How is Singapore helping businesses to transform?

The Singapore government has been urging companies, including SMEs, to transform their businesses to stay relevant and competitive, as far back as a decade ago or earlier. Initiatives such as the Smart Nation roadmap aim to help companies boost productivity through digitalisation and integration of technology in their business.

The COVID-19 pandemic makes for an interesting discussion about the role of technology in businesses, especially Singapore’s tech sector. While unprecedented in the damage to the economy, not to mention the lives lost, the crisis has also pushed for acceptance and adoption of technology like never before. According to Microsoft CEO Satya Nadella, Microsoft has seen two years’ worth of digital transformation in just two months of its third quarter.

So how can businesses, especially SMEs, ride on the wave of governmental support such as grants, to increase productivity through integration of technology and digitalisation?

Challenges

Demand for technology jobs in Singapore rose by 20 per cent in 2018, according to a 2019 salary benchmark report by recruiting firm Michael Page. The growing demand for digital skills in the workplace has resulted in a talent crunch, despite the Government’s push to encourage students to pursue careers in science, technology, math, and engineering.

This tech talent crunch, coupled with a tightening foreign workforce quota, has driven up wages and salary expectations. This puts pressure on SMEs who find it harder to hire local talent with the right skills when competing against larger firms with better benefits and development opportunities.

Changing mindsets was also another challenge.

Singapore Business Federation’s (SBF) annual National Business Survey in 2019showed nine in 10 companies recognise the importance of business transformation to remain relevant and competitive, as the world becomes increasingly digital. Yet, companies, especially SMEs, seem to lag in this innovation drive. In 2018, larger businesses reported a higher rate of implementing new technologies (40 per cent) compared to SMEs (31 per cent). This echoes a 2018 Cisco study which shows that most companies in Asia are slow to adopt technology due to budget constraints, a lack of adequate talent and an inadequate IT infrastructure.

What has been done?

According to a study by AI Summit Singapore in 2019, only 14 per cent of Singapore-based companies could boast of mature AI capabilities, and only 8 per cent reported the regular use of AI. Compare this to the 57 per cent who agreed that automation and AI are needed in their companies.

To provide incentives and resources for SMEs to invest in automation, robotics and other technology solutions, numerous initiatives were implemented. These include the then Productivity and Innovation Credit scheme, Technology Adoption Programme and SMEs Go Digital Programme.

In March 2020, Singapore Business Review reported that 41 percent of SMEs said their top barrier to digitisation was the high investment costs. In April 2020, IndSights Research (link to BSSFY20Q1 findings) found that as part of their business strategy, companies planned to increase their budgets in 3 areas: digitisation, investments in R&D, and training. Regarding the Resilience and Solidarity budgets announced at the start of 2020, companies found the various support programmes such as the Jobs Support Scheme, the Wage Credit Scheme, and the Foreign Worker Levy assistance to be useful and most were aware of these schemes.

Singapore’s Fortitude Budget included more than S$500 million as part of the supplementary Covid-19 relief package to fund local digital transformation initiatives. For companies that hunkered down during the lockdown, it is time to innovate to prepare for the next phase. The Government allotted funds to “support digital transformation”, pointing to areas they think can maintain productivity and accelerating innovation. This is a good direction for businesses contemplating where to spend the funds – to prioritise critical digital upgrades that may considerably increase their capability.