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Renewing the push to go digital

Industry leaders discuss the obstacles SMEs face in adopting digital technology and efforts on the government's part to help them

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Ms Heng: "The adoption of new technology has to solve a pain point, improve a product, service, or user experience. It's important for SMEs to consider the relevance and value that the technology will add to the business."

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Mr Lim: "Most SMEs are open to or already adopting government-led schemes to power their growth. The Start Digital Programme ... effectively gives SMEs a head start in going digital."

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Ms Chu: "SMEs are investing in digital marketing to reach out to a wider audience. E-payment systems are also of interest to them as more and more consumers are paying with PayNow and various e-wallets."

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Mr Arora: "There needs, on the firms' part, to be a willingness to embrace and embark on a change management programme: first, to agree on a digital vision and next, to define a digital strategy."

MUCH support is available for small and medium-sized enterprises' (SMEs) digitalisation endeavours - either from the government or private sector. Yet, businesses have been slow to warm up to the idea.

They might need to move more quickly though, or risk being rendered obsolete in today's fast-changing consumer landscape and advent of technology. Going digital is now no longer an option, but a means to survive and thrive.

The Business Times talks to these industry leaders to find out how to better drive businesses to go digital.

Roundtable participants:

sentifi.com

Market voices on:

  • Deborah Heng, country manager, Mastercard Singapore
  • Andrew Lim, managing director, business group, group enterprise, Singtel
  • Christie Chu, head, emerging business and commercial banking cash, global commercial banking, OCBC Bank
  • Puneet Arora, CEO of Singapore, Philippines and Thailand, GroupM

Moderator: Lynette Tan, journalist, The Business Times


SMEs are keen to tap digital technology, but few fully do so. What are the main barriers?

Deborah Heng: While SMEs understand that digitalisation can enhance business efficiency and productivity, a range of factors such as high cost of investments and a lack of adequate cyber protection hinder them from adopting digital practices, according to a recent annual survey by global insurer QBE.

Besides financial constraints, business leaders also struggle with finding talent with the required skill sets to manage and harness the full capabilities that digitalisation can offer.

Andrew Lim: For most SMEs, digitalisation is simply not their main priority. This is because they have other pressing concerns arising from the day-to-day running of the business.

In many cases, SMEs don't have a dedicated team to look after their technology requirements, and often lack the skillsets and know-how to digitalise the business. They might also be hindered by cost considerations.

Christie Chu: There is a general lack of understanding of what digital solutions can do for a business and the many choices on the market can make things even more confusing.

Moreover, digital is often associated with high cost so the return on investment of digital projects can be a worry - especially since cashflow is one of the biggest challenges for this segment of businesses.

With that said, SMEs have made big strides in the last few years when it comes to digital so we are quite confident that this trend will continue despite the challenges.

There is more awareness of the technologies that can improve productivity and drive innovation, and of the grants and financial programmes available.

Puneet Arora: Many are stubbornly rooted in the more traditional methodologies that have found them success previously, set in their thinking of "if it isn't broken, why fix it?".

Through our experience working with SME clients, we have also found two key barriers they face.

From a business operational perspective, many SME owners may not be aware that adopting certain digital technology can massively aid in efficiency and productivity.

They view these digital technologies as "niche" and "more suited to tech startups", which would hurt their bottom line more than simply hiring more sales people.

As a result, many SME owners simply do not hire digitally-savvy individuals or agency partners, who are best equipped to grow the company on the digital frontier.

SMEs are getting more help from government-led initiatives such as Start Digital recently. But how effective are these schemes?

Andrew: We find that most SMEs are open to or already adopting government-led schemes to power their growth.

The Start Digital Programme under the SMEs Go Digital programme curates a list of solutions across key operational areas for SMEs, allowing them to narrow down the type of solutions needed, and simplify decision-making in a market where there are a large array of solutions available. This effectively gives SMEs a head start in going digital.

At Singtel, we help to drive adoption of such schemes through our regular engagements with customers and also by working with trade associations to apprise SMEs of the latest government-led initiatives.

Christie: These are good schemes so we actively encourage SMEs to give them a try and we have heard positive feedback.

SME owners that have gone through the pain of doing accounting manually using spreadsheets for instance, appreciate the subsidies for accounting apps under the Start Digital package.

But there are also other startups that want to stabilise their business first and get their cashflow under control before they think about adopting digital solutions. It will take time for SMEs to change their mindsets to think digital when rebuilding their business models.

Puneet: Start Digital is a recent enhancement and addition to the SMEs Go Digital Programme. It is still too early to assess the success of this initiative, but it certainly is a positive start. More importantly, greater emphasis must be placed on raising mass awareness in order to effectively create advocates for these schemes.

What more can be done, on the firms' part versus the government's?

Deborah: According to the Mastercard Digital Evolution Index 2017, Singapore is among the top ten countries in the list of the most advanced digital economies in the world.

Such digital sophistication has been achieved largely with the support of the government, which has been a strong advocate of digitalisation.

Continued collaboration between government and businesses is key to bringing SMEs to the forefront of digitalisation. A great example of this is Mastercard Track, a unique global trade platform which was integrated with the networked trade platform in partnership with the Singapore Customs.

Andrew: Before going digital, SMEs need to prepare themselves for change and it is important to start with their employees. Starting a digitalisation journey will be challenging if employees are not trained or equipped with the skillsets needed to deploy and run these solutions.

For SMEs to thrive in today's rapidly changing environment, they need more targeted support. At Singtel, we conduct frequent workshops for SMEs to learn about how digital solutions can support their business goals.

Christie: There needs to be continual education to change mindsets and increase awareness of how important going digital is.

This can be championed by the government and industry associations. Industry-specific sessions, on how going digital can give them more marketing opportunities or drive costs down, would be particularly useful.

While the government has been leading the way with different Smart Nation initiatives they are also encouraging players in the SME ecosystem to do their part.

One of the things we do to increase awareness is to reach out to our customers directly. When we launched our digital business dashboard earlier this year, for example, our digital ambassadors visited customers for a detailed walkthrough.

Puneet: On the firms' part, there needs to be a willingness to embrace and embark on a change management programme. First, agree on a digital vision: carry out a situational analysis to get a view of current internal practices, competitors and the customer experience.

Next, define a digital strategy: for example, creating a map to guide transformation and prioritising key areas. There must also be a pre-defined set of key performance indicators and parameters.

On the government's part, leverage the expertise of communications specialist agencies, such as GroupM, which are well equipped to provide integrated solutions at scale, develop and activate an effective awareness and education campaign.

What are some best practices for firms looking to introduce technology in their operations?

Deborah: Artificial intelligence (AI) and blockchain have generated tremendous hype. However, a recent Microsoft survey revealed that many companies deployed new AI-based technology only because it was "trendy" to do so.

The adoption of new technology has to solve a pain point, improve a product, service, or user experience. It's important for SMEs to consider the relevance and value that the technology will add to the business, such as improving business productivity or customer experience.

Andrew: One of the best practices for introducing technology is to ensure that all employees, not just senior management, fully support the vision of going digital.

To get employees on board, sufficient time for training needs to be set aside, allowing staff to become familiar with the new technology in the workplace. Staff should also be given ample notice about new and incoming technology.

Most importantly, SMEs need to ensure that their employees understand how the new technology benefits them and enables them to do their job better.

Christie: SMEs should do their homework before making any costly digital investments. They need to find out what alternatives are out there and understand how their business will benefit from their investment.

Getting employee buy-in is another best practice. Digital technology provides the possibility of increased productivity and efficiency. But whether this potential can be unlocked is largely up to the attitude and mindset of employees. It is also a must to allay employees' concerns as some may perceive technology as a threat to their jobs.

Puneet: First, audit the current operations structure - look at strengths and weaknesses. Next, prioritise areas for change that are key to improving operations effectiveness and workflow efficiency. Firms should also be patient - to have operational processes seamlessly in sync with implemented digital technology takes learning, testing and time.

What are the technologies that SMEs are investing in next?

Deborah: A 2018 Mastercard Mobile Shopping Survey revealed that just over one in three consumers in Singapore (35.6 per cent) are willing to leave home with only their mobile phones to make payments.

With this growing mobile-first cohort who are active consumers of digital content, it is not surprising that SMEs are looking to invest specifically in software to optimise their websites or develop mobile apps.

In addition, the shift towards a labour-light workforce is being driven by the growing adoption of automation in unattended retail. Investment in technologies such as robotics, automated reservations, self-service food ordering systems and digital payments will continue to support this trend.

Andrew: As part of SMEs' digitalisation efforts, they will need to be vigilant and take steps to bolster their cyber security defences, and ensure that there is a business continuity plan in place should operations be disrupted by a cyber attack.

We work closely with SMEs to address the challenge of cyber threats. Our comprehensive suite of cyber security solutions ranges from managing their devices to protecting their networks.

The comprehensive security framework that we offer can help SMEs identify, protect, detect and respond to cyber attacks. This helps to prevent financial losses and damage to their reputation.

Christie: SMEs are investing in digital marketing to reach out to a wider audience, while at the same time ensuring that targeting is optimised.

E-payment systems are also of interest to them as more and more consumers are paying with PayNow and various e-wallets.

Cybersecurity is yet another concern. SMEs are realising that it is not just big companies being targeted - all businesses face cyber threats and need to be prepared. And with consumers becoming more concerned about how their data is being protected and used, technologies in this area are going to become more important.

Puneet: SMEs are looking at these fundamental technologies: automation, Internet of Things and customer relationship management tools.

We're also on marketing technology with certain SMEs that pride themselves for being truly digitally sophisticated. Marketing technology is a combination of software and tools to help them achieve their marketing goals and objectives to drive greater business growth. Integrating that into their business ecosystem allows them to better plan, execute and measure marketing efforts.