Over half of SMEs in Singapore blame digitalisation delay on coronavirus

Despite higher adoption rates, only two in five SMEs perceived their efforts to be successful.
Despite higher adoption rates, only two in five SMEs perceived their efforts to be successful.ST PHOTO: CHONG JUN LIANG

SINGAPORE - While many small and medium-sized enterprises (SMEs) here have strategies in place to go digital, the take-up rate has been slow, with firms blaming Covid-19 for causing delays in their digitalisation plans.

This is in stark contrast to the belief that the outbreak has fast-tracked digitalisation for many companies, a study by the Association of Small and Medium Enterprises (ASME) and tech giant Microsoft showed.

The SME Digital Transformation Study involved a poll of 400 SME owners and key IT decision-makers here from March to June.

The survey found that 83 per cent of SMEs in Singapore have digital transformation strategies in place, but despite higher adoption rates, only two in five SMEs perceived their efforts to be successful.

More than half the firms (54 per cent) blamed the Covid-19 outbreak for slowing their digital transformation plans, but about an equal proportion (56 per cent) said it was too expensive to digitalise.

They also cited a lack of digital skills and low awareness of digital transformation initiatives by the Government which they could tap.

Mr Vivek Chatrath, small, medium and corporate lead for Microsoft Singapore, noted that due to their size and structure, SMEs have unique needs and some may lack the resources to digitally transform.

He said that disruptions from Covid-19 had hit these firms hard, and some have to refocus their efforts to just stay afloat.

"During Singapore's circuit breaker and the months that followed, many small businesses took hits to their revenue as a result of forced closures or reduced operating capacities," said Mr Chatrath.

"These SMEs have had to deprioritise investments in digital transformation as they focused on ensuring business survival and overcoming financial challenges."

A similar survey was carried out in 2018.

The take-up rate was lower then, with 57 per cent of firms indicating they were aware of digital transformation. Only 56 per cent had digitalisation strategies in place.

In the latest iteration, the respondents were from 15 industries, representing professional and business services, manufacturing, healthcare, construction and energy.

The study found that top barriers to digital transformation included the uncertain economic environment, a low awareness of government support and the lack of a digitally skilled workforce.

The biggest complaint was the high cost involved.

Ms Irene Boey, vice-president of membership and training for ASME, said a reason for firms failing in their digitalisation plans is due to the inappropriate choice of technology used.

She said while SMEs implemented digital solutions that have been approved by government grants, they failed to consider if such solutions are the best to meet their needs.

"What we want to emphasise is that SMEs need to adopt an outcome-driven mindset when it comes to digital transformation - where they need to be clear of their business objectives and needs before identifying suitable types of digital technologies that can help achieve their desired outcomes," said Ms Boey.

The survey found that the top three digital solutions firms are keen on adopting are: artificial intelligence and machine learning, business process apps, as well as big data and advanced analytics.

Sunlight Paper, a tissue product supplier first established in 1977, recently implemented a new fleet management system that uses cloud-based technology to allow company officers to access both customer and product data easily.

This allows the company to automate processes and reduce time spent on paperwork.

Mr Marc Chua, the firm's business development manager, said that it improved the company's productivity by 400 per cent.

"We strongly embrace the benefits that digitalisation can bring to our day-to-day operations - whether by optimising processes or improving employee and customer engagement," he said.