What SMEs Did To Overcome Digitalisation Pitfalls
Businesses are starting to move in the right direction. But to truly thrive, they need to be more deliberate in their digital approach and not dive in blindly
In April, Singapore-based business-to-business packaging manufacturer AcePac International turned to digitalisation to overcome COVID-19 business restrictions. The firm averted one immediate business crisis but was soon confronted with another: the frenetic pace of change took some getting used to, as employees grappling with new digital tools had to concurrently cope with customer questions and sales targets.
AcePac’s experience is not uncommon: The pandemic has exacerbated the survival-of-the-fittest landscape where many small- and medium-size enterprises (SMEs) operate. For these SMEs, digitalisation is proving to be the difference between staying afloat or going under. According to a recent study by United Overseas Bank (UOB), six in ten ASEAN SMEs are now committed to investing in digital technology, making it their top business priority. Prior to the pandemic, digitalisation was ranked the fourth in terms of business priorities for ASEAN SMEs (49 per cent), behind improving customer experience (63 per cent), adopting digital marketing strategies (57 per cent) and product line expansion (56 per cent).
Businesses are starting to move in the right direction. But to truly thrive, they need to be more deliberate in their digital approach and not dive in blindly. Here are three tried-and-tested strategies.
Start from the core
According to McKinsey, the success rate of digitalisation is alarmingly low despite more organisations starting on their digital transformation journeys across the world. Only 14 per cent of companies reported sustained performance improvements, and just three per cent reported that they have had success at sustaining change. Unfortunately, businesses often fail to assess fully their organisational challenges before implementing a digital strategy, and this can result in missed opportunities for companies to transform their business holistically for the future.
The ideal starting point for any SME interested in change is to start at the core—its business model—and to review and to strategise how best to transform to stay relevant. For those who had to take the first step quickly towards digitalisation during the pandemic, what is needed next is a deeper look at where technology can supplement their business operations to enable their long-term business objectives, such as business expansion and productivity gains.
While embarking on a business transformation journey can be daunting for many SMEs given their lack of knowledge on where or how to start, they do not have to figure it out on their own. Across the world, governments have grants and support schemes to support their local SMEs. For example, in Singapore, government agencies Infocomm Media Development Authority and Enterprise Singapore have launched the enhanced SMEs Go Digital Programme to help SMEs address urgent COVID-19 challenges with grant support for adopting digital solutions.
Lead change from the top
Digitalisation must be seen as a strategic initiative across the company, rather than a string of unconnected projects and technological solutions. This is only possible with leadership and strong management support.
Strong leadership plays a key role in overcoming employee resistance. The lack of knowledge and confidence among staff to adopt new processes is a common problem holding companies back at the implementation stage. According to a Bain & Company report, 45 per cent of ASEAN SMEs cited uncertainty or a lack of understanding of digital technology as the top barrier to digital integration.
To boost staff readiness, begin by investing in people and given them training opportunities to upskill in areas related to their direct job scopes or with adjacent skills that help them broaden their perspectives and think more strategically for the company.
One useful step is to make information more accessible through self-serve resources for employees to digest at their own pace, and this is where communities like The FinLab can play a crucial role in supporting change management when driving digitalisation.
Start viewing digitalisation as an investment, not expense
Given the current economic slowdown, even businesses that initially invested in digitalisation may be tempted to step on the brakes. It is important that companies view digitalisation as a necessity for facilitating recovery and for weathering future uncertainties, and not simply as a stop-gap measure.
For this to happen, businesses should identify and prioritise the areas that deliver the biggest impact and set clear goals on the type of transformation they want to achieve, before establishing success metrics to measure the outcomes and the return on investment. In the Internet age, investing in these changes are a basic necessity—not a luxury—in building a successful business. Because this is easier said than done for many SMEs, a good place to start is by piloting small innovations before implementing these new digital solutions, processes and policies across the company.
Digitalisation is a significant decision, but not necessarily a daunting one. For businesses, it is the best bet to turn this crisis into an opportunity.
Pauline is currently the Head of The FinLab, an innovation accelerator powered by United Overseas Bank (UOB). The FinLab helps businesses scale across ASEAN by connecting them to industry experts and mentors, and by facilitating the right technology solutions to power their growth, maximise their efficiency and enable long-term success. She started her banking career serving the banking and financial needs of SMEs before joining the FinTech, Ecosystem and Innovation team in UOB and The FinLab. She was also part of the team that set up The FinLab in 2015.
Pauline was elected into the executive committee of Singapore FinTech Association (SFA), the association for the FinTech community in Singapore, and served as the Lead for Women in FinTech subcommittee in the term 2018-19.