use comprehensive box solutions for the digitalization of business
“Big companies have to help small companies, and such box solutions do exist. They really solve probably the top three problems of entrepreneurs, which are lack of qualified personnel and limited budgets. Probably box solutions, ready-made products that are already being developed by big companies, business and IT, banks, and telecoms – they must have already been created,” Karolina Sokolova, General Director, EVEREST Sales House.
"You have to remember at this point that these guys do not have time for us in a sense and we have to come in with a ready-made solution to talk right away in their language," Roman Chernin, Head of Small Business Services, Yandex.
"Regarding the latter program, which we launched in the fall. We trained and we really sat at the same desk with our entrepreneurs for over three months. <...> First of all, they need not so much knowledge, but rather ready-made instructions, tools that will be effective for business. Our task as a technological leader is, of course, to help in this respect. We are doing a lot in terms of developing this area. We have the VKontakte platform for business, on the basis of which there are ready-made step-by-step instructions,” Lyubov Pshenichnikova, Director of Strategic Partnerships Development, Mail.Ru Group.
Government support and assistance from big business in the implementation of digital solutions
"We have programmes that we have already launched in the Ministry of Finance. The first one is concessional lending, the programme is underway. <...> We have a huge request from small businesses for concessional lending, and we lowered the bar from 20 million [roubles] as the lower limit of credit to 5 million [roubles]. <...> In addition to the fact that we lowered the bar for credit for small businesses, we lowered the bar for regional banks. <...> A preferential credit with 1 to 5% concessional rate – we have already granted credits for 41 billion, the average rate is 2.63%. <...> The second area we are now launching is the provision of cloud services for small businesses at a preferential rate. The state will take 50% of the cost of the license for the most popular domestic solutions. <...> We plan to launch the programme in June. According to our KPI, RUB 1 billion has been allocated for such compensation of 50%. This is not a small amount: according to our KPI, the figure for this year is 63,000 licenses that we have to provide. This is such a challenge for us," Maxim Parshin, Deputy Minister of Digital Development, Communications and Mass Media of the Russian Federation.
“E-commerce platforms are basically a launchpad for a huge number of new businesses. That is, today in Russia it is very easy to start trading. Platforms will be competing for you, so that it is on their platform that you place your offer,” Roman Chernin, Head of Small Business Services, Yandex.
“Now the Ministry of Digital is actively involved. They hear the needs of SMEs in the field of digitalization, and various new systemic support measures are being created. <...> We need a separate programme for SME digitalization,” Elena Volotovskaya, Vice President for Investments at Softline; Head of Softline Venture Partners.
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