MSMEs are a huge contributor to growth in the Indian economy. After agriculture, the MSME is the second largest employer in India. A contributor to over one-third of the Indian GDP.  MSMEs have successfully transitioned from traditional to online businesses, reaching global and national audiences through omnichannel e-commerce platforms. Today, Indian MSME businesses are defying expectations by making significant developments and space in sectors traditionally dominated by established International brands. 

But, how is this being made possible? Today MSMEs are more open to adopting new technologies and software applications to take their businesses to newer heights. 

However, even amidst these positive developments, there is still a large number of MSMEs that face challenges like operational scalability, supply chain inefficiencies, high competition, regulatory scrutiny, and many more. These are mostly the MSMEs that still work without technological upgrades and have not implemented software solutions like cloud-based business applications. While MSMEs have a multitude of opportunities to thrive and succeed in a vibrant economy like India, it is possible only if they embrace technological upgrades and innovative software solutions. 

This article evaluates how technology and advanced software applications can help MSMEs succeed in the digital era. 

MSMEs in India: Definition and Key Statistics

Micro, Small, and Medium Enterprises (MSME) in India are entities involved in the manufacturing, production, and preservation of goods and commodities. 

The classification of MSMEs is based on a composite criterion of investment and turnover. 

The updated MSME criteria in 2024 are as follows:

• The MSME sector in India contributes around 30% to the GDP, constitutes 48% of the exports, and provides livelihoods to more than 120 million people. 
• With 751.5 million internet users (smartphones in use), digital penetration in India has surged, making convenience a top priority for consumers.
• India is the largest customer base of Meta-owned WhatsApp, Instagram, and Facebook. Social commerce platforms like Facebook and Instagram have revived the tradition of personalized service, allowing MSMEs to connect directly with customers and build trust. 
• The digital shopping revolution, accelerated by the pandemic, is driven by the determination of MSMEs and supported by e-commerce platforms and government initiatives like Digital India MSME Schemes. 

Did You Know? 27th June: World MSME Day Micro, Small, and Medium-sized Enterprises (MSME) Day is celebrated annually on June 27, as designated by the United Nations General Assembly. MSME Day serves as a reminder of the significant contributions of MSMEs to the global economy and their pivotal role in driving inclusive growth and shared prosperity.

Why MSMEs Need Technological Support? Benefits of Adopting Technology in MSMEs’Business Processes 

Considering their importance in the economy, MSMEs are critical for any country’s sustainable and inclusive growth. However, many MSMEs fail to adopt the right technology at the right time risk and suffer a decline in market share and customer footfall. This highlights the imperative for MSMEs to adopt technology to enhance their competitiveness and ensure long-term viability. 

In the modern consumer world, technology plays a crucial role in empowering Micro, Small & Medium Enterprises (MSMEs) to overcome traditional barriers and achieve long-term success.

Below are the benefits of adopting and implementing the right technology for MSMEs: 

#1 Higher Competitive Strength

Competitiveness depends on how fast you can change to market demands than your competitors, how better you can service your customers than your competitors, and how fast you can time-to-market than your competitors. MSMEs can adapt more quickly to market shifts, customer needs, and industry trends by utilizing digital platforms. 

For instance, a small online grocery store that employs data analytics to predict customer buying patterns and optimize inventory management can beat even large-scale grocery retailers. 

Similarly, grocery businesses with multi-chain business model can deploy supply chain management systems to keep their stocking system centralized and more effective than their competitors. This way they can ensure their stores never go out of stock and house all products that their competitors stock. 

#2 Increased Speed of Operation

The rate at which businesses can carry out their various activities and processes, the swiftness with which tasks are performed, decisions are made, and services are delivered is critical in the context of MSMEs.  Speed of operations is crucial for maintaining competitiveness, meeting customer demands promptly, and quickly adapting to dynamic market conditions. 

The speed of operations enables MSMEs to operate more efficiently and reduce time to market. deliver products and services to customers in a timelier manner. 

For instance, cloud-based project management software enables better collaboration between employees, supervisors, and managers in a small manufacturing unit. This real-time communication and sharing of documents or workflow tasks can eliminate data siloes and improve the speed of operations. 

#3 Effortless Scaling

MSMEs (Micro, Small, and Medium Enterprises) have the dream to scale their operations. After all, every business wants growth and envisions crossing the threshold limits and achieving more growth. MSMEs can benefit from software solutions to scale their operations. 

For instance, process automation can automate repetitive tasks and accelerate business productivity. Data Analytics can help MSMEs gather and analyze data to identify the bottlenecks that are hampering growth and limiting their ability to scale, providing valuable insights for informed decision-making and improved operational efficiency. 

CRM software can help MSMEs manage customer interactions, and touchpoints for personalized experiences that increase customer satisfaction and loyalty. More customers mean more scaling of the business. When you think of scaling business reach and sales areas,  there is no better way than going omnichannel. An E-commerce software platform that lets you build your website or integrate with marketplaces will help you reach more customers and diversify revenue streams through online sales.

#4 Significant Cost-Savings

MSMEs can achieve significant cost savings by optimizing operations and workflows, particularly by reducing employee costs. Automation to handle routine tasks like stock management, billing, CRM, warehouse operations, etc. MSMEs can reduce the need for additional labor.  When you deploy software solutions you will need human involvement only for high-value activities. 

When you can get a sales analytics report with a click, your sales managers will not have to spend hours creating the report by themselves. They can only spend some time implementing the insights received from the sales reports for further optimization and improvement of sales activities. 

#5 Error-Free Workflows

Cloud-based solutions such as Retail Management Software and ERPs eliminate various types of errors in MSMEs’ workflows. For instance, automated workflows in billing ensure that invoice data is consistent and traceable, minimizing the chances of duplicate entries or wrong cash register entries. 

Another example is automated inventory management or warehouse workflow tracking without human involvement. Automated inventory solutions integrate real-time tracking of stock movements across sales, purchases, delivery transit, and warehouse storage, ensuring that inventory records are error-free, accurate, and reliable. 

#6 Enhanced  Productivity 

Digital technologies enhance the productivity of MSMEs by automating key tasks. For instance, the adoption of digital tools and technologies can lead to a substantial increase in productivity by up to 20% for MSMEs, says PWC.  This increase in productivity is due to multiple workflow automation like inventory management, billing, CRM, and other operational processes.  This also frees up the time of the managers for more strategic activities. 

Example: An MSME that implements an automated inventory management system can track its inventory without manual interventions. Reorders are automated with demand forecasting analytics.

#7 Reduction in Manual Errors

By reducing manual input and automating processes, digital technologies help MSMEs reduce human errors. Automated tech like cloud technologies, Artificial intelligence, accounting software solutions, etc. have up to 99.99% accuracy and the risks of glitches are almost negligible. 

Example: An MSME integrating a POS system for billing will notice a decrease in errors in billing as the software will not enter wrong dates or prices (after barcode scanning of products).  Also, the total of the bill by POS systems (that have high-end computation powers) rarely can have any error. 

#8 Better Compliance

MSMEs have to deal with multiple compliances from central and state government and their regulatory authorities. Most of the compliances are documentation intensive. Technology adoptions like Accounting software with GST capabilities can automate tax calculations, invoice generation, and filing GST returns ensuring accurate and timely compliance with GST regulations. 

Technology enables MSMEs, especially those involved in Food business or manufacturing to maintain and manage documentation (procedural compliance). These software come with tools like audit trails, testing documentation, labeling documentation, etc. 

#9 Higher ROIs

Return on Investment (ROI) is a financial metric used to evaluate the profitability of an investment. Implementing cloud-based solutions transforms capital expenditures into operational agility. Operational agility translates to higher productivity levels. Higher productivity levels mean more revenue, more sales, and a better return on investment. 

For example, MSMEs deploying ERPs and managed IT services can access enterprise-grade expertise and solutions, leveling the playing field with larger competitors.

#10 Improved Time to Market

Cloud-based solutions such as ERPs and inventory management systems can significantly contribute to faster time to market for MSMEs. Cloud-based ERPs can manage business processes like order processing, purchase planning, production planning, inventory management, etc. to respond to market demands swiftly. 

Cloud-based ERPs provide real-time data and analytics, empowering MSMEs to make timely informed decisions. Integrated ERP systems can keep a tab on real-time information on stock levels, customer demand, and production schedules, enabling MSMEs in the manufacturing sector or food businesses to make timely adjustments to meet market demands and ensure on-time deliveries.

#11 Better Customer Experience (CX)  

MSMEs with digital technologies like CRM software integration can provide superb customer service through faster resolution (in-built chatbots), personalized recommendations for customers based on buying history, loyalty programs, memberships, etc. Access to customer data and analytics through digitization can help MSMEs further eliminate the CX bottlenecks and strategize their services as per customer preferences. 

How MSMEs Can Stay Competitive and Drive More Profits with Technological Upgrades with Cloud-based Software Solutions? 

In the rapidly evolving landscape of retail and small manufacturing, several next-generation technologies are poised to make a substantial impact on operations and customer experiences.

The key features of software solutions for MSMEs include: 

• Inventory management: It makes store owners’ lives easy by providing a comprehensive solution for tracking and managing inventory levels that includes stock tracking, SKU management, and automatic inventory updates. Produce various types of barcodes and labels for item variants, and streamline the process of tracking and organizing fashion inventory. Systematically checks and confirms the accuracy of inventory records against the physical inventory on hand. 

• Point Of Sale System(POS): An integrated POS system enhances the experience of processing sales transactions for various payment methods and generates receipts too. For instance, with seamless POS integration with inventory management, one can track stock levels and manage product variations. Manage customer information, track interactions, and analyze buying patterns to personalize customer experiences with billing.

• Customer relationship management (CRM): Business management software like VasyERP manages customer information, tracks, and purchase history, and analyzes customer behavior to tailor the marketing efforts as well as enhance customer satisfaction. Provides valuable insights into customer satisfaction, preferences, and areas for improvement by monitoring feedback from customers by using CRM. Reward and incentivize customers for their repeat purchases and brand loyalty. Customers earn points based on their purchases or engagement with your brand.

• E-commerce integration: MSMEs are driving the $300 billion Indian Ecommerce business. When you are a participant in such a huge ecosystem, you need reliable ecommerce software to keep you going. The software is integrated with online e-commerce platforms easily and marketplaces too. It enhances online sales expands the store’s reach to new clients and drives businesses towards success. Streamline inventory management, order processing, website maintenance, customer service, and marketing strategies

• Reporting and analytics: Business management software includes in-build reporting and analytics tools that track sales performance and monitor inventory levels to gain insight into business trends. Comprehensive reporting and analytics capabilities provide detailed insights into sales performance and customer purchasing patterns. 

• Billing and invoicing: It has automatic billing and invoicing capabilities to streamline the process of customer transaction management. Manage cash transactions, monitor cash register activities, and monitor sales, refunds, and deposits. Hassle-free transactions by offering customers the flexibility to choose their preferred payment method from a wide range of options.

• Financial Management: Get insights into the financial health of your accessories store and monitor expenses. Execute collection analysis, and interpretation of financial data to generate actionable insights and make informed business decisions.

How Cloud-based Software Solutions Can Solve Operational Issues for MSMEs? 

Challenges Faced by MSME Businesses	How Software Solutions Can Address the Challenge	Software Solutions
Stock-outs, overstocking, and wasted resources result in lost sales. Difficulty tracking inventory and product variants	Real-time tracking of inventory levels, setting reorder points, and generating purchase orders automatically. Product variants. Barcode generations.	Inventory Management Software
Coordination with suppliers and keeping track of purchase orders and goods receipts	Effective tracking of suppliers and purchase orders. Efficient management of goods receipts and production orders.  Improved coordination with suppliers.	Supply Chain Management Software
Billing issues, no payment integrations, Difficulty in creating GST-compliant invoices	GST-compliant invoicing.  Multi-channel payment gateways Multiple payment methods Optimization of inventory levels.	POS Software
Difficulty in managing customer relations, loyalty cards, discounts	Customer relationship management module Discount and offers Loyalty Management & Feedback	CRM Software
The complexity of warehouse operations	Proper organization of inventory in the warehouse. Effective tracking of stock levels Improved management of warehouse infrastructure.	Warehouse Management Software
Financial Management	Proper organization of inventory in the warehouse. Effective tracking of stock levels Improved management of warehouse infrastructure.	GST Compliant Accounting Software
Managing e-commerce operations efficiently	Online website & e-commerce operations. Inventory management across the physical and online store E-marketplace integrations	E-commerce Software with Omnichannel Capabilities
Reporting and Analytics	MIS reports  Real-time analytics  Centralized Dashboard	Business Reporting/BI Software

** You can also get all these software features combined in one integrated software for MSMEs. No need to deploy separate software for each activity. A cloud-based software like VasyERP with integrated modules as mentioned above is a single-point solution to address all challenges faced by your business. Moreover, it comes with multi-branch business management. 

Seize the Digital Advantage – Transform Your MSME with All-in-One Cloud Software Solutions Connect Now!

MSMEs Can Also Consider Futuristic Technologies 

• Generative AI is set to transform retail businesses, particularly in ecommerce transactions and online customer interactions. 
• AR applications are becoming increasingly relevant in retail, offering virtual “try-before-you-buy” experiences and enhancing the digital shopping experience with virtual storefronts. 
• Blockchain technology is expected to play a crucial role in ensuring transparency and security across retail supply chains. 
• C-store retailers are focusing on streamlining their technology efforts through unified commerce. 

How to Select the Best Software Solutions For Your MSME?  

Choosing the best management software tools and applications and next-generation technologies need careful consideration because of several key factors. 

Here are some of the steps that you should follow to make an informed decision

Identify your business needs: Try to find your business-specific requirements from the software and prioritize the tasks that you need to execute with the help of that software. You can consider focus factors like inventory management, sales reporting, customer relationship management, e-commerce integration, and scalability.

Evaluate functions and features: You should consider software solutions that have robust features and functionalities tailored to your business needs and can manage your workflows and activities. For example, a retail MSME business will need software that must include essential features such as inventory management, POS capabilities, CRM tools, reporting, and analytics.

Consider integration capabilities: Choose software with seamless integration capabilities with other systems and platforms used across your business branches, such as accounting software, e-commerce platforms, and payment gateways, to ensure smooth data flow.  The integration capabilities define how smooth the data flow will be after installing the software in your all branches system.

Check customer support and training: Ensure the software provider offers comprehensive customer support and training resources for employees and managers, including timely technical assistance and access to training materials or tutorials to maximize the software’s potential.  You must be able to assess the training materials or tutorials on YouTube or their website to help you make the most of the software.

Check Reviews and Ratings: Research and analyze reviews and ratings of the software solutions from trusted sources like Google Business Profile and existing users to gauge the overall satisfaction and performance of the software in real-world applications.

Check Experience and Expertise and Current Clientele: Consider the experience and clientele of the software provider to assess their expertise in catering to the needs of MSMEs, as well as their track record of successful implementations and support.

Evaluate through a Demo: Request a demo of the software to evaluate its user interface, functionality, and ease of use in a real-world scenario within your business environment before making a final decision.

Conclusion

There is a seismic shift in the way small and medium-sized enterprises (MSMEs) operate and compete today. Industry 4.0 sees technology as a medium to cross the growth barriers and MSMEs that can adapt the automation led by next-generational cloud technologies have been growing exponentially. Cloud technology helps MSMEs in all operational areas, workforce transformation, and regulatory aspects. In short, it covers it all. 

The integration of technology and software solutions can help MSMEs to stay competitive, drive profitability, and ensure sustainable growth. 
Would you like to explore more insights on how MSMEs can effectively leverage technology for sustainable growth and success? Contact our team at VasyERP for details on our software solutions and ERPs designed for MSMEs.