Company Culture, Clear Business Objectives and the Right Resources are Key Factors for Successful Digital Transformation
Digital transformation is critical to staying relevant. It ensures the survival of a business now and in the future. In this regard, the 23 Industry Transformation Maps (ITMs) and their corresponding Industry Digital Plans (IDPs) are a critical roadmap for firms. Furthermore, the current shock resulting from the COVID-19 pandemic has accelerated the need for companies to transform to remain in business. The best time to start is now.
Unfortunately, despite having the transformation roadmaps, the actual journey, as experienced by many SMEs, is not smooth. While SME business owners understand that digitalisation is necessary, they are preoccupied with the day-to-day demands of their business, or in the current climate, worried about survival. Many do not have the bandwidth to think about digitalisation, or they may be ill-equipped to do so.
Currently, SMEs depend on consultants at the SME Centres to advise them on digitalisation. The slow uptake of digitalisation among the broad base of SMEs suggests that the help they are getting is not enough.
Furthermore, it is not enough to only digitalise business platforms or applications. Firms must transform themselves digitally. Unable to distinguish the two, SMEs delay the necessary process of digital transformation, putting at risk their long-term survival.
Digital transformation is not only about buying digital tools
There is a common misconception that digital transformation is a one-off project, whereby a company transforms from “not-digital” to “digital” by merely installing some applications. The reality is that such actions only represent the digitalisation of specific business processes.
As a result of the misconception, many companies underestimate the magnitude of involvement of the business in digital transformation. For transformation to be successful, there is a need to relook at the company’s business model, business processes and interactions with other companies and customers. Then, only after that process is completed, and it is clear how the business is to transform to be relevant to the environment, will looking at digital tools to enable and support the transformation make sense.
Those companies that jump directly into a tool-selection process often find that the process becomes arduous because the context of the usage of those applications is unclear, or they select tools that do not meet the business needs in actual deployment. By putting the cart before the horse, firms waste time and resources and fail to gain traction on their journey to digital transformation.
On the other hand, as long as companies begin in the right place by studying how their business is to remain relevant, they are on the right path to success. There is no need to fear digital transformation.
Critical to guide the transformation journey with clear and attainable business objectives
Many SMEs need help to get started on their transformation journey in a structured way. Each organisation must start with clear business objectives of why they need to transform, and how they want their business model to change. After these objectives are defined, then they can start mapping out how they can apply technology, as an enabler, in their journey to meet their desired outcomes.
This journey should begin with a thorough review of their business, such as through the lens of design thinking. Companies must start from a point where they are clear how their product or service is suitable for their customers, and if things have shifted, what they will change to make their product or service more relevant and successful.
To start, SME business leaders should participate in a series of hands-on workshops1 where facilitators skilled in digital transformation can guide them through the strategising process, to help them determine where they are headed and define the journey to get there. Subsidising these workshops for qualifying SMEs can lower the barriers and encourage more businesses to join and benefit from the guided thinking process.
This initiative also supports local firms who can help SMEs. To meet demand, these firms will recruit and train more facilitators, creating more good jobs in the economy.
In-house champion a determining factor of successful transformation
Even after understanding what they need to do to transform, down to the types of solutions they need, SMEs often put off implementing their transformation. Day-to-day operations tend to supersede other needs, taking up the business owner's time and attention.
Furthermore, in any transformation endeavour, other than the external party (a vendor, solution provider, or consultant) handling implementation from outside the company, a key determinant of success is a champion to drive the transformation from within, in tandem with the external partner.
This digital-savvy resource, or IT expertise, is sorely missing in many SMEs. The business owner (whether savvy or otherwise) may double up in this role, putting whatever attention is available after dealing with the day-to-day of the business. It is little wonder that many transformation projects do not get started, lose their direction midway, or complete without meeting the success criteria – laying to waste the resources and support invested into them.
Digital Transformation Leads to seed the digital transformation of SMEs
To overcome this challenge, we recommend embedding a resource within the SME. This headcount within the business will champion and drive the SME’s digital transformation journey and advise on best practices of how digital transformation can address the challenges faced by the various functions and departments in the business. This resource will also form the initial core of a “centre of excellence” within the company for digital transformation, supporting the departments and ensuring that business decisions always consider digital transformation options. With this resource, SMEs can be assured that the company’s objectives are at the heart of any digitalisation implementation with external partners. This approach can make a significant difference to the result.
SGTech advocates that the government fund this Digital Transformation Lead for SMEs that intend to transform digitally. This resource can be a direct hire by the SME or an in-house consultant, with measurable outcomes to define the initial transformation journey and drive its successful implementation.
Candidates for the Digital Transformation Lead role require a foundation of well-rounded skills and experience. We must also equip these Digital Transformation Leads with the right skills to facilitate the change within the companies. SGTech can work with industry partners and educational institutions to co-develop a programme, jointly with IMDA. The programme will focus on design thinking and innovation, and other skills that enable the Digital Transformation Leads to connect with employees and develop an intimate understanding of the company and its opportunities and challenges quickly.
It would also be useful to establish a community of Digital Transformation Leads so that they can support one another and cross-share their learnings (both successes and failures) as they work with individual companies. This cross-sharing can form the leverage that can accelerate the progress of digital transformation across-the-board. SGTech can support this community of Digital Transformation Leads by curating successful use cases of relevant solutions as a reference resource to build a good understanding of best practices.
Agile mindset and equipping employees with design thinking skills crucial for digital transformation to be sustainable
An observation of organisations that had successfully transformed digitally2 showed that their leaders focused on changing their employees’ mindset as well as the organisational culture and processes before they decide what digital tools to use and how to use them.
In our VUCA3 world, businesses must embrace an agile mindset so that they can respond to changes and opportunities quickly. They must continually keep their eye on their customers (and their needs), focus on collaboration internally and externally and keep all communication channels open.
Business leaders must commit to transforming their company culture - to become agile in their practices and move away from the traditional linear waterfall approach to doing things. Therefore, we recommend that companies commit themselves to make their decision-making processes agile once they decide to embark on their digital transformation journey.
Although the Digital Transformation Leads are there to help in launching a company’s digital transformation effort, they are but a short-term resource to facilitate the change. For the transformation to be sustainable in the long run, firms must equip their employees with design thinking and agile skills so that the business can continually calibrate itself and move in anticipation of changes in market needs, from the ground up.
Correspondingly, individuals (employees) must also embrace lifelong learning to keep up with the necessary skills to be able to contribute meaningfully at work continually.
Expand industry Skills Framework to include relevant core skills and support micro-SMEs under Skills Future Enterprise Credit
We should support companies’ workforce transformation to aid them in seeing through their business transformation. Currently, qualifying companies can tap on the Skills Future Enterprise Credit (SFEC)4 for their enterprise transformation and upgrading their employees’ capabilities through eligible courses under each sector’s Skills Framework, which are aligned with their Industry Transformation Map.
However, design thinking, innovation/transformation and agile methods are not included as core skills in the Skills Framework for every sector. We are missing the opportunity to help businesses sustain their digital transformation.
We advocate that design thinking, agile methods and transformation be included as core skills in the Skills Framework for all industry sectors, qualifying for workforce transformation support through the SFEC.
Besides, to qualify for SFEC, an SME must have contributed at least $750 to the Skills Development Levy (SDL) over a year. This amount represents an annual payroll of at least $300,000. This payroll hurdle may pose a challenge for micro-enterprises, who are among the groups with the most urgent need to transform and perhaps with the least resources available to them but are excluded from this much-needed help.
We need to address this gap, by lowering the qualifying criteria for SFEC, to include micro-enterprises that do not meet the current SDL threshold.
SGTech Initiatives to Support Digital Transformation for Singapore Businesses
We recognise that the digital transformation journey may not be comfortable for many SMEs. It requires changes at multiple levels. And, in a climate where business survival is uncertain, the challenge is multiplied.
SGTech wants to help ambitious and forward-thinking SMEs who are ready to step forward to embrace this change and transform digitally. We want to create a platform to guide, equip and find additional support for companies that are willing to do so.
To support digital transformation for SGTech members, and the broader SME community, SGTech’s Digital Transformation Chapter will do the following:
- Work with trade associations and chambers (TACs) to refine their Industry Digital Plans.
- Identify firms that can assist SMEs in their transformation, then pull these resources together and develop a programme in collaboration with the government to support SMEs in defining the objectives and strategy for their transformation.
- Define the skills, qualities and experience needed for Digital Transformation Leads to be successful, and collaborate with industry partners and educational institutions to develop a programme, jointly with IMDA, to provide Digital Transformation Leads with the right training and support.
- Create a reference resource for the Digital Transformation Leads for best practices and solutions by curating successful use cases for solutions.
- Promote sustainability and continuity in firms’ transformation by curating training programmes to equip SME employees with the right skills.
Digital transformation is crucial for the survival and success of Singapore businesses. More importantly, it is a continuous endeavour, requiring the company to continually evolve to keep pace with evolving customer needs and make investments in relevant technology as the environment and customers change.
To succeed in this evolution, business leaders must change their mindset and company culture to embrace agility in their practices and equip employees with design thinking and innovation skills. At the same time, individuals must be willing to embrace lifelong learning to stay agile.
This change is not easy. SGTech wants to contribute to Singapore’s strategic objective by supporting the ongoing digital transformation of the Singapore economy. We do this by serving as the on-ramp for SMEs that are willing to embrace this change to transform digitally to stay relevant as we head to the future, by creating a platform that can provide firms with guidance and connect them to the support they need.
SGTech’s Digital Transformation Chapter gathers like-minded companies with various specialities, with the common aim of accelerating innovation to drive the successful digital transformation of Singapore businesses.
1 Such as the Operation & Technology Roadmapping workshops by A*STAR. https://www.a-star.edu.sg/Collaborate/programmes-for-smes/Operation-Technology-Roadmap
2 “Digital Transformation Is Not About Technology”, Harvard Business Review, Mar 2019. https://hbr.org/2019/03/digital-transformation-is-not-about-technology
3 VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity. It describes the situation of constant, unpredictable change that is now the norm in many industries and areas of the business world.
4 SFEC caters for up to $10k for companies to invest in enterprise transformation and upgrading employees’ capabilities, with at least $3,000 set aside for workforce transformation. https://www.skillsfuture.sg/sfec
Published Dec 2020