Digital upgrade failed for 3 in 4 SMEs

But some firms think they could still gain 26% from doing so.

Only one in four leaders of small- to medium- enterprises (SME) in Singapore said they were able to succeed in executing digital transformation in their business, leaving the remaining three in four up in the air, a study by the Association of Small & Medium Enterprises (ASME) and Microsoft Singapore revealed.

Even amongst the best achieving group of SME leaders with more than 20 employees, only approximately half of them saw some level of success in their digitalisation efforts. Despite this, firms that are actively implementing digital initiatives are still positive of the impact of this on their bottom-lines.

The SMEs who are actively implementing digital initiatives projected that their investments will deliver an average of 26% in revenue gains and achieve an average of 22% in cost savings. “The strong projection on bottom-line impact… revealed in the study suggests that SME leaders are optimistic about the tangible benefits of digital transformation,” said Gerald Leo, director for commercial partners and small medium enterprise group of Microsoft Singapore.

Majority of SME leaders said they already have basic technology solutions, such as office productivity tools (86%) and email (81%) in place. Whilst big data analytics, artificial intelligence (AI), and machine learning (ML) solutions currently have the lowest adoption rates at 9% and 7% respectively, almost 20% of leaders said that they plan to adopt related solutions in the next 12 months.

However, only 57% of polled SMEs have heard of digital transformation, whilst only 56% have strategies in line with it. Whilst this is considered a “good start,” the number is low compared to 98% of mid- and large-sized organisations polled by Microsoft earlier this year.

SME respondents also perceived that digital transformation is high-cost, citing this as a top barrier to digital transformation. However, ASME president Kurt Wee noted that leaders from the medium-sized enterprises (50 to 99 employees) view employee resistance (15%) as the top challenge to digitalisation. “This points towards the emergence of a potential workplace culture issue for larger-sized SMEs,” he added.

There were 1,057 business owners and key IT decision makers from across 23 industries surveyed in May and June 2018.