ONDC for SMEs: Unlocking Growth Potential and Operational Readiness

Small and Medium Enterprises (SMEs) are critical in promoting economic growth and innovation in today's quickly changing business environment. However, the road to success and growth for SMEs can take time, especially when efficiently and effectively scaling operations.

Growth is a critical turning point for SMEs that can lead to a wealth of advantages. These businesses can not only access new markets and extend their consumer base, but there is also the potential to boost earnings, improve profitability, and ensure long-term viability. As a result, the Open Network for Digital Commerce (ONDC)'s growth has drawn considerable interest from the business community, especially from SMEs.

Through the ONDC, SMEs can establish a robust online presence, seamlessly connect with consumers, and streamline their operations. The platform offers various features and services, including digital storefronts, secure payment gateways, logistics support, and real-time analytics, enabling SMEs to enhance their customer experience, optimize supply chains, and make data-driven business decisions.

ONDC Definition and Goals

The Indian government is leading the way in democratizing digital commerce with the Open Network for Digital Commerce (ONDC). It is an inclusive ecosystem supported by an open, public, and transparent digital infrastructure that enables participation and fair competition for companies of all sizes. The ONDC strives to encourage competition and innovation while boosting customer choice and convenience by lowering barriers to entry for companies into the digital economy.

ONDC's primary goals are two-fold - To simplify and standardize digital commerce, thereby making it more accessible and manageable for businesses of all sizes, and to encourage a more balanced distribution of economic benefits from digital commerce across the breadth of society, including SMEs. It desires to achieve this by offering a universal, interoperable platform that eliminates businesses' need to register on multiple digital commerce platforms.

Impact of ONDC on the Commercial Environment

ONDC's introduction represents a significant shift in the digital commerce environment. Its multi-faceted effects profoundly impact how businesses operate, compete, and grow. ¹According to McKinsey (ONDC) has the potential to increase India’s digital consumption by 5X to around $340 billion by 2030.

Implementing ONDC can drastically lower the barrier to entry for SMEs into the digital economy. Businesses are freed up to concentrate their resources on enhancing their goods and services by forgoing the requirement to integrate with various platforms. Additionally, this openness allows firms to reach a larger customer base without worrying about platform-specific demographics.

Second, ONDC could alter market dynamics and intensify rivalry amongst digital commerce platforms. Given the fundamental principle of competition driving quality and cost-effectiveness, this disruption could result in better services and reduced prices for businesses and customers.

Thanks to ONDC's interoperability function, businesses are no longer bound to a single platform, which allows them to move freely across platforms. As a result, more choice and flexibility might result in an improved digital environment that would benefit both businesses and consumers.

Additionally, the transparency of ONDC promotes ethical behavior in the world of digital commerce, which is particularly advantageous for SMEs. They can negotiate more fairly after frequently losing out in negotiations with major platforms.

Changes Brought by ONDC to the Business Ecosystem

In the modern era, information and data have become the lifeblood of business. The Open Network for Digital Commerce (ONDC) represents a significant shift in how businesses interact with these vital elements, particularly small and medium-sized enterprises (SMEs). The changes brought by ONDC will affect how businesses operate and how they communicate and grow in a rapidly evolving digital ecosystem.

Digital Infrastructure:

SMEs frequently face multiple challenges in building and maintaining a robust digital infrastructure. These challenges frequently involve tight financial constraints for digital transformation, a lack of technological know-how, and problems with data security and privacy. Additionally, many SMEs need help with integration and interoperability problems while attempting to connect several digital systems and applications. This may limit their productivity and adaptability.

By offering a single and interoperable infrastructure for digital commerce, ONDC seeks to ease these difficulties. This entails developing open protocols for ordering, logistics, and cataloging, all essential to digital commerce. In addition, by reducing costs, streamlining procedures, and fostering interoperability, the platform hopes to assist SMEs in overcoming these obstacles to digital transformation.

Moreover, ONDC is built with the principles of security and privacy by design, which ensures that SMEs can safely and securely engage in digital commerce without needing a high level of technical expertise. This is particularly vital for SMEs, which often need more resources to adequately address data security and privacy concerns.

A robust digital infrastructure can provide numerous benefits for SMEs. First and foremost, it can enhance efficiency by automating routine tasks and streamlining business processes. This can free up valuable resources for strategic endeavors and improve business agility. ²According to Deloitte 85% of all SMEs report that the digital tools they use have helped their business somehow.

Furthermore, a strong digital infrastructure can enable better data collection, analysis, and decision-making. This can help SMEs understand their customers better, identify market trends, and make informed strategic decisions.

Communication Issues:

SMEs often struggle with a range of communication issues. These include the difficulty in organizing and coordinating communication across several channels, the restricted availability of trustworthy and economical communication technologies, and the problems in maintaining an efficient connection with clients, partners, and suppliers.

ONDC can greatly improve the capacities of SME communication. The ONDC supports smooth communication between the various stakeholders in the digital commerce ecosystem, including companies, clients, partners, and suppliers, by offering a single and interoperable digital commerce platform.

Moreover, ONDC's open cataloging, ordering, and logistics protocols enable efficient and reliable communication throughout the commerce process. This assures all parties access to necessary information, reducing miscommunications and enhancing coordination.

Improved communication can confer a host of benefits for SMEs. For one, it can enhance collaboration and coordination with partners, suppliers, and customers, improving efficiency, customer service, and competitiveness.

Operational Preparedness for SME Growth

As SMEs prepare to exploit the opportunities offered by the ONDC, several key factors are crucial for successful scaling. These include infrastructural upgrades, workforce development, and process automation and improvement.

Infrastructural Upgrades

To effectively utilize ONDC's capabilities, SMEs must invest in upgrading their digital infrastructure. The new-age digital infrastructure comprises three core components: hardware, software, and internet connectivity.

• Hardware and Software: As businesses scale, their hardware and software requirements grow accordingly. With the technology-driven ONDC platform, SMEs must adopt the latest hardware supporting high-volume digital transactions. Similarly, they should embrace software that can efficiently manage business operations, such as inventory management, customer relationship management (CRM), and data analysis.
• Internet Connectivity: High-speed, reliable internet connectivity is another prerequisite for SMEs to exploit the ONDC benefits fully. This ensures uninterrupted digital operations, facilitates swift transactions, and supports real-time data transfers.
• Data Security Measures: With digital transformation comes the increased risk of cyber threats. SMEs must enhance their data security measures, ensuring they comply with applicable regulations and safeguarding customer data from breaches. Cybersecurity solutions like firewalls, intrusion detection systems, and encryption should be central to their digital strategy.

Training and Workforce Development

The advent of the ONDC era necessitates upskilling the workforce to navigate the digital landscape competently. Therefore, SMEs must focus on two primary areas of workforce development: digital literacy and technical skill enhancement.

• Digital Literacy: As businesses digitize, employees across all levels must possess the fundamental skills to interact with the digital environment. This includes knowledge of how to use various digital tools and platforms, cyber hygiene practices, and digital communication etiquette.
• Technical Skill Enhancement: Beyond basic digital literacy, specific roles within SMEs may require advanced technical skills. For example, teams managing digital operations and data security should be proficient in data analysis, cloud computing, and cybersecurity. To enhance these skills, SMEs should consider investing in regular training programs or collaborations with ed-tech companies.

Process Automation and Improvement

Process automation is a tactical choice for SMEs in the ONDC age. Automation can boost operational effectiveness, decrease human error, and free up resources for work with higher added value.

SMEs may consider automating repetitive processes like data entry, invoice generation, order processing, and customer service. Artificial intelligence and machine learning technology can also offer useful insights to enhance business decisions.

Improvement is a continuous process, and SMEs should strive for constant refinement in their operations. Regular audits of business processes can identify bottlenecks and inefficiencies. In addition, feedback from customers and employees can be instrumental in process improvement initiatives.

How Tata Tele Business Services can help…

The role of TTBS becomes even more vital considering the ONDC's objective to democratize the digital commerce landscape and increase its accessibility. ONDC aims to promote open networks developed on open-source methodology, enabling a resilient and interoperable digital commerce ecosystem.

TTBS can play a key role in enabling SMEs to capitalize on ONDC's potential by ensuring that businesses have access to reliable, secure, and efficient technology services. TTBS provides the digital infrastructure that SMEs need to integrate their operations with ONDC. In addition, it offers secure broadband connections, data protection solutions, and cloud services that make the transition to ONDC more seamless.

ONDC requires strong, reliable connectivity and robust data protection measures. TTBS, with its comprehensive ICT solutions, provides these necessary elements. In addition, it ensures that SMEs can thrive in the ONDC era by assisting in developing a resilient technological framework.

Conclusion

There are numerous opportunities for SMEs in the ONDC age. Standardizing digital commerce protocols promotes interoperability, making SMEs more accessible and expanding their market reach. Furthermore, it promotes competition and gives SMEs a better chance of success by democratizing the digital commerce ecosystem.
For SMEs navigating the ONDC age, TTBS can be a dependable digital services enablement partner. It improves operational readiness and enables SMEs to benefit fully from the ONDC era's opportunities by offering comprehensive and integrated ICT services. Without question, TTBS will continue to play a critical role as a technology partner as SMEs get ready to grow and prosper in this digital era.

References

1. https://www.moneycontrol.com/news/business/ondc-likely-to-increase-digital-consumption-by-5x-to-340-billion-by-2030-report-10474651.html
2. https://www2.deloitte.com/content/dam/Deloitte/es/Documents/Consultoria/The-performance-of-SMBs-in-digital-world.pdf