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S'pore businesses should step up their digitisation

It is a strength that the people here are digitally savvy. Support for this drive is also coming from the government.

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A prototype of a self-registration kiosk at the integrated services centre of the Immigration and Checkpoints Authority. By 2023, up to 95 per cent of transactions Singaporeans make with the government will be done remotely.

AS regional and global leaders gather for Smart Nation Innovation Week, digital transformations will implicitly underscore every discussion. As a concept, the term "digital transformation" seems to be getting increasingly belaboured, given overuse is rendering its meaning nebulous.

But savvy business leaders will tell you: It doesn't come in a box - or a cloud, and neither should the topic remain a recurring conversation. The time for action is now.

At the five-day conference which started on Monday, more than 15,000 people, including thought leaders in technology innovation, are gathering in Singapore to imagine a digital Asia - everything from building trust in a digital-as-usual age to digital government and smart cities.

Singapore's own efforts have been under the spotlight. Last year, the country released its Digital Government Blueprint, which outlines its efforts to keep pace with digital transformation across industries. Along with making every government service available online, the initiative is also expected to enable Singaporeans to conduct 90 to 95 per cent of their official transactions remotely by 2023.

Singapore has been rightfully recognised for its success in building a strong business environment. For example, the country came out on top of the World Bank's Ease of Doing Business Index from 2007 to 2016; since 2016, it has been second after New Zealand. On the Asian Digital Transformation Index published by the Economist Intelligence Unit, Singapore was first in 2016 and last year.

Industry transformations maps (ITMs) and government initiatives have been helpful in encouraging businesses to pursue digital transformation plans, but the bulk of the responsibility remains with the private sector. Corporate innovation and market disruption are essential in generating momentum and inspiration to all institutions - industry and public sector alike - as they collectively digitise.

AVOIDING THE 'PILOT TRAP'

The most common challenge that arises is creating a viable long-term plan with a realistic programme to deploy successful initiatives broadly throughout the organisation. Too often, companies get stuck in the "pilot trap", where pilot projects for digitisation are launched, but either stall or cannot be scaled across the organisation. Companies often initiate one or several pilot projects to test the waters of a digital transformation, but without a meaningful long-term plan, these pilots fail to produce any clear bottom-line benefits.

A global study by McKinsey found that of the businesses surveyed, less than 30 per cent of the pilot programmes initiated were followed with broader deployment. The study showed 84 per cent of the companies examined remained in pilot mode for more than a year, and 28 per cent for more than two years. To avoid this trap, organisations must focus on integrating new digital initiatives and approaches into legacy IT and operating systems.

PUSHING PAST THE NOISE

Unfortunately, noise and hype often make it difficult for leaders to distinguish between advanced technology, which is most valuable for their interests, and passing fads. The cacophony poses an obstacle in tackling fundamental issues, such as creating clarity around an organisation's technology vision and understanding the urgency, even for companies doing well today. Further, organisations often struggle in writing a plan they can execute, particularly when it comes to comprehending the scale of change needed, for instance in processes and talent.

In pushing past this noise, public and private leaders in Singapore benefit from several advantages. Compared to its regional neighbours, a sizable proportion of Singapore's population is digitally savvy. Workers, customers, and constituents are often exposed to advanced and online technologies, and many are at ease with them. In addition, the government has been an outspoken supporter of digital adoption, working closely with the private sector in its efforts to transform.

While these factors provide a solid foundation, continued efforts are needed for Singapore to realise its aspirations as a Smart Nation and for businesses and individuals to integrate digital technologies into their day-to-day lives. McKinsey's experience and research has highlighted four fundamental building blocks that can help organisations succeed in their transformations

  • Talent diversification: A next-generation business requires a company to re-examine talent pools and search beyond traditional groups. Along with functional expertise, teams should comprise individuals with different skillsets and varied points of view. For example, some successful insurance companies put together claims teams that include lawyers, nurses and other subject-matter experts, providing a range of perspectives as they conduct their work. In any industry, leaders should think broadly about the configuration of their teams and be willing to experiment with exotic groupings as they adapt to changing customer needs.
  • Technological flexibility: Companies often mistakenly start a transformation by setting up a new business with a digital focus and hope it can be scaled across the organisation eventually. The result is often an IT system that is too rigid for broader deployment. Instead, new IT systems should be an integral part of the organisation - even if initially isolated from broad use - and provide enough flexibility for easy modifications as necessary to meet individual business unit and customer needs. These modular systems should be developed in close collaboration with unit leaders to assure that these senior managers understand how to create value through new processes or revenue streams.
  • Embracing data: A digital transformation is lifeless without data, and company leaders must be comfortable with this new resource. Organisations can no longer wait to see how decisions play out in quarterly or annual reports. They must collect and analyse pertinent data quickly as they decide how to react to market changes. A digital transformation requires that companies learn to use data, test a broader range of ideas and experiment beyond traditional perspectives. To do this, companies should invest in business-intelligence systems that capture data and present it in user-friendly formats that support real-time decisions.
  • Accepting failure: Accepting failure has been a part of the high-tech mantra for decades, and the philosophy is no less important during a digital transformation. Organisations cannot wait for products and services to be perfected before debuting them, especially in the fast-paced digital era. Executives must think like their customers, learn from their experiences and failures, and make rapid changes as they go along. For an agile company, even a grand failure can lead to great success.
  • The writers are from McKinsey & Company.
  • Vinayak H V is a senior partner and leader of McKinsey Digital in South-east Asia and Diaan-Yi Lin is a senior partner and the managing partner of the Singapore office, where they are both based.