Adoption of Business Analytics in MSME

Nidhi Bandihole Prasanna SJB Institute of Technology

Computer Science Engineering(Data Bengaluru, India
Science) [email protected]

Abstract— Around 6,08,41,245 MSMEs are registered in insights and predictive capabilities, MSMEs can anticipate
India according to the 2023-24 annual MSME report. MSMEs challenges, seize growth opportunities, and build resilience
contribute around 30% to India’s GDP, emphasizing their against disruptions. This paper delves into the
crucial role in the country’s economy. Additionally, they are
transformative role of business analytics in the MSME
significant employers, especially in rural and semi-urban areas,
helping to drive regional development. MSMEs face resource
sector, highlighting its potential to foster sustainable
challenges like limited funding and technology, but business economic contributions and bridge gaps in accessibility and
analytics helps them make informed decisions, reduce risks, awareness.
and improve operational efficiency. By leveraging AI and
machine learning, MSMEs can enhance customer experiences, Business analytics also enables MSMEs to personalize
unlock growth opportunities, and stay competitive in a customer experiences, a critical factor in maintaining
dynamic market. This paper summarizes the role and process competitive advantage. By analysing customer behaviour
of BA&I (Business Analytics and Intelligence) in helping and preferences, enterprises can tailor their offerings,
optimize MSME growth.
improve satisfaction, and foster loyalty. Tools like sentiment
Keywords— MSME, Business Analytics analysis and real-time customer feedback systems provide
valuable insights that allow MSMEs to respond promptly to
I. INTRODUCTION evolving demands. This level of adaptability is essential in
both local and global markets, where consumer expectations
Big Data isn't limited to companies with larger budgets. are constantly shifting.
These days, small businesses can also benefit from the vast In addition, integrating analytics into financial operations
amounts of offline and online data available to them to make ensures better resource allocation and profitability
informed decisions that will help them expand. While the management. MSMEs can use economic modeling to assess
majority of Big Data conversations center on businesses that the impact of investments, optimize pricing strategies, and
have the means to identify cost-saving opportunities. Advanced analytics also
Employ data scientists and research companies. Small assists in risk management by evaluating credit risks and
businesses can collect, examine, and interpret their existing market vulnerabilities, enabling enterprises to take proactive
data in several ways. measures. These capabilities are particularly important for
Opportunities for new businesses and established SMEs to MSMEs looking to scale operations while maintaining
discover innovative ways to leverage the power of the financial stability.
expanding collection of digital data are being sparked by the
revolution in data accessibility and enhanced analytics. The DATC/DBT (Data Analysis and Technical co-
Every day, new businesses are being founded thanks to the corporation/ Direct Benefit Transfer) wing under
enormous opportunities brought about by the collection and The Ministry of Micro, Small & Medium Enterprises, GoI
analysis of data. conducts statistical and data analysis for the MSME Sector
and offers technical assistance for evidence-based decision-
Micro, Small, and Medium Enterprises (MSMEs) are vital to making in this area. Other significant activities include
the Indian economy, driving employment, rural implementing the promotion of digital payments within the
industrialization, and wealth distribution. However, these Ministry, managing the Ministry's IT Cell, coordinating full
enterprises often face resource constraints, market compliance with directives for the Direct Benefit Transfer
accessibility challenges, and operational inefficiencies. (DBT) schemes, and providing technical coordination with
Business analytics provides a powerful mechanism for all stakeholders towards the development and maintenance
addressing these issues by offering data-driven insights to of MSME databases. [Annual MSME report 2023-2024]
enhance decision-making, optimize processes, and improve
overall competitiveness. The DATC/DBT division’s multifaceted approach not only
By leveraging tools like data analysis, statistical modelling, enhances the technical capacity of the Ministry but also
and machine learning, business analytics enables MSMEs to ensures that the MSME sector is equipped to meet current
uncover patterns, forecast trends, and streamline operations. and future challenges. By focusing on data, collaboration,
Applications include demand forecasting, inventory and innovation, this division is instrumental in fostering the
optimization, and customer segmentation, which help growth and sustainability of the sector.
MSMEs adapt to evolving market conditions. Furthermore,
analytics facilitates compliance with digital transformation
initiatives and sustainability goals, ensuring resilience and II. LITERATURE REVIEW
long-term growth.
Business analytics has emerged as a crucial tool for
Analytics goes beyond improving internal operations; it
improving organizational efficiency, particularly in
empowers MSMEs to make informed strategic decisions
competitive environments. Vera-Baquero et al. [1] discuss
that reduce risks and drive innovation. With real-time
the integration of big data and advanced analytics Finally, the study by Nurqamarani et al. [8] focuses on the
techniques, such as predictive models and behavioral pattern role of business planning and digital marketing in
recognition, to enhance business process monitoring and strengthening the capabilities of a micro-scale bag producer
performance. Their work highlights the challenge of in Indonesia. The study emphasizes the importance of
managing high volumes of data generated in distributed combining traditional business planning methods with
business processes and proposes a big data approach to modern digital marketing strategies to enhance
provide real-time, actionable insights for business analysts. competitiveness and business growth.

Similarly, Boerner et al. [2] examine the relationship These studies collectively underscore the growing
between business analytics capabilities (BAC) and significance of business analytics across various sectors,
controllership effectiveness in organizations. Their study from manufacturing and consulting to MSMEs and patent
identifies three key BAC dimensions—tangible resources, analysis. While business analytics offers substantial
intangible resources, and human skills—and analyzes their opportunities for innovation, resilience, and performance
mediating effect through the business partner role within improvement, challenges such as data standardization, the
management control. The findings suggest that the business shift to data-driven decision-making, and intellectual
partner role is central to enhancing the effectiveness of BAC property management remain areas that require further
and improving decision-making and controllership output. exploration and attention.

In the context of emerging economies, Costa et al. [3] III. DISCUSSION

explore the significance of business analytics capabilities in
A. Government support in MSME empowerment using BA
enhancing business resilience, especially during and after
the COVID-19 pandemic. Their study, conducted with
multinational and national companies in Brazil, Prime Minister Narendra Modi participated in the 'Udyami
demonstrates that analytics capabilities, particularly in Bharat' program, highlighting the importance of MSMEs in
digitally enabled organizations, are essential for maintaining driving India's economic growth and societal strength [30
resilience and economic performance. Their work also offers JUN 2022, PIB Delhi]. He launched initiatives like the
a roadmap for non-digitally enabled companies seeking to RAMP and CBFTE schemes to enhance MSME performance
build resilience during crises. and global exports [30 JUN 2022, PIB Delhi]. The
government has supported MSMEs through measures such as
Asitaha et al. [4] conducted a patent landscape analysis the Emergency Credit Line Guarantee Scheme and Mudra
using bibliometric methods to identify global trends in Yojana, empowering millions of entrepreneurs, especially
women and marginalized communities [30 JUN 2022, PIB
business analytics patents. Their study focuses on patent
Delhi]. The Prime Minister also celebrated the milestone of
data from the Lens database, revealing an upward trend in
Khadi and Village Industries surpassing a Rs 1 lakh crore
patents related to business analytics. They note that the turnover [30 JUN 2022, PIB Delhi]. He assured continued
United States dominates in patent ownership and highlight government commitment to policies supporting MSMEs and
opportunities for entrepreneurs to use discontinued patents emphasized that their success is key to achieving a self-
related to business analytics to avoid royalty payments. reliant India [30 JUN 2022, PIB Delhi]
The Office of Development Commissioner (MSME) has
Oyewoa et al. [5] investigate the factors influencing the
launched a web-based application module, My MSME, to
adoption of big data analytics (BDA) in business consulting help enterprises benefit from various schemes. This module
firms. Through a survey of multinational and indigenous can be accessed through a mobile app, allowing
firms in Nigeria, their study explores the determinants of entrepreneurs to create applications and track them on their
BDA adoption and the interrelationships among these mobile devices. The Coir Board, under the Coir Industry Act
factors using structural equation modeling. The findings 1953, is responsible for collecting, compiling, analyzing, and
emphasize that BDA adoption is driven by the need to disseminating statistical data related to the Coir Industry. The
enhance competitive advantage and market share. Board conducts surveys, market analysis, and other activities
related to the industry.
Boerner et al. [6] further highlight the importance of BAC in
improving controllership effectiveness. Their study
illustrates how the development of BAC and the business
partner role contribute to better decision-making and
improved management control. The research presents
empirical support for a three-dimensional conceptualization
of BAC, underscoring the importance of the business partner The Ministry of MSME has also launched the MSME
role in organizations relative to the scorekeeper role. Data Bank, allowing MSMEs to provide information about
their enterprises online to the Central Government. This data
In the context of MSMEs, Bhatt [7] examines the lack of bank will streamline and monitor schemes, providing real-
business analytics tools in small-scale industries in Gujarat. time information about MSMEs' status. The data bank allows
The study identifies the methodologies currently used in MSME units to update their enterprise information without
these enterprises, highlighting the absence of advanced visiting any government office and access information about
analytical techniques, and proposes statistical and business their products or services for procurement under the Public
intelligence interventions to improve decision-making. Procurement Policy of the Government of India.
 the significance of digital transformation in propelling the
sector's growth.
B. Contribution of Tech-based Platforms in the MSME
Growth

a. Tradeindia

Founded in 1996, Tradeindia has positioned itself as India’s

largest online B2B platform aimed at assisting Small and
Medium Enterprises (SMEs) in embracing digital
transformation. The platform connects buyers and suppliers
across various industries, promoting the growth of
businesses in India. In addition to its marketplace,
Tradeindia offers services such as TI Pay (payment
protection plans), TI Lending (collateral-free loans), and TI
Logistics (logistics solutions), ensuring comprehensive
support for SMEs. Notably, it became the first company in
India to offer e-commerce solutions that include domain Fig. 2. Digital Maturity of MSMEs in India
booking, SSL certificates, AdWords, SMO, and Facebook
promotions, making it a one-stop solution for SMEs seeking
digital solutions and growth opportunities. IV. CONCLUSION
b. Locus
In conclusion, business analytics has the potential to be a
transformative force for MSMEs, enabling them to
Established in 2015, Locus leverages machine learning and
overcome the challenges of limited resources, market
proprietary algorithms to automate and optimize supply
access, and operational inefficiencies. By integrating tools
chain decisions. The company provides advanced
such as data analysis, machine learning, and predictive
technology that helps businesses improve logistics
modelling, MSMEs can gain valuable insights into customer
efficiency and reduce operational costs. In response to the
behaviour, optimize their operations, and make data-driven
COVID-19 pandemic, Locus launched QuickStart in April
decisions that foster growth and resilience. Furthermore,
2020— a free, self-serve tool designed to assist MSMEs in
with government support through initiatives like the Digital
managing and optimizing their supply chains. By offering
Public Infrastructure (DPI) framework and the work of the
this tool, Locus supported businesses in navigating the
DATC/DBT division, MSMEs are positioned to thrive in a
pandemic’s disruptions, helping them adapt and improve
digitally driven economy.
operational efficiency in a challenging environment [Tech-
based solutions to empower the Indian MSME landscape,
IBEF] The increasing accessibility of big data and advanced
analytics tools empowers MSMEs to innovate, enhance
competitiveness, and personalize customer experiences,
C. Digitization of MSMEs ultimately contributing to their long-term success. However,
Businesses all over the world are using digital technologies the journey toward widespread adoption of business
more and more to increase resilience and competitiveness. analytics among MSMEs requires continued efforts to
With its Digital Public Infrastructure (DPI) framework, address barriers such as data standardization, digital literacy,
which empowers 97% of the population, encourages and resource allocation. technologies, the sector will
entrepreneurship, and boosts competitiveness in important continue to play a critical role in driving India's economic
industries like Micro, Small, and Medium Enterprises growth, fostering regional development, and contributing to
(MSMEs), India has led the way in this digital the nation’s global competitiveness.
transformation. The expansion and development of MSMEs
in India have been greatly aided by the recent wave of With the ongoing digital transformation, it is clear that the
digitization, notwithstanding inadequate digitization and future of MSMEs in India lies in their ability to leverage
difficult access to funding. Of India's 64 million MSMEs, an business analytics effectively to navigate the challenges of a
estimated 12% have reached digital maturity, highlighting rapidly evolving market.

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