The success of digital transformation initiatives undertaken by organisations in Singapore fall short of expectations due to their heavy emphasis on technology and lack of focus on people and processes.
This was one of the main findings of Telstra’s Disruptive Decision-Making research, which surveyed 3,810 senior decision-makers from 12 industries in 14 markets around the world to uncover insights into strengths and weaknesses around their digital transformation programs.
Focus on technology undermining success
When rating decision-making across four factors for success – people, processes, technology understanding and partnerships – businesses in Singapore ranked ‘technology understanding’ as the area where they feel by far most confident.
Seventy six per cent of Singapore respondents felt their organisation makes technology decisions ‘well’ or ‘extremely well’. While the understanding of technology and its performance is important, other factors are equally significant.
Telstra’s Managing Director, APAC, Marjet Andriesse, said that organisations that are highly digitally mature (20% in Singapore, compared to 21% globally) show greater focus on people and processes.
“The research shows that successful digital transformation relies on more than the right technology, it requires the right culture, the right people - and the right processes to support them,” Ms Andriesse said.
“Digital transformation must be a company journey that involves upskilling and changing employee mindsets, adapting structures and ways of working, and creating teams that can take advantage of new technologies.”
Whole-company approach needed
The research found that a company-wide approach to digital transformation is significantly more likely to result in success, yet 66% of Singapore organisations are allowing business departments drive individual digital initiatives, compared to 51% globally.
A further 8% said they outsource as much as possible (vs 15% globally), and only 25% say they have an integrated, whole-of-company digital transformation strategy (vs 31% globally).
“Globally, organisations that have a whole-of-business digital transformation strategy are significantly more likely to be highly digitally mature, make extremely good digital decisions, and see the impact of digital transformation across the business,” Ms Andriesse said.
“The research demonstrates that Singapore organisations have an opportunity to integrate digital transformation activity across all areas of the business, but this needs to be led by a clear company strategy from the C-suite and board level down.”
Businesses in Singapore not delivering on digital priorities
The report also found there was a substantial gap between digital transformation priorities and performance.
Organisations in Singapore rated their top digital transformation priorities as (1) optimising technology to move faster, (2) protecting digital assets from cyber threats, and (=3) optimising security investments to reduce time and resource management, and (=3) protecting, detecting and responding in real time to events.
However, when it came to decision-making performance, these priorities ranked poorly.
“One of the red flags we saw in this research was the gap between the areas businesses in Singapore chose as their highest priorities, and their performance in these areas,” Ms Andriesse said.
“Cyber security was identified as a particular focus area in Singapore. But despite protecting digital assets from cyber threats rating as the second highest priority – it achieved the lowest performance score in terms of ability to deliver.”
Ms Andriesse said there were a few factors to consider when analysing this finding.
“It is notable that three of Singapore’s top four priorities are related to security, even though performance in these areas is poor. This performance gap is symptomatic of the fact that security requires a whole-of-business approach incorporating people, processes, and technology working in concert together,” Ms Andriesse said.
Hard financial outcomes difficult to show
The research found that while organisations in Singapore are increasing their investment in digital transformation, many businesses had yet to realise the financial impact of their efforts.
More than a third of businesses in Singapore invested more than US$1 million in digital transformation products and services over the past year (34%), while almost one in 10 spent more than US$5 million (8%).
This figure is set to increase as 30% of respondents said their company’s total spend on digital transformation would grow by more than 10% in the next three years.
However, when it came to measuring the impact of digital transformation, showing hard outcomes such as financial returns of this investment was difficult.
“Measuring the progress and success of any digital transformation strategy or individual project is an absolute essential. But the metrics in which we measure success are just as important,” Ms Andriesse said.
“Organisations in Singapore found it particularly hard to demonstrate financial results from digital transformation. In fact, of all the business outcomes surveyed, increasing profit margins saw the lowest levels of achievement in Singapore.
“Successful companies are clear on what digital transformation means for their organisation, they have empowered their people, strengthened their processes and identified their key partners.”