Singapore: Although businesses recognise the importance of digital transformation, organisations worldwide are struggling to balance the elements needed to deliver on digital, according to a report by Fujitsu, an information technology equipment and services company.
The report—titled the Digital Transformation PACT—surveyed 1,625 global business leaders and found that one in three (33 percent) has cancelled a project in the last two years at a cost of SG$689,659 (US$523,000), while one in four (28 percent) has experienced a failed project costing SG$904,872 (US$686,000). A majority (82 percent) of businesses say that their customers expect them to be more digital, while 71 percent believe that they are behind their competitors. Ultimately, two in three (66 percent) believe that they will lose customers relative to their competitors as a result of digital transformation.
Business leaders in Singapore, among the respondents surveyed, proved to be highly confident when it comes to digital transformation. Fewer than half of Singapore businesses said that the fear of failure seriously hindered their organisations’ digital transformation initiatives, while nearly two in three business leaders said that digital is creating entirely new business processes and functions that are entirely digital-led—the highest among all countries surveyed.
Mr Wong Heng Chew, country president, Fujitsu Singapore, comments: “Technology is not the only influencing factor in achieving digital strategies, and companies in Singapore have caught on to this, with close to half (48 percent) of them saying that action is the most important factor in achieving their digital strategy. Digital transformation is firmly integrated into Singapore’s business culture, and the majority agree that this goes beyond creating new business models and revenue sources, to include the changing of business processes. Co-creation remains a strong influence on businesses as well.”
Key Highlights For Singapore
Realising that digital transformation is about much more than technology alone, the research examines how businesses perform against the four strategic elements required to digitally transform: People, Actions, Collaboration and Technology (PACT).
In Singapore, one in four organisations have experienced a failed digital project in the last two years. While this is consistent with global trends, the average cost of failed projects locally was lower at SG$788,354 (US$598,000) , compared to the global average cost of SG$904,872 (us$686,000).
More than two-thirds (68 percent) of the respondents admit a digital skills shortage. Three in four (74 percent) of businesses say shadow digital projects are the only way parts of the organisation can complete meaningful innovation, while 92 percent say that their customers expect them to be more digital.
Local organisations generally recognise the importance of digital transformation with majority of their projects having either been delivered or are in progress. Close to half (46 percent) of business leaders have already implemented transformation projects with outcomes delivered, while 40 percent say they are in the process of implementing digital transformation projects. For firms, the biggest external factor driving transformation was competitors (76 percent), while customers were a close second (68 percent). However, businesses continue to face challenges across the four pillars of PACT.
Business leaders recognise the role of digital skills, upskilling their staff through digital training programmes, and attracting the right digitally-native talent. When considering their approach to the people involved in digital transformation, the vast majority of business leaders (92 percent) are taking steps to increase their access to digital expertise, with 68 percent admitting there is a clear lack of digital skills within their organisation.
Looking to the future, finding and nurturing talent with the right skill sets will continue to be a key business concern. Nearly all (98 percent) of the respondents in Singapore agree that upskilling existing staff will be vital to success in the next three years. In addition, 94 percent saw that artificial intelligence will transform the skills needed internally by 2020.
Survey results showed that Singapore is the most confident country in believing that digital transformation is creating entirely new business processes and functions that are digitally led. Almost all Singapore business leaders agree that their business has a clearly defined digital strategy (94 percent).
A majority (90 percent) are confident that the rest of the business knows what their overall strategy is, while 92 percent say that the leadership team is involved in the planning of all digital transformation projects. However, two in three organisations focus too much on technological change during transformation rather than the skills, processes and behaviours that must support it. Business leaders (72 percent) here say that silos within their organisation seriously hinder the ability to achieve their digital strategy, which is similar to sentiment globally.
Shadow digital projects remain a prevalent issue in Singapore. Three in four (76 percent) of respondents say that digital transformation projects often undertaken are not linked to the overarching strategy, while 74 percent say that shadow digital projects are the only way that parts of the organisation can complete meaningful innovation. While half (55 percent) say that the cost of failed digital transformation projects has discouraged their organisations from pursuing them in the future, the sentiment is still better than the global average (66 percent).
Co-creation remains a strong influence in Singapore, with over two thirds of businesses looking to undertake co-creation projects. Most of these partnerships have been formed with technology experts (77 percent), followed by existing customers (59 percent) and start-ups (56 percent). All three findings are ranked above the global mean.
Over three quarters (76 percent) say they would be willing to share sensitive information such as business plans and project pipelines with an external partner as part of a co-creation project. However 72 percent admit that a lack of success in a short timeframe would quickly put an end to strategic partnerships.
Technology is also changing the way businesses in Singapore operate. Business leaders planned to implement digital technologies such as cyber security solutions (76 percent), big data and analytics (72 percent) and cloud computing (66 percent) in the next 12 months. In the longer term, business leaders pointed to big data and analytics as being most important to their financial success (80 percent), while cybersecurity systems were most crucial to organisational success (74 percent) over the next ten years.
There is a lack of optimism when it comes to businesses’ progress with digital technologies, more so in Singapore than globally. Nearly all (92 percent) admit that their customers expect them to be more digital, while 60 percent feel that they are behind their competitors in using digital to deliver for their customers, and 70 percent believe that digital transformation in their sector will cause them to lose customers relative to their competitors.
While it was unanimous that technology is creating a fast-moving business landscape, over two thirds (70 percent) are concerned about their organisations’ ability to adapt to digital technologies such as artificial intelligence. More than four in five (82 percent) conclude that it was impossible to guess who their closest competitors would be in ten years.