Thailand 4.0: Are local SMEs doing enough?

Thailand 4.0: Are local SMEs doing enough?

Small and medium-sized enterprises (SMEs) dominate the business landscape in Thailand but, like much of the country, are caught in a sort of middle-income trap. They face intense competition from other SMEs in low labour cost, low value-add production locations in the region (such as Cambodia and Vietnam), yet they also are unable to transit into innovative, high-value activities (such as those that SMEs in Japan, Korea and Taiwan are engaged in).

The government in Thailand has been very supportive, developing the Thailand 4.0 model to build a knowledge-based society for the benefit of all citizens. Thailand 4.0 is seen to be a new economic model aimed to pull the country out of the middle-income trap in which it has been in for over a decade. To bolster growth, Thailand needs to move on from banking on its abundant, cheap, unskilled labour as a source of competitive advantage to being an innovation-led country.

High potential for automation

A recent McKinsey Global Institute study, “A Future that Works: Automation, Employment, and Productivity,” showed that Thailand has plenty to gain from automation. The study looked at 46 countries representing 80% of global workforce and examined the potential of automation in these countries, what’s possible by adapting demonstrated technologies, as well as the potential similarities and differences in how automation could take hold in the future.

The overall results showed that all economies, from Brazil to India and Saudi Arabia, stand to gain from the hefty productivity boosts that robotics and artificial intelligence will bring. Thailand has the second highest potential for automation globally (54.6%).

Countries such as Thailand should consider driving automation as it can enable businesses to improve performance by reducing errors and enhancing quality and speed. Sometimes automation can even achieve outcomes that go beyond human capabilities, such as contributing to cures for diseases.

Thailand, being an automotive hub, should be driving automation wherever possible. In fact, McKinsey’s report also showed that deploying automation technologies could help Thailand leapfrog into state of-the-art manufacturing.

When countries are experiencing slower growth such as now, automation can help give a needed boost to economic growth and prosperity.

But the question remains – how do you capitalize on this opportunity? Also, despite the government’s efforts, Thailand still has some way to go before achieving its digital vision. What’s the missing link?

Capitalising on opportunity from Industry 4.0

As the champion of local and global business builders, Sage believes local business builders need to make a concerted effort to understand, adopt and innovate using the technologies at their disposal. The government cannot tackle the task of transforming Thailand’s economy alone.

SMEs can support the Thailand 4.0 vision by starting to see themselves as technology-embracing companies . They must leverage technologies such as cloud and artificial intelligence for survival and success. Regardless of industry or vertical, all businesses will need to understand the impact of these technologies.

While some businesses may see technology as a threat, those that can seize the opportunities and understand how technology can open up new sources of information and enable brand new avenues of growth, will come out ahead of their competitors.

Two technology trends to take note of are:

  1. Cloud

When it comes to cloud, there is a misconception amongst some business owners that cloud technology works best for larger businesses or businesses in certain verticals and not others. However, by incorporating cloud as part of a larger IT strategy, businesses of all sizes can keep pace with today’s fast and evolving business environment.


Cloud allows smaller businesses to benefit from Anything as a Service (XaaS). Smaller businesses gain access to infrastructure, platform, software and even security as a service, reducing the need for hosting (and the underlying requirement for infrastructure and systems), and turning these services to on-demand. Smaller businesses get better access to new technologies and easy scalability with cloud. It also shifts costs from capex to opex and freeing up cash for business.


SMBs can leverage cloud by automating processes like issuing quotes and invoices so that they can save costs, present a professional face to customers and free up time for tasks that add value to the business. Business owners need to focus on things that really give them a competitive edge, like innovation and customer service instead of worrying about their books. That’s where affordable online accounting solutions (such as Sage One) come in – they make accounting easy for non-accountants


While at some point in time, these benefits may have been mere conveniences and ‘nice to haves’; they’ve become increasingly important as SMBs respond to more demanding customers, tougher regulation and growing economic pressure.


  1. Artificial Intelligence (AI)

Based on a recent PwC report, “Leveraging the Upcoming Disruptions from AI and IoT”, Vilaiporn Taweelappontong, lead partner for PwC Thailand’s consulting practice, said businesses needed to learn how to derive value from both AI and IoT technologies or risk losing to their competition for years to come. The same report also highlighted how the pace of technology adoption by businesses will be augmented by pressure from employees, who will want to experience the same convenience and personalisation of AI applications in their working lives that they’re accustomed to at home.

Since AI is still in its early days, businesses may have the misconception that AI can only be utilised by larger corporations, or by those with the tech know-how. This cannot be further from the truth as there are many applications of AI for businesses of all sizes.

The most immediate benefit of AI is that it can offer businesses new tools to work smarter. With advancement in AI, there will be less time entering data and more time getting valuable intelligence and insights from the services used. AI can be used to augment decision making, which includes everything from choosing which products to feature on your website to where to spend your advertising budget.


A great example is Pegg, a chatbot created by Sage on Facebook Messenger and Slack. Pegg lets users manage business finances, including expenses, something that small businesses would find appealing since it’ll allow them to focus on doing their work.


AI is still in its infancy but we are already seeing much possibilities, as we witness computers already outperforming humans in specific tasks. For smaller businesses, AI can open up new possibilities. It can disrupt old business models and reveal new opportunities and offer lower barriers of entry. AI can also offer better efficiency, more streamlined processes, lower operating costs, better customer experiences, etc. Smaller businesses must be able to identify AI opportunities early and not shy away from new technologies.


Saying yes to technology – how does Sage help?

SMBs are usually viewed as slow adopters of emerging technologies.  Sage aims to equip SMBs to leverage technology and gain a first-mover advantage. Inorder to bring value to SMBs’ sustained growth. Sage helps SMBs navigate their way around new technologies such as AI, by answering salient questions like “What does this technology mean for me?”, and “Where and how do I start?”.

Sage supports business builders in their dreams of leaving a legacy by taking care of their technology worries. From implementation and legislation to compliance and digital transformation, Sage can support business builders no matter the stage of their business and in this way, overcome any technology or capability gap they may have when facing questions about technology. Business builders are the backbone of economy, so by supporting their expansion goals, we hope to drive the economy as well.

Sage’s solutions are created from the ground-up, with the core of our solutions being a deep understanding of SMB-specific characteristics and needs. This has allowed us to create unique frameworks which suit SMBs perfectly, instead of simply scaling back enterprise solutions into smaller packages for SMBs.

Sage Asia is making our commitment to Thailand by growing roots in Bangkok as a start, with plans to establish a presence here in Bangkok. A local office will help us better connect with our local partners here, to not only handle the growing Northern and Southern regions of Thailand, but also to expand into the Indo-China area. Details on our plans in Thailand are in the works, but we do plan to solidify our commitment to our Thai customers as well as to our business partners.

We also want to start helping institutions of education and higher learning, through cooperation with government bodies or private organisations, to help Thai students be equipped with the necessary skills in the area of technology to stay relevant and employable in the digital age, essential as Southeast Asia capitalises on the benefits from the ASEAN Economic Community, which promotes free movement of goods, services, and investments as well as freer flow of capital and skills. Having such technological skills and know-how will facilitate the ability of future Thai workers to find positions in any of the other ASEAN countries in future, especially as there will be SMBs in these countries.

The last word

Technology is fast disrupting businesses across industries and SMEs in Thailand need to get ahead of the curve to stay relevant and ride the change. Businesses fail when they do not keep up with current trends. History is littered with examples of businesses that used to be on top, but failed to innovate and now no longer exist (Kodak, Blockbuster, and Borders)

To drive not just the success of their own businesses, but also the success of Thailand, businesses must create a plan to leverage technology and do so as soon as possible. If businesses think that they will consider leveraging AI or cloud in 10 years, they will already have lost the battle to competitors that have been more forward looking.

Similarly, SMBs should seek technology partners with tailor-made solutions that can truly meet their needs – not just scaled-down versions of larger enterprise grade solutions. Technology partners that understand SMBs are better placed to create solutions that can genuinely help them get organised, gain more visibility into their businesses, and manage their growth.

Sage helps SMBs become successful in the Industry 4.0 era through its powerful and dynamic enterprise management portfolios like Sage X3, Sage 300, Sage CRM and their latest HCM solution, Sage 300 People which not only allows HR practioners to manage talent and learning for staff, but also enables management to be aware of availability of skilled labour for future expansion. With millennial workers expanding in numbers soon, providing them such self-service tools to manage their own learning and HR development will be a stronger be key to inspiring and retaining such talent. Sage Software has been enabling SMEs to be on par with latest technologies and developments including Industry 4.0 and focuses on bringing the best to the SMBs. Best of all, technology makes it easier for SMBs and enterprises alike to stay in business and sets the foundation for business expansion, an ambition all SMBs are chasing.