In today's digital age, technology projects have become an expected staple in business growth plans.
Companies that have announced their intention to invest in new digital capabilities are usually rewarded by the market with increased investor interest and possibly higher valuations. For example, in 2017, On-line plc's stock price jumped as much as 394 per cent in London within a day after announcing plans to add "blockchain" to its name.
While achieving return-on-investments on new technologies remains every business' challenge, the growth in interest and adoption is real. One technology that has picked up strong interest is artificial intelligence (AI), given its widespread potential applicability across any industry or company.
According to Gartner research, the potential market value for AI projects this year alone is estimated at US$1.8 trillion (S$2.5 trillion). Contrary to the commonly held assumption that only large companies can afford new technologies, middle-market companies - those earning US$1 billion to US$3 billion - are stepping up their investments in this area too.
In a recent EY Growth Barometer report, which surveyed 2,766 middle-market executives across 21 countries including 103 respondents from Singapore, middle-market companies here have the third-highest adoption rate of AI at 9 per cent, following closely behind companies in China and the Netherlands, which tie at 10 per cent.
Of Singapore middle-market companies, 72 per cent say they plan to introduce AI within two years.
As AI is a broad field of computer science, these projects could range from simple to advanced applications, that is, chatbot versus predictive analytics software. Regardless of the level of sophistication of these AI projects, it is clear that companies are betting big on AI.
However, to what extent will the technology support their ambitious growth plans? The same survey had revealed that close to four in 10 Singapore middle-market companies are targeting double-digit growth in the next 12 months.
Companies that place strong faith in technology being the silver bullet for growth may have been inspired by the rags-to-riches stories of today's technology giants.
Yet, often, the technological prowess of these successful companies, albeit impressively leading edge, is not the secret behind their success. Rather, it is their perceptive understanding of and innovative approach to the customer that has enabled them to deliver commercially competitive solutions that drive profitability.
For many of these leading companies, applying technologies such as AI is a means to create value for the consumer, for example, to better provide relevant product recommendations and enhance the e-retail experience, generate accurate search results to improve information search efficiency, or create round-the-clock services with chatbots and robo-advisers.
It is thus worth noting that the above-mentioned survey had found Singapore middle-market companies to be focusing on operations rather than their customers' needs in their deployment of technology. A larger percentage of respondents had placed improving process efficiencies as their main objective, ahead of improving customer experience.
Focusing on operations can indirectly improve the customer experience, as increasing operational efficiency would improve the organisation's speed to market and achieve higher predictability in its quality of goods for customers.
However, organisations will invariably hit a roadblock when they are focused solely on staying "lean and mean". A customer-focused lens is what will predominantly deliver dollars - and growth - to your business.
As technology reinvents the way that customers live, work and play, leaders will need to reimagine the future consumer. This will require Singapore middle-market companies to radically challenge and stress-test their assumptions of customer needs by asking: What will customers value? What will you change in your organisation to meet those needs? How will you use technology to lead that transformation?
These questions are not mere intellectual exercises but will help companies to identify untapped markets and "sweet spots", which is where growth, opportunity and profits lie. The boundaries for these markets may extend far beyond Singapore's shores in today's interconnected economy. The borderless opportunities brought about by going digital are particularly important for Singapore companies.
According to the above-mentioned survey, 30 per cent of the Singapore companies had cited overseas expansion as a growth priority to overcome the limitations of the small domestic market, with mergers and acquisitions being the second-most cited growth strategy (19 per cent).
As companies reassess their market opportunities, current business strategies may no longer be fit-for-purpose. Take the automotive industry, which has traditionally adopted a product-oriented approach to innovation in the areas of improving fuel efficiency and enabling faster speeds. With the arrival of self-driving cars and when people no longer own cars, who will be the customer?
Advancements in technology have certainly created growth opportunities today, and the future is full of unrealised possibilities. The means to delight the customer has expanded more than ever, even as the customer has arguably become even harder to please with the plethora of choices and increased sophistication. In that light, customer-centricity beyond operational improvements should top the list of drivers for technological projects.
If your company is merely asking about the latest software or setting technical key performance indicators, then beware - technology may have inadvertently become your biggest distraction to achieving growth.
• Choo Eng Chuan is EY Asean growth markets leader, Ernst & Young Solutions LLP; Charles Foo is Singapore customer leader, Ernst & Young Advisory.
