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Power of IoT in SME Digitization

Paper Type: Free Essay Subject: Information Technology
Wordcount: 4680 words Published: 18th May 2020

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 The advent of 21st century’s digital transformation has created an immense platform for businesses rapid growth and success with modern day digital facilities changing the entire working procedure of a business (Abdollahzadegan et al. 2013). Renovation in the process of doing business has been occurring at a fast pace across businesses from large-scale to small and medium scale enterprise. Digital makeover has different types of benefits, which include, connection between similar businesses, breaking of barriers between individuals doing business as well as efficient ways of engaging with target customer has become easier with the use of modern day technologies. This change in working structure of businesses to make them digitally efficient requires a digital platform (Alshamaila, Papagiannidis and Li, 2013). Companies using these digital transformational procedures with active social media engagements, data analytics and cloud based services are likely to garner more public attention making profits to businesses overall.

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 Strategizing is an important factor in case of small and medium enterprises before implementing digital transformation within the working structure in an organization. Integration of technologically enhanced facilities requires a business model for the transformational procedures, actively engage audience and implement digital changes to capitalize in a market based on customer necessities and demand (Tehrani and Shirazi, 2014). There are various important factors, but for small and medium enterprises success through the use of Internet of Things (IoT) in improvising their digital strategy require cloud based services, digital mode of transaction and effective use of social media to carry out campaigns to actively engage with the customer (Ross and Blumenstein, 2015). These factors provide a strong digital presence for businesses growth in the vast digital sphere, however, there are certain risks associated with digital transformation, which include protection of customer data, secure methods of payment for digital transaction and active feedback mechanisms for customers in order to improve facilities related to customer satisfaction in small and medium enterprises.


 SMEs have started to use digital platforms to expand their business. This has paved way for a diverse list of opportunities in an organization to implement cloud-based services, digital modes of payment including internet banking, credit card and debit card facilities amongst others. The digital world is expanding, which implies that the consumers nowadays use internet to buy, sell or invest and in order to catch their attention digital marketing is required. This will help small and medium enterprises to develop marketing strategies to interested audience for products as well as specific services provided by the organizations. However, this rising competition leads to trends in the market place, where customer data is jeopardized due to potential hacks occurring in the system; safe and secure methods of transaction in a digital platform is of utmost importance. SMEs need to look after all these factors while in the process of digital makeover in their organization so that in the process no hurdles turn up, which might be a fatal problem for the enterprise in the future (Awa, Ojiabo and Emecheta, 2015). The use of these technologies as well as their implication into the digital work force in an organization is associated with benefits as well as challenges.

Cloud Based Services

 Small and medium enterprises (SME) are considered as the pivot of social and economic development of a nation. Increase of SMEs provide scope for employment opportunities, development in rural areas as well as increase in product export of a country (Hussain, 2013). Innovation of small and medium enterprises with digital technologies bring about a modification in the entire working paradigm of a business. This in turn contributes to the various modern technological innovations in the digital sphere (Shemi and Procter, 2013). Cloud based services are a new development to cope up with the challenges faced by enterprises. Cloud services provide small and medium enterprises with affordable technological solutions at a cheaper cost used by large business organizations to facilitate in business solutions.

 Cloud services include use of certain applications and processes, email services, network security, online storage facilities; however, rate of adoption for cloud services is quite slow in SMEs. Most importantly, the use of cloud computing as a resource needs to be strategized before implementation (Stankovska, Josimovski and Edwards, 2016). Cloud based services provide with scalable options to every small and medium enterprises. The rise in Information Technology has provided businesses to gain advantage over other competitors through adoption of cloud based services to facilitate in strategic advancements, benefits both economic and technical, however funding and cost estimation is a barrier for small and medium business ventures. The advantage in cost management lies in terms with operational expenditure (OPEX) and capital expenditure (CAPEX), which popularized the adoption of cloud based services in businesses of small and medium scale (Öztamur and Karakadılar, 2014). The design for cloud based services are done in a way to withstand failures related to hardware and recovery of any disaster, moreover infrastructures used for cloud services depend on a divided, vigorous and scalable option to store data in different available physical locations, which are accessible from any internet enabled devices (Karimiand Naghibi, 2015). Employees will be encouraged to collaborate with one another from any location as well as share important information related to business queries, both from management as well as customers.

 Cloud based services are easy to adopt in a business, due to less compliance standards in the global market, because this is a domain which is not totally explored as of now (Nobre and Silva, 2014). Regulations for use of cloud services are difficult to ascertain because it is still an emerging market. Businesses on the verge of adoption of these services can implement it on various spheres starting from storing of customer data, use of automated email facilities to inform about transactions done in a store, keep a record of individual’s product preference and the list goes on. Cloud based services in a small and medium enterprise is economically sustainable as well as timely durable (Vásquez and Escamilla, 2014). Enterprises planning to digitize work force, data pertaining to use of cloud services opens paradigms like customers accessing business information required for product purchase, automation of procedural mechanisms of a business reduces the risk of human error in enterprises, which is a crucial factor for sustainable business models using cloud-based facilities to provide better quality of services to customers.

Benefits of Cloud-based Services

 Cloud-based services are beneficial to any SME in different spheres. Digital technologies are always efficient and provide optimum performance, which in turn decreases electricity cost, hardware requirements, and operational staffs and reduced cost of hardware expenditure. Since, services provided through cloud computing are delivered based on demand, customers are charged for use of resource in computing similar to utility service providers (Abed, Dwivedi and Williams, 2015). Cloud based services are entirely digitized infrastructures which is devoid of human error. Cloud services are a paradigm of IoT, which provides easy access to services and facilities through any internet enabled device for easy access of required information.

Challenges for Cloud-based Services

 Implementation of cloud services often pose certain organizational as well as technological problems to businesses adopting the service (Dahnil et al. 2014). Prime obstacle, which arises, is security of a system. Systems using cloud services are at risk from potential hacker, planning to take advantage of online availability of customer information as well as business statistics to conduct illicit activities that might incur heavy loss to a small and medium enterprise (Gbandi and Amissah, 2014). Misuse of sensitive information and data stored in cloud facilities are at a risk of illegal use by potential hackers and systems often lack security measure to counter hacks from attackers in an organization.

Implementation of Digital Payment Procedures

 One of the pivotal elements of any business is the process of managing flow of cash and values associated with the transfer. Every customer receipt generated, running of payroll, disbursement of supplier transaction are necessary factors that need to be recorded, and payment should be done based on requirement (Khalique et al. 2015). Small and medium enterprises have started to invest in digitizing payment procedures with technologically enhanced payment systems for conducting customer transactions and improvised mode of business payments. Typical methods include credit card and debit card transactions, electronic payment facilities like net banking facilities, which are used for paying online to vendors, market suppliers, product analysts where high volume payments of low value as well as low volume payments of high value are required to be made.

 Payment procedures are digitized unlike previously, where receipts and manual mode of transactions were used for payment with cheque or cash. Due to occurrence of delayed transaction in manual mode of payment as well as complex structures that were a hindrance to a small and medium enterprise (Kim, Lee and Lee, 2013). Digital mode of payment in the modern world transactional procedures made the process easily accessible and reduced the risk of errors occurring in manual payment methods (Brunswicker and Vanhaverbeke, 2015). Digitizing transactional methods helped businesses to revolutionize customized mode of payment designed according to the necessities, which were not previously tailor made for small and medium enterprises.

 There is a paradigm shift in digital payment methods with the advent of mobile applications facilitating online transactions, which changed the modes of payment from physical mode of transaction to virtual mode of transaction. This process made it much easier to transact and execute payments (Ross and Blumenstein, 2015). This era of rapid digitization, with increased computational resources has made payment process work at a faster pace and seamless execution timing, moreover the resources used are software’s invisible and instruments used for making transactions are imbued into applications and other digital payment processes.

 The cost estimation for digitization of payment processes are required to have certain attributes for making easier and safe payments methods, security and reliability are of prime importance for generic methods of payment, offered to small and medium enterprises. The available technology was not flexible for customization; however, advancements and open architectural Artificial Payment Interface (API), with regulations by Australian government authorities without intervention in the mechanisms used by businesses helped SMEs to create payment methods easy, fast, secure and reliable (Al-Johani and Youssef, 2013). Lack of competitors using digital methods of payment helped SMEs adopting to this change, where existing reliable technologies helped to create a dedicated network for card payments for businesses with relevant data required to establish such mechanism (Jones et al. 2013). There are three important factors involved in the process of digital transactions, which include starting of a payment, infrastructure involved in the transaction, and recording data related to the transaction made. The innovation related to change in payment methods is provided through a shift from physical mode to virtual modes of transaction (Nussbaumer and Liu, 2013). This is beneficial for small and medium enterprises to conduct digital transactions reducing effort related to payment methods.

Benefits of Digital Payment Procedures

 Digital payment procedures implemented in digitalization strategies of small and medium enterprises aid to deliver, a customized user experience (Seethamraju, 2015). Accepting payments of a purchase from a distant location through mobile payment applications, net banking facilities, reduction in cost incurred to businesses and enterprises, due to less number of required personnel who were required in physical mode of transaction for maintaining records as well as ledgers. Transactional data records are kept in cloud services, accessible to business ventures based on requirement and another important aspect of digital payment is increase in consumer purchase from overseas helping businesses growth in oversea markets.

Challenges of Digital Payment Procedures

 Digital payment procedure has garnered a lot of attention due to easy accessibility of payment procedures, however there are certain disadvantages associated with this process. Small and medium enterprises lack of budget pose a threat in providing secure database for payment. Hindrances arise when transactions are made, but due to the incompatibility of the system, it does not reflect in the enterprise database (Abanis et al. 2013). Database management requires safe and secure transactional methods to be used by small and medium enterprises to facilitate seamless transaction through varied internet banking facilities like card payment where these enterprises, due to lack of budget cannot provide with adequate resources for seamless cash flow into the system.

Effective Use of Social Media

 Products are effectively sold when there is an active engagement with the customer. This digitalized era has seen marketing in forms of advertisements on various social platforms ranging from Facebook, Instagram, Google advertisement services. Effective use of social media marketing to interest audience is of prime importance, because this generation of millennial buy products from services having an active customer response platform as well as feedback mechanisms to address grievances ranging from quality of product, service of third-party agents, easier payment methods and so on. The average social media presence in Australia has increased with leaps and bounds, where many small and medium enterprises having an active social media platform have seen increase in total revenue and profit in the organization.

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 Social media marketing is favorable for small and medium enterprises on various frontiers ranging from cost cutting of marketing department, higher flexibility rate. Online interactions between customers and business enterprises on social media platforms helps in identifying potential customers as well as maintain a positive relation with consumer, which was previously dependent on marketing through advertisement in print media, investment in making hoardings and posters to engage with customers to increase profit and sales of business. Analytical approach towards monitoring of users to identify requirements and preferences are an important part of social media marketing. Smartphones, laptops, tablets and devices with enabled internet facilities have connected the world and easier ways to advertise has given a great deal of value to small and medium enterprises. Location is not a factor anymore, because previously in order to garner enough attention by an enterprise or a business used to be localized, in either newspapers or posters, but with the integration of effective social media strategies to improvise, marketing has enlarged the domain at an international level. Based on choices of product, customers can engage from overseas if needed, which is possible due to social platforms like Facebook, that provide small and medium enterprises with cheap marketing facilities that people can access anywhere around the world.

 Use of proactive strategist who plan on dynamic distribution of marketing facilities with the use of various social media tools have provided with many opportunities for enterprises to increase potential customer base. Strategists effectively use platforms like YouTube, Facebook to run advertisements to target audience. Examples can be cited where small business making customized products like totems, amulets from movies and serials are most likely to be bought by younger people, with the help of various algorithms, advertisement platforms target audiences and run advertisements to specific age group, gender as well as location and choice of product by a customer. This has helped small and medium enterprises improve in digital marketing, with the use of IoT devices, connection between people with similar interest provides a platform to create a dedicated user base for products sold and purchased by consumers. Social media marketing actively helps small and medium enterprises to find competitors in the market and use innovative approach to stay at a better position compared to their opponents in a similar product-selling scenario.

Benefits of Social Media Marketing

 Social media has helped small and medium enterprises to develop a dedicated customer base with the help of effective social media marketing strategies. Various consumers prefer products that has feedbacks from other customers, in their social media platform. Grievances can be easily addressed and identified to help businesses strategically improve provided services. Reduction in the implementation of marketing strategies have helped businesses to run advertisements on various social platforms without huge investment in the marketing front. This has helped businesses to adapt to changes based on customer demands and necessities. Social media in 21st century is the pivotal axis of a business enterprise to sustain in this vast digital market.

Challenges of Social Media Marketing

 Social media is a vast digital sphere of information, which has certain challenges associated with it. Media marketing has certain aspects like engaging audience with original content. There are innumerable small and medium enterprises that are using social media marketing, to make a presence in this market; these include making an active presence in the market with expanding the reach, which is not always feasible in terms of cost management. Engaging audience with contents require use of high quality images for posts and engaging audience to share content in various social media platforms by performing effective analysis of products and analysis of consumer preference.


 This essay concludes that use of IoT and digital transformation in small and medium enterprises to strategize business is of prime importance in this vast digital sphere. There are various factors small and medium enterprises must keep in mind in order to imbibe digital transformational procedures in the working structure of an organization. Firstly, use of cloud-based services revolutionized various factors starting from storing of consumer data to cost cutting where human intervention as well as scope of human error is least. Certain security mechanisms must be adhered by organizations to defend their database from potential hackers planning to seize information related to customer name, email address, bank account details, which should be taken into consideration while designing a robust framework for these services. Other factors necessary for sustaining small and medium enterprises is the digitalization of payment procedures for ease of access to both the consumer as well as the business enterprises. Digital payments provide easier alternative through which customers can pay directly to the enterprise with credit cards, debit cards, internet-banking facilities. Enabling such facilities help businesses in transaction, because everyone nowadays use mobile banking applications that can pay from anywhere to the required enterprise. This has also helped organizations to expand reach outside their territory in overseas ,where due to digital inclusion these procedures like payment, details related to products, listing of price is quite ease and hassle free. Digital payment mechanisms also require security and ease of transactional facilities for consumers to avail services without any problem. Digital payments are faster as well as more secure compared to physical form of payment. This shift of payment has occurred due to IoT and enabling of such facilities by businesses to overcome pertinent issues of the 21st century. Another important aspect is strategizing social media marketing to actively engage audience. This helps small and medium enterprises to boost up their sales because of active social media engagement from interested customers globally. Thus, with implementation of digital procedures in working structure of a company is profitable for the organizations in the end. Future prospects include automated delivery services as well as more secure and robust framework to efficiently manage various requirements of small and medium enterprises in digitally strategizing with the help of IoT. Finally, effective media management strategies and digital implantation in various spheres of a business will help to thrive small and medium enterprises in this competitive global economy in this vast digital market space.


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