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Small business innovation trends that will shape 2024 in Malaysia

small business innovation trends MY

Starting a business is easy. But staying in business? That’s the hardest part.

Small businesses have gone through a challenging number of years thanks to the pandemic — and for those that have emerged through the ‘rubble’ and survived, you might be wondering; what’s next?

Two key words have been mentioned consistently over the past year — adaptability and agility. As a small business owner, you know better than anyone that you need to keep improving to keep your business running and your company growing. And that means constantly adapting, evaluating, reflecting, and fine-tuning.

For many small businesses, digital transformation has been the only way to stay afloat during the pandemic. Thanks to that, there’s been a rise of various technologies and software, bringing about monumental changes to small businesses and consumer expectations.

Now that the world is more interconnected than ever before, keeping up with digital trends and adopting new technologies is crucial for small businesses. The digital economy presents a huge opportunity for small business owners to reach new markets and acquire customers.

We want to empower Malaysian businesses with the knowledge of innovation trends in the digital space so you can take your business to the next level and achieve (or even exceed) your target growth.

Download the guide to discover the top 5 innovation trends for Malaysia in 2024.

small business innovation trends MY

What is business innovation?

Business innovation refers to the introduction of new processes, ideas, services or products, with the ultimate goal of driving profitability and revenue growth for the company. It could be anything from launching a new product or service, or having more efficient operations, solving current business problems and more.

How is the Malaysian government supporting innovation?

The Malaysian government has big dreams — as outlined in the Twelfth Malaysia Plan, with RM400 billion allocated for new and existing projects. The plan is centred around the theme of being ‘Prosperous, Inclusive, and Sustainable’, and aims to turn Malaysia into a high-income economy by 2025, increase the contribution of small businesses to the total economic output, and reduce income gaps, amongst others.

One of the key policy enablers outlined is accelerating technology adoption and innovation — as the government has identified that Malaysia’s competitiveness is driven by good talent and infrastructure, but not innovation. There is a crucial need to strengthen and improve innovation capacity and skills in Malaysia, especially because an increase in innovation will increase wealth at a faster pace.

scatter plot graph depicting countries and their innovative capacity on the X axis and GDP (PPP) per capita on the Y axis

Based on the Malaysia Knowledge Economy Study Phase III in the Twelfth Malaysia Plan, they found that based on the average growth trend, every 1% increase in innovation helps to increase wealth by 0.36%. Malaysia’s GDP growth was significantly lower than its potential output — with a huge wealth gap of 49.2%.

bar chart depicting Indonesia, Malaysia, Singapore and Thailand and their score on the Production Innovation sub pillar of the Global Entrepreneurship Index 2018

Malaysia’s position in product innovation has also been deteriorating over the years, as evidenced by the data shown in the graph above. As such, new targets have been determined in order to accelerate research and development (R&D), commercialisation, and innovation.

Gross expenditure on R&D to GDP is expected to increase from 1.04% to 2.5% by 2025; business expenditure on R&D to GDP is expected to increase from 43.9% to 70% by 2025;

the number of researchers per 10,000 people in the labour force is expected to increase to 130 by 2025; and the number of patent applications by Malaysians is expected to increase to 2000 by 2025. Malaysia is also aiming to be one of top 20 countries ranked in the Global Innovation Index by 2025.

How are these targets going to be achieved? The government has launched the MYDIGITAL initiative to help bolster innovation efforts and tackle current challenges. It’s also supporting innovation from the ground up — Yayasan Inovasi Malaysia (YIM), an agency within the country’s Ministry of Science Technology and Innovation (MOSTI), helps direct funds and support to grassroots inventions that can make a difference.

MOSTI has also announced the formation of the Malaysian Research Accelerator for Technology and Innovation (MRANTI), as it aims to fast track the commercialisation of its technology and innovation. Established as a launch platform to help enterprises, researchers, and inventors maximise the return of ideas at a faster rate, it will offer capacity-building programs, assistance to penetrate the market, prototype facilities, live test fields, as well as other facilities and services.

Additionally, MOSTI is creating a Startup Development Roadmap with the aim of creating 5,000 companies (including five unicorn startups) by 2025. A comprehensive platform known as MyStartup will also be set up to boost the development of startups in Malaysia.

What are the top small business technology trends?

1. Artificial intelligence

Artificial intelligence (AI) and machine learning have been trending topics for years. Al helps to predict consumer behaviour, which in turn allows businesses to anticipate demand surges.

It also enables small businesses to offer more personalised customer experience and services.

AI can assist SMEs in performing tasks more efficiently with reduced personnel, resulting in lower operational costs. That’s an essential approach for small businesses in today’s challenging economy, and in the face of Industry Revolution 4.0. Business leaders who implement AI and machine learning technology early will profit from being ahead of the curve, since these breakthroughs will only prove more important in the future.

2. Proliferation of 5G

a person typing on their phone with icons overlaid to depict financial and technological functions

Although the pandemic has delayed the rollout of 5G technology domestically and internationally, it’s clear that 5G is the future. It provides significantly faster data transmission speeds than existing 4G networks, and according to Huawei, it also promises little to no latency, or delay in data transfer.

Efficient speeds in data transmission will lead to more business growth and less communication delays. 5G has the potential to transform almost all industries, ushering in a new world of hyper-connectivity, and facilitating the 4th Industrial Revolution through the Internet of Things (IoT).

Technologies such as artificial intelligence, virtual and augmented reality, advanced analytics, and robotics will be boosted by 5G’s enhanced reach, speed, and reliability — and researchers at IHS Markit say it could enable global economic output of US$13.2 trillion by 2035.

The number of 5G global connections was estimated to reach one billion by the end of 2022, according to GSMA. And by 2025, two in five people around the world could be living within reach of a 5G network. In Malaysia, telcos will not impose an additional charge for 5G access and the Communications and Digital Ministry is offering a 5G Rahmah package – these initiatives will further boost 5G adoption within the country.

3. Cloud computing

Cloud computing is the new normal. There’s already a whole new wave of companies leveraging the cloud to create automated solutions, and businesses who are investing in it because they see its value.

As technology gets more and more complex, businesses are increasingly finding a need to store their confidential data safely and securely, whilst ensuring it remains accessible to those relevant — this is where cloud computing comes in. According to Gartner, worldwide end-user spending on cloud services is forecasted to grow 20.7% to total $591.8 billion in 2023, up from $490.3 billion in 2022.

Locally, the Malaysian Investment Development Authority (MIDA) announced that a major cloud provider plans to invest over RM25.5 billion over 15 years to establish a new infrastructure “region”. This could be significant for Malaysian SMEs looking to integrate cloud computing into their business processes in the future.

4. Automation

Automation isn’t a new concept, but it used to be synonymous with the image of advanced manufacturing plants full of robotics. It has nonetheless come a long way since, for example in the form of software tools in commonly used programs.

There’s scope for it in almost any business and across industries — and contrary to popular belief, it doesn’t replace people. It simply frees them from performing mundane and repetitive tasks.

Historically, automation required expensive servers and a team of experts to maintain them. This meant that it was out of reach for many small businesses due to cost issues. With the development of cloud-based platforms however, automation tools are now accessible to even the smallest companies — even those with just a handful of employees!

Because of the current labour crunch, companies that used to depend on manual employee-driven processes and operations cannot easily scale. As such, business owners are increasingly looking towards workplace automation to alleviate the talent shortage, in addition to saving valuable money and time.

As a small business, automation is the way to go — it releases employees so that they are able to focus on higher value tasks, enabling them to augment their skillsets with emerging capabilities. All this increased efficiency, productivity and lower costs translates into healthier profit margins, and that’s certainly what you want to see for your business.

Download this innovation trends guide to find out more.

5. Work management tools

a group of colleagues looking down at a table and smiling

Another small business tech trend is the use of work management tools. Gone are the days where a simple to-do list or Excel sheet would suffice. As projects become more complex, trends keep changing, and competition increases, managers constantly have to deal with a growing list of tasks and responsibilities — in addition to managing a team!

Work management tools have come to the rescue with amazing features and all sorts of integrations with other software. From daily reports to activity tracking, overview of digital marketing campaigns and more, they provide everything managers need in one central solution.

They also improve accountability in an increasingly hybrid or remote work environment, as they are transparent in showing who’s the owner in charge of each task, as well as the corresponding status of that task. This allows managers to plan for the months ahead more efficiently — they can organise and delegate, track progress and deadlines, and review projects alongside team performance.

Globally, the demand for task management software is growing faster than ever. In fact, the industry was set to reach a value of $4.33 billion by 2023, with more to come in 2024. Given the increased complexity of the modern workplace, this is a trend to watch.

6. Comprehensive HR software

The pandemic has no doubt introduced a new normal — remote working. It became difficult and complicated for many small businesses to keep track of their employees and engage them effectively.

Many small business owners and HR leaders rely on Excel spreadsheets and antiquated HR systems to manage their people, but employees are starting to expect more. And they also deserve more. This is why comprehensive HR systems are incredibly beneficial — they not only help to improve productivity, they also help to create a system of engagement, provide a centralised source of information, enable employee self-service, and more.

In the new world of digital and remote working, traditional HR is falling short — which is why taking HR digital is more imperative than ever. If your small business is still relying on manual HR processes, it’s time to consider switching to Software as a Service (SaaS) HR. You’ll be blown away by the incredible benefits it brings to your business.

If you’re unsure about how you can go about choosing the right HR software for your business, check out our comprehensive guide here. Or if you’d like to see if Employment Hero is the right fit for you, request a demo today and we’ll show you how it works.

7. Increased focus on cybersecurity

In today’s digital-first world, cybersecurity has climbed up the list to become one of the top priorities of businesses.

While many businesses have pivoted successfully to e-payments because of its efficiency and convenience across multiple touchpoints, trust is a huge factor when it comes to sentiments around it. Businesses need to strengthen and future-proof their digital payments architecture to ensure that consumers can purchase from them safely and securely.

We are seeing an increase in the number of cyberattacks around the world. From government agencies to big corporations, no one is safe from cyber attackers. Technologies to combat data leaks and breaches will only continue to grow in the coming years.

According to cybersecurity company Kaspersky, phishing incidents continue to skyrocket in Southeast Asia, with more than half of them targeting Kaspersky users in Malaysia. From January to June 2022, Kaspersky’s anti-phishing system blocked a total of over 12.1 million malicious links in Southeast Asia, one million more than the 11.2 million detected over the same period last year.

Their research also revealed that more than 22% of SMEs do not have a policy to regulate or restrict access to internal infrastructure by a third party. As a small business owner, you need to build your cybersecurity infrastructure immediately, as having good security means protecting your cash flow and reputation.

8. Adapting remote work

The future of work is flexible. The pandemic has changed our perceptions of the way we need to work — when everyone realised that working remotely gets the job done too. In Employment Hero’s 2022 Remote Work Report, we found that more than anything, employees are looking for balance and flexibility.

They want to enjoy the benefits of the office, while also having the option to work remotely and create a better work-life balance – in fact, 88% of knowledge workers in Malaysia said they would like to work remotely at least one day per week, and almost a quarter (23%) would like to work remotely every day.

Having the option to work remotely has even become a non-negotiable prerequisite for job seekers in cities like Singapore. With the help of technological tools however, companies are learning to embrace new working cultures and meet employee expectations to enhance retention rates.

Remote working has also made it possible for businesses to hire talent regardless of their geographical location — opening up a whole new world of possibilities, not to mention the cost savings and flexible work hours which also enables businesses to grow quickly.

What should small business owners focus on in 2024?

2024 is shaping up to be a year full of challenges and uncertainties with the rising cost of living, inflation rates and forecasts of an impending recession. One thing’s for sure, though — you should continually develop your business to future-proof yourself and your team.

Download this innovation trends guide so you can keep your finger on the pulse. These trends will help you identify where to focus and invest in as you plan your strategy for the upcoming year.

Don’t forget to upskill your workforce for the next decade too. With the rapid speed of innovation and technological developments, technical skills are in demand — but so are soft skills. These are 6 of the most in-demand skills for the future of work that you should focus on.

Wishing you all the best in your 2024 endeavours — we hope to see your small business grow and prosper!

For more helpful resources, check out our Resources page to stay up-to-date with all the happenings in Malaysia.

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