As the Covid-19 pandemic raged across the world in April 2020, Microsoft CEO Satya Nadella observed, “We’ve seen two years’ worth of digital transformation in two months.”
We saw this same urgency among many SMEs in Singapore. By October last year, 83% of SMEs in the country had already established strategies to digitise their business processes, compared to just 50% in 2018, according to the 2020 SME Digital Transformation Study.
There’s a nuance to this story, though. It’s one thing to plan, and quite another to act. Implementing digital strategies has been tough, and the pandemic only served to delay SMEs’ progress in doing so.
As a business owner, what’s preventing you from moving forward with your digitalisation strategy?
The cost of digitalisation
The SME Digital Transformation Study revealed that 56% of SMEs in Singapore found the implementation costs of digitalisation too high. This concern is valid, especially in the wake of the pandemic. In fact, cost control is a priority for 62% of SMEs in Singapore this year as they try to bounce back from last year’s economic slowdown.
With your books in the red or your finances stretching thin, it can be difficult to view digital tools as an investment. But others’ success may inspire you: in 2020, around 40% of SMEs with digital strategies up and running saw their sales grow compared to the non-adopters, 60% of which saw a decline.
Those who digitalised more than one area of their business did even better than those who only focused their digital plans on one area. Digitally mature companies enjoy double the benefits of those who don’t see it as a priority.
The key is to identify specific ways in which digitalisation can help your business reduce costs in both the short and long term.
Lack of awareness of government initiatives
Luckily, the Singapore government is proactive in providing SMEs with assistance to increase their competitiveness and improve operations. The SMEs Go Digital programme offers several initiatives to help SMEs identify relevant digital tools and offset the cost of purchase. One of these is the Productivity Solutions Grant (PSG), which offsets the cost of buying pre-approved digital solutions by up to 80%.
Other Go Digital initiatives:
- Digital resilience bonus
- Industry Digital Plans
- Pre-Approved Solutions
- Start Digital Pack
- Grow Digital Pack
- SME Digital Tech Hub
- Chief Technology Officer-as-a-Service
- Advanced Digital Solutions
Knowledge of these grants is important in order to apply for assistance early, in case there’s a limit on the number of firms or budget. In the wake of the pandemic, the government is expanding its efforts to help more SMEs. In early March of this year, the SME Digital Reboot programme was launched to train 500 selected SMEs and help them digitise processes by the end of 2022.
If you’re wondering why the government is pouring so much of its resources into championing SMEs’ digitalisation, the country has much to gain from it. SMEs, after all, employ 70% of the country’s workforce. These businesses are also responsible for half of the nation’s gross domestic product (GDP), and could add another US$24 billion by 2024.
If you don’t have time or staff to research all the various government initiatives for SME digitalisation, you can always ask your accounting firm to help out. We’re not just record-keepers, after all—for accountants, it’s in our best interest to keep our clients’ cash flow healthy and help them identify ways to improve their financial position.
Requires a change in company culture
Digitalisation is a huge transformation for any organisation, big or small. Maintaining a digitally forward business involves specific requirements to make the embrace of new technology beneficial.
The most important is to have a culture of innovation. It’s a synergy of people, tech, processes, and data in a way that encourages growth and change. Such a culture accepts that major improvements would be needed every few years to remain competitive.
Business organisations are said to have the culture of innovation when they have these key telltale signs:
- More resilient against unpredictable changes, with the use of technology
- Invests in their people’s skills and knowledge
- Uses data to develop products and services
- Regular reviews processes, and redesigns them to make it easier for their people to push for innovation
Another way that it affects company culture is the skills needed by their manpower. In the SME Digital Transformation Study, by The Association of Small and Medium Enterprises (ASME) conducted in partnership with Microsoft last year, company leaders responded that their staff lacked the digital skills necessary.
However, this has been quickly changing, with big tech companies leading the way, like Microsoft and LinkedIn. Both have helped companies equip their employees through their skills-based training. In Singapore alone, Microsoft has trained over 200,000 people since the beginning of the pandemic.
While companies are quickly accepting digitalisation after seeing the effects of the pandemic, it may take a deeper dive as a nation to really become a hub for innovation. This culture of innovation encourages leading with ideas that break away from the norm. It involves risk-taking, and willingness to make mistakes, characteristics that are discouraged even among children.
Dr. Michael Teng, CEO of the Singapore Innovation & Productivity Institute (SiPi), mentioned this in the 2015 Frost & Sullivan Growth, Innovation, and Leadership conference. He said that it could be a possible major roadblock for startups.
The hesitancy to shift to tech-based solutions prior to Covid-19 hints that much of this mindset may still be present in the Singaporean society. For companies to plan effectively around this, and encourage the innovative way of thinking, it’s important they understand its roots.
Embracing innovation in Singapore
While a culture change would be much more challenging than costs and awareness of assistance programmes to address, steps should be taken as early as now. It starts with being armed with comprehension of the issue and the right information.
Your firm may have its own set of challenges to adopting digitalisation into your accounting process. In cases like these, it’s important to reach out to experts that understand your struggles as well as what a change like this entails.
Harvest Accounting specialises in assisting small and medium enterprises (SMEs) making the change. The firm not only provides accounting services, and endorses the use of their recommended tech solution, but helps SMEs with tailoring it to their business processes.
Make the first step towards having a more efficient accounting process by booking a consultation with us today!