Interview With Hepsy Mkhungo, CEO of One Linkage On The Importance Of Digitalising SMMEs! Hepsy Mkhungo is the founder and CEO of One Linkage, an Integrated end-to-end digital platform that enables supplier diversity by simplifying collaboration between corporates and small and medium businesses.
We recently had an interview with her to help shed some light on the challenges SMMEs are facing in South Africa and discuss some of the solutions to resolve those issues including the importance of digitalisation. Check out the interview below.
1. At what point did you realise that digitalisation can be used to make it easier for businesses to function?
Covid-19 and lockdown highlighted the need for many organisations to quickly adopt innovative solutions in order to continuously service their clients. Even though a large number of companies may have struggled during this period, there was still the expectation to deliver to one’s clients, who in turn had their own deadlines to contend with. As a result, many businesses had to digitalise their service offering. Covid-19 ultimately encouraged businesses to innovate.
2. What inspired you to come up with this solution for SMMES?
Linkage spotted a gap in the market in realising that corporates often don’t have an end to end system that manages their interaction with SMMEs. The interaction is to support SMMEs with integrated development, procurement and funding support. Corporates need to achieve their commercial objectives through SMMEs, Conversely, there are SMMEs that are desperately looking for various opportunities in order to survive, grow and flourish. We understood the importance of ‘connecting’ these SMMEs with corporates and as such, Linkage was developed to create a digital, unified solution that solved this issue, and Covid-19 was the opportune time to do so.
3. What is your take on the current South African SMMES sector and the challenges they face?
The problems that South African SMMEs face are unfortunately multiplying. They operate in an already-weak economy, while many are trying to recover from the July unrest – this, coupled with loadshedding. Attracting funding is also a major challenge for many SMMEs. Many of our SMMEs are struggling in this difficult climate and battling to ‘catch a break’. Some have even had to close their doors.
A positive that has emerged for SMMEs is many have been forced to innovate by digitalising their solutions and changing their approach to business. I am now seeing a much greater level of collaboration happening among SMMEs, which is attracting new skillsets to the sector. Because many businesses are worried about having a full-time staff complement, they are engaging (and collaborating) with contractors and freelancers to aid in their service delivery, driving the business model of Enterprise Supplier Development.
4. Why do you believe that Digitalisation is the most viable solution for SMMES?
Having the right tools and harnessing the benefits of digitalisation is critical for businesses. Through digitalisation, SMMEs are able to make use of data to help make more informed decisions in order to understand the market better.
The world is moving towards ‘digital’, and even our communication strategies are becoming digitised (for example, using communication and collaboration tools such as Slack).
SMMES cannot avoid moving into the digital space, otherwise they will be left behind.
- Improves efficiencies and turn-around times for businesses;
- Allows for access to funding opportunities available online;
- Provides the asset of data analytics whereby digital tools can help businesses make informed decisions, quicker.
5. What made you realise that there is a need to boost procurement that supports smaller business, diversity and sustainability in corporate SA?
I have found that many corporates still operate in siloes and as a result, cross-collaboration within departments and SMME suppliers is not common. Corporates need to engage and integrate more interdepartmentally whilst connecting with SMMEs that can fulfil strategic business services and functions. Furthermore, corporates often don’t have the right toolkit to connect with SMME’s (and vice versa for the SMMEs). A procurement processes and digital platform that interlinks and connects corporates with an integrated database of fully vetted SMMEs became starkly apparent.
Linkage’s platform is the ideal solution to facilitate this integration.
6. What advice would you give corporate SA in terms of how they can best work with small businesses through digital tools?
The advice I would give is to move away from having procurement teams working in siloes. Corporates need to adopt tools that will help attract and integrate SMMEs. Funding is critical in this regard. Often, stakeholders who are tasked with small business development work in siloes – there is no transparency within their role, and they end up becoming gatekeepers. This results in opportunities not reaching emerging suppliers, who need the funding.
Linkage’s digital platform enables transparency and collaboration between SMMEs and corporates. Funding is also done on the platform.
7. What difference do you think an inclusive economy will bring for SMMEs in South Africa?
Last year, Mckinsey conducted a study that examined how SMMEs (with a turnover of more than R15m and less than R500m) play an outsized role in economies and employ an estimated 80% of the continent’s workforce in both the formal and informal sectors. These businesses carry a very important value proposition – they are innovators, and creatives, and corporate South Africa needs to leverage them. Our economy won’t grow if our SMME sector doesn’t grow. The two are interlinked and interdependent.
8. What role do you think Digitalisation will play in connecting SMMES and Corporates?
Digital transformation drives business development and access to opportunities. It also enables businesses to enter new markets. It allows for faster turn-around time in terms of service delivery, as well as a more engaged workforce.
However, a change in mindset is required in order for digital transformation to be a success.
9. What are some of the challenges SMMES and Corporates can expect from digitalising their business processes?
The biggest challenge is adoption – anything new can often be seen as ‘scary’. New tools and platforms can be challenging to implement, and serious change management is required, alongside a reward mechanism. However, if digital adoption is done correctly and properly, it can truly transform a business, and this is achievable through implementing proper change management practices.
10. What would you say are the benefits that SMMES and Corporates will gain from digitalisation?
SMMEs and corporates will both benefit from digitalisation. For example, they will gain access to markets that they previously did not have. They will also be able to make choices based on facts, and the culture of the company will improve as staff move to a remote way of work.
11. Since many companies are opting for digitalising their businesses, what advice would you give to SMMES and Corporates that want to convert and use digital tools so that their business can improve and thrive?
Organizations must first determine if they want to ‘buy, borrow, or build’ digital assets. They must make a strategic decision on which tool they wish to use and invest in in the long term, and which tool will best act as a strategic enabler. However, due to the amount of effort required and the fact that they may not be in the business to be able to pursue such a costly exercise, some of them may seek to make use of tools currently in existence. Alternatively, some businesses may want to borrow because they wish to employ a variety of equipment. So, the first step is to make sure they have a clear aim in mind. Secondly, they must gauge the amount of interest in the adoption from their own teams. In simple terms, education is key and knowing the tools that you want to introduce and how they are integrated.