African Journal of Business Management Vol.6 (23), pp. 7042-7052, 13 June, 2012 Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM10.137 ISSN 1993-8233 ©2012 Academic Journals
Full Length Research Paper
Information systems in small and medium enterprises in Republic of Kazakhstan N. P. Singh1*, Dimitriy Molokov2, Stanislav Lechshak3 and Askar Kuspanov3 1
Management Development Institute, Mehrauli Road, Sukhrali, Gurgaon-122007, India. Department of Operations Management and Information Systems, KIMEP University, 2 Abai Avenue, Almaty, Kazakhstan. 3 Department of Business Administration, KIMEP University, 2 Abai Avenue, Almaty, Kazakhstan.
2
Accepted 15 May, 2012
Small and medium enterprises (SMEs) are characterized by either the number of employees or level of assets or turnover or both across the world. In Asia/Pacific region, SMEs account for 90% of enterprises and provides 32 to 40% of employment. On the other hand, in Latin America, SMEs make up more than 98% of enterprises and more than 80% of employment. SMEs which consist of over 90% of enterprises in many countries are responsible for large number of innovations, product and services development and also contribute to the growth of the countries by creating employment, creating knowledge, investment opportunities and trade. Republic of Kazakhstan is no exception to these statistics and it has 16,066 SMEs registered in the Almaty blast alone. These SMEs are playing the same role in Republic of Kazakhstan as SMEs play elsewhere in the world. Looking into their importance in the world’s economy, big software vendors such as SAP, Microsoft, IBM and Oracle are targeting their products to meet the requirement of SMEs. They are providing solutions for both in-house implementation and also through SaaS (Software as a Service) model. The solutions include automating production processes, capturing, storing and integrating the data, and processing captured data for decision making and report generating. The paper presents some facts about application of information systems in SME sector in Kazakhstan. This study is mainly concerned about the type of information technology/information systems used in SMEs in Republic of Kazakhstan with respect to Almaty city. In addition, the paper presents the findings of the study with respect to barriers in implementing information systems, government support, role of web technology, benefits of using information systems and future trends regarding usage of information technology. This study is based on primary, as well as, secondary data. Primary data is specific to Almaty city only which is termed as financial capital of Republic of Kazakhstan. Key words: Small and medium enterprises, information systems, small and medium enterprise development authority (SMEDA), European commission.
INTRODUCTION The small and medium enterprise (SMEs) faces different problems, which may not be faced by large companies, due to their economy of scale. One of such problems is the application of information systems/information
*Corresponding author. E-mail:
[email protected].
technology for optimizing and efficiently running their business processes. The main reason is scarcity of financial resources in setting up and running information systems. The cost of running information systems, their upgrades, and maintenance require sizable resources (money and technical manpower) in the long run in SMEs. In addition, in some cases, entrepreneurs of the small firms are ignorant about information characteristics
Singh et al.
7043
Table 1. Characteristics of SME as per European commission.
Variable Maximum number of employees Maximum turnover Maximum balance sheet total
Medium sized Maximum 250 €50 Million €43 Million
Small sized Maximum 50 €10 Million €10 Million
Micro-enterprise Maximum 10 €2 Million €2 Million
Source: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htm.
of their firms, information needs, and sources of information and utility of various types of information to the business. For large companies, it is easy to create digital working environment because they have recourses and highly skilled professionals working in the organization. They have created globally networked information systems. On the other hand SMEs do not have resources and in most of the cases they do their business locally. However, their operations are similar to any large companies. SMEs follow two types of business models. The first, wherein they convert raw material into finished products and directly sell it to the consumers. The consumer may be an ordinary citizen or a firm. The second, they provide raw materials, work in progress inventory, and even finished goods in the form of parts/components, mainly to large manufacturing or marketing companies. To be successful in such scenario, SMEs need information systems for efficiently running business and also for cost effective and faster means of communication. It will help them in networking and forming peer groups for better bargaining from large companies. They need information systems for searching raw material for their products, buyer markets for their finish products and being well informed about environmental conditions, such as market trends, government policy and initiatives, availability of financial resources and availability of efficient technology/machinery. Keeping this in view, the present study was taken up to identify major information technologies/information systems being used in the SMEs in Republic of Kazakhstan, specifically in Almaty region. In addition, this study also focuses on usage of technology and acceptance by the SMEs and government assistance for setting up infrastructure for information systems. This paper is divided into seven sections, including a brief introduction of the study in first section. In the second section, various definitions of terms SME/SMB are summarized. This is done to make comparison of the term across different continents/countries. The SME status in Republic of Kazakhstan is presented in the third section. The fourth section contains the review of literature in the context of utility of information systems and information technology in making SMEs more sustainable. The detailed research methodology adopted for the purpose is given in section five. The results based on the analysis of primary data with respect to various facets of information systems in Republic of Kazakhstan are presented in section six; it is followed by analysis and
concluding remarks in the last section.
SMALL AND MEDIUM ENTERPRISES (SMES) The SME abbreviation is common in European Union; however the term SMB (Small and medium business) is a standard term in other part of the world. SMEs/SMBs are characterizes by a number of employees, turnover of the company, volume of sale, etc. In the literature SMEs are defined by researchers in different ways, depending on many local, national, international and environmental factors. In fact, the definition of SME is very specific to a particular country. However, there are some regional agreements on the definition of SMEs. As an illustration, few definitions of SMEs from Australia, European Union, Pakistan, India, Bangladesh, South Korea, Taiwan, Malaysia and Thailand are listed below.
Definition 1 Jones (2001) defined SMEs in the context of small businesses in Australia as "Firms are categorized as small if they employ less than 20 people, medium 20 to 199 people, and large for more than 200 employees" (The international standard for large business classification is those with 500 or more employees).
Definition 2 European Commission defined an enterprise as SME or micro enterprise if it satisfies the criteria for the number of employees, and one of the two financial criteria, that is, either the turnover total or the balance sheet total as given in Table 1. In addition, the other features described by the commission are "it must be independent, which means less than 25% owned by one enterprise (or jointly by several enterprises) falling outside the definition of an SME or a micro-enterprise, whichever may apply. The thresholds for the turnover and the balance sheet total will be adjusted regularly, to take account of changing economic circumstances in Europe (normally every four years)". In addition, EU member countries have their own definition also. For example, an enterprise in Germany, up to 500 employees is known as SME but in Belgium, this number is only 100.
7044
Afr. J. Bus. Manage.
Table 2. SMEDA: SME Definition.
Enterprise category Small and medium enterprise (SME)
Employment size (a) Up to 250
Paid up capital (b) Up to Rs. 25 Million
Annual sales (c) Up to Rs. 250 Million
Source: http://www.smeda.org.pk/main.php?id=2. 1 US$ = 90-92 Pakistan rupee.
Table 3. SMEs in developing countries.
Country Bangladesh
Manpower strength
