By Dr Dayana Jalaludin
Technological advances under Industry 4.0, coupled with the impact of the Covid-19 pandemic, have pushed many Malaysian SMEs to step out of their comfort zones and embrace digital transformation. Today, more SMEs are offering their products and services through online platforms, leveraging technologies such as the Internet of Things (IoT), Cloud Computing, and Big Data Analytics.
These tools have simplified information exchange, improved commercial activities, and enhanced customer interactions. Ideally, technology adoption creates a more cohesive business ecosystem where communication among employees becomes more effective and connections between companies and customers grow stronger than ever. But the real question is: how can SMEs continue to progress and stay competitive in this digital era?
Technology evolves rapidly and keeping up can be challenging. But rather than racing to catch every new trend, SMEs should focus on building a resilient and secure environment that can withstand trial and error during their digital transformation journey. Digitalization should strengthen both your company’s online and offline identity. It must benefit employees and external stakeholders—customers, suppliers, and lenders—by fostering trust and long-term sustainability.
As your business relies increasingly on digital tools, ensure that communication remains effective for collaboration. Each new technological initiative should aim not just for cost savings but also for enhanced productivity and long-term profitability. Progress may be gradual, but every small win counts. If something fails, fail fast, learn quickly, and move forward smarter.
Leadership commitment
Every successful transformation begins with committed leadership. As the captain of the ship, you must be clear about how technology fits into your business model. Leaders who understand how digital tools drive value will be better equipped to steer their organizations through uncertainty and volatility. Technological mastery is no longer optional but it’s strategic. Your commitment to continuously learn, unlearn, and relearn ensures that your team stays confident in embracing innovation. By demonstrating that technology is not a threat but an enabler of progress, you inspire your workforce to move forward together.
Digital transformation is not just about adopting new tools; it’s about empowering people. As your business evolves, so must your workforce. Identify the skills and competencies required for your company to reach the next level. New talents may bring fresh ideas and perspectives that help push boundaries, while existing employees may need upskilling and reskilling to stay relevant.
Address skill gaps early and support employees in mastering digital tools and analytical thinking. Encourage a mindset that embraces technology as a problem-solving partner, not a burden. Beware of “digital hallucination”—when technology adoption looks impressive but adds little real value. The goal is always clear: maximize productivity through meaningful technology use while maintaining balance and control.
As operations shift online, performance monitoring must evolve. Traditional metrics should now include digital performance indicators such as online engagement, conversion rates, repurchase behavior, time saved, and workload reduction. At the same time, cyber risks are rising.
Every SME must prioritize digital safety and data protection. Develop clear Standard Operating Procedures (SOPs) for cybersecurity, use reliable security tools, and educate employees about threats like scams, malware, and data breaches. Proactive cyber vigilance is not a luxury—it’s a necessity for business continuity.
Staying realistic
Digital partnership begins with self-awareness. Identify existing gaps in your internal systems. Are your Accounting and Human Resource systems aligned with your newly digitalized operations? Are your internal processes supporting or hindering your digital growth? Also, consider external realities such as internet accessibility, 5G coverage, mobile dependency, and data costs.
These factors can significantly influence the success of your digital transformation. Ultimately, technology must serve your business purpose. It should enhance your return on investment (ROI), not strain your resources. Sustainable digitalization means integrating technology strategically, balancing innovation with practicality, and progress with profitability.
In summary, partnering with technology is no longer a choice but a necessity for SMEs seeking long-term growth. However, success lies not merely in adopting digital tools, but in preparing people, processes, and leadership to thrive alongside them.
With resilience, vision, and the right talent, Malaysian SMEs can transform technological challenges into opportunities for innovation and sustainable competitiveness.
Dr Dayana Jalaludin is a Senior Lecturer, Department of Accounting, Faculty of Business and Economics, Universiti Malaya, and may be reached at dayana@um.edu.my