Singapore small and medium businesses struggle in digital transformation

Digitalisation efforts remain at early stages, with many not seeing success, despite multiple government programmes. And the need is only getting more acute.

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Moving up the digital transformation ladder remains challenging for Singapore small and medium businesses. The adoption rate of digital technology has increased for small businesses with 99% of companies adopting at least the most basic level of digital technologies such as office productivity tools and web-based email, according to the 2020 SME Digital Transformation Study by Microsoft Singapore and the Association of Small & Medium Enterprises (ASME), which surveyed 400 business owners and key IT decision makers in Singapore small and medium businesses. Small and medium businesses make up 99% of all Singapore businesses, the government statistics agency reports. Medium businesses are defned as those making between S$10 million and S$100 million in revenues a year; small business make less than S$10 million.

Although levels of awareness and adoption of digital transformation have increased since 2018, small and medium businesses continue to see only moderate levels of success in their digitalisation journey. Only 39% perceive their digital implementation to be successful—a small improvement from 28% two years ago.

The reason: “It is likely that most small and medium businesses are still in the relatively early stages of embracing digital transformation and have yet to maximise the value they can derive from the cloud,” said Peter Yuan, technology lead for Southeast Asia at Accenture. “Over the past year, the focus of cloud investments would have been on achieving business continuity scenarios such as providing resources for remote work models. Digital transformation requires cloud at scale—and now that these firms have got the basic cloud infrastructure in place, the next step will be to start looking towards exploring other advantages that cloud adoption enables.”

The 2020 Asia Pacific SMB Digital Maturity study by Cisco Systems found that, although Singapore was ranked top of the maturity index, it was still at the second of four stages—“digital observers”—of digital transformation. That means many processes are still not automated and that companies are focused on addressing inefficiencies with very limited use of analytics, focused on the use of reporting tools and only starting to create a digital plan.

Many small and medium businesses are like Sunlight Paper Products, a 40-year-old business that supplies tissue products to corporate customers, whch only recently began their digital transformation journey by moving its manual logistics system to a cloud-based system for its enterprise resource planning and fleet management.

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