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Digital transformation amid a pandemic
COVID-19 has helped organisations around the world to achieve in a few months what might have taken years in a non-pandemic world: Accelerate their adoption of digital solutions and processes.
Amid the crisis, many companies have had to expedite their digitalisation efforts - from increasing their online presence to digitalising supply chains - during this period or risk being left behind. Indeed, a McKinsey study has suggested that the equivalent of five years of consumer and business digital adoption has been realised in just eight weeks since the onset of Covid-19.
"While there are organisations that had begun their digital transformation journey before the pandemic hit, they still had to pick up speed to adapt to the changes as countries fight against the spread of Covid-19," says
Cheung Pui Yuen, chief executive officer, Deloitte Singapore.
Beyond dealing with immediate challenges, the crisis has also made it clear to many businesses that digital transformation will be key to sustaining long-term growth in an increasingly volatile operating environment.
"Even as organisations seek to adapt to new norms, the unfolding uncertainties of the post Covid-19 world require organisations to embrace digital transformation so as to reposition themselves for sustainable growth for the long-term," says Max Loh, managing partner (Singapore and Brunei), EY.
"There is a growing appreciation among business leaders that digital transformation is less about digital and more about transformation. Less about machines and more about people - helping them flourish in an ever-changing environment."
Beyond accelerated digital adoption, another key trend that has emerged from the pandemic is the virtualisation of the workforce. Many organisations are now working remotely through digital communication and collaboration channels, and are unlikely to revert entirely post-pandemic.
Covid-19 has also driven the adoption of different business models and new ways of service delivery. For instance, B2C businesses have started leveraging digital platforms to sell directly to customers. According to KPMG's Global Retail Trends 2020, online sales in Singapore amounted to around 18.1 per cent of June 2020's retail sales, or about S$2.6 billion.
INVESTING IN DIGITAL
The rush to digitalise has led to a spike in technology investment among businesses. According to the 2020 Harvey Nash/KPMG CIO Survey, some three quarters of global IT leaders reported additional technology expenditure as a result of the pandemic, with a median additional technology spend of 5 per cent.
In terms of specific solutions being adopted, there has, unsurprisingly, been widespread investment in connectivity and collaboration tools. For instance, video conferencing platforms Microsoft Teams and Zoom have reported significant spikes in their usage rates. According to Aternity's Productivity Tracker series, the use of Microsoft Teams grew by 894 period from February 2020 to June 2020, while Zoom usage grew by 677 per cent over the same period. More companies are also deploying contactless solutions in a bid to keep customers and employees safe.
However, as the crisis is not affecting all industries equally, there is no one-size-fits-all approach to digitalisation, industry watchers note. "Each sector, country and organisation is experiencing different recovery patterns. Some enterprises will continue on the road of digitising their manual and paper-laden processes and aiming to move towards e-payments and e-invoicing," explains Ling Su Min, partner, audit, head of data & analytics, head of clients, markets & innovation KPMG in Singapore.
"For other enterprises, we are seeing the application of intelligent automation, artificial intelligence (AI) and machine learning gaining traction, particularly where AI and machine learning are paired with the Internet of Things to increase operational efficiency and productivity."
However, organisations will face various obstacles as they fast-track their digitalisation plans to ensure business continuity. For one, they will need to "balance the tightrope of making critical investments for digitalisation versus conserving cash for business viability", says Ms Ling.
Transitioning to remote working also comes with its own unique set of operational risks, she adds. "Businesses need to ensure that their people have the right tools and connectivity to work remotely and have received the necessary technical and compliance training to be effective, while keeping their own and third-party data safe and secure."
There is also the challenge of legacy infrastructure and business models, where current operational processes and the new digital infrastructure might not be integrated properly at the start. "Organisations cannot let this challenge dictate their digital future - while there is no one-size-fits-all solution, organisations will be required to innovate, be open to new ideas, be willing to accept the risk and put in the hard work," says Mr Cheung.
TAKING THE FIRST STEP
The first step of a company's digital transformation journey should involve putting together a corporate-wide strategy that has a vision, sets goals to reach it, and gives the team a purpose.
"Start with the business strategy first - it is about a business plan for the digital world, rather than purely a focus on 'going digital'. Develop the vision for the business first and then determine the best way that the deployment of technologies and new digital business models can help an organisation achieve its vision and goals," says Greg Unsworth, partner and risk assurance and digital business leader, PwC Singapore.
The next step is to get the right people on board - either within or outside of the organisation - and equip employees with the digital skills they need to be effective. Companies should also seek out collaborations to help them better navigate the fast-changing landscape. For instance, e-commerce platform Lazada Singapore started a pilot programme with Singapore's largest taxi operator, ComfortDelGro, to train and tap their drivers and vehicles to deliver groceries to consumers.
LOOKING BEYOND THE CRISIS
Some businesses are already looking beyond the pandemic, and leveraging digital tools to help them emerge stronger from the crisis. "Many organisations are already looking beyond the shorter term challenges of the pandemic, and are developing enhanced digital adoption plans for the future. For organisations that have been severely impacted it is about business survival and the need to reinvent themselves. For other organisations in industry sectors that have not been hit as hard, it can be more about taking proactive steps now to achieve greater competitive advantage in the future," says Mr Unsworth.
Indeed, digitalisation and innovation should be viewed as a constant journey, and not something adopted to tide over the Covid-19 crisis.
Says Mr Cheung: "We have seen that companies that were already on their digital transformation journey before the pandemic hit had a head start in responding to the crisis. This goes to show that the advantages of being more digitally mature go beyond traditional business benefits - it enables organisations to keep pace with society's changing expectations of businesses, particularly in the post-Covid-19 world."
Seven steps to digital maturity
ACCORDING to Cheung Pui Yuen, chief executive officer, Deloitte Singapore, there are seven digital pivots that an organisation can make to become a data-driven, digitally mature and innovative enterprise. The pivots are:
- Flexible, secure infrastructure: Leveraging cloud computing for scalability, agility, and cybersecurity to protect data, applications and infrastructure - and to lower the risk of innovation.
- Data mastery: Using data and analytics to generate insights that can enhance efficiency and effectiveness, guide product development and support new business models.
- Digitally savvy, open talent networks: Securing flexible access to the talent and skills necessary to evolve and grow a digital business.
- Ecosystem engagement: Working with business partners to gain access to resources such as intellectual property, technology, or talent that can help accelerate innovation.
- Intelligent workflows: Leveraging automation to increase efficiency and effectiveness, and free up resources to focus on higher-value tasks such as creating new products.
- Unified customer experience: Delivering a superior customer experience built on deep data-driven knowledge of the customer.
- Business model adaptability: Expanding business models and revenue streams that can help a company adapt and thrive in changing conditions.