What's the hype about 
going digital?

The future is digital and that is unstoppable. Singapore has been slow in technology adoption with only 4,000 SMEs adopting pre-approved digital solutions since Singapore launched the SMEs Go Digital programⁱ. Despite 65% of SMEs being aware of government support initiatives to help digitalise, only 30% utilised themⁱⁱ.

According to StarHub’s research, Singapore SMEs identified their struggle to keep up with technology as one of the top five business challenges. With SMEs as the backbone of Singapore’s economy, contributing to half of our GDP, it is now more crucial than ever for them to pick up the slack.

Growing number of SMEs are facing up to digital reality. The first movers will gain a competitive advantage and outpace their peers because emerging technologies can give birth to new business models that disrupt sectors, drive greater productivity and higher revenue growth, leaving companies who fail to adapt struggle to survive.

StarHub Business speaks to five local SMEs to hear what they have to say about the digital movement.

“In the olden days, all you need is good food to attract customers and create a good F&B business. However, as the industry gets more saturated and customer expectations evolve, businesses need to continuously innovate and evolve to provide more value to their customers in order to stay in the game. With rising rental costs and manpower shortage, it is a struggle to maintain a healthy bottom line without affecting day to day operations,” said Kelvin Goh, owner of F&B outlet Etuckshop at One North.

Digitalisation was a driving force for Zingrill Holdings’ (parent company of Seoul Garden Group) strategy to enhance customer experience. They introduced e-menus to Seoul Garden HotPot in 2017. Not only did this provide an easy, seamless and completely transparent ordering process, it boosted sales through functions such as suggestive dish recommendations that allowed for cross- and up-selling. Compared to printed menus, staff can easily and promptly update the e-menu based on inventory, which is very useful when dealing with perishables and ingredients that are subjected to seasonal availability.

CEO of Zingrill Holdings, Andrew Lee, shared his take, “Technology is constantly advancing and tightly weaved into our everyday routine. It can create many great opportunities for businesses. With suitable digitalisation of menial tasks, we can effectively eliminate work redundancy and human errors, thus ensuring and maintaining quality consistency.”

Also from the F&B scene, Joey Lee, Founder and Director of local food chain Poke Theory, said digitalisation wasn’t so much a choice, since delivery partners and meal subscription players are all tapping into tablets and staffs’ devices for their systems to work. Digital payments such as Grabpay came naturally, especially with the discounts they were offering as part of their customer acquisition strategy, and since they offer a lower commission than old school payment partners like Visa and Mastercard. He also diverted their procurement system to digital alternatives. Not only are they more efficient for the bookkeeping process due to automation, they also churn out useful reports for the management to derive answers from.

For traditional companies who are entrenched in manual systems and processes, making the digital switch can seem especially overwhelming.

Tommy Phun, Commercial Manager of 62-year-old company Eng Hup Shipping said the shipping industry is facing intense pressure to reevaluate the ways business is conducted as customers become more digitally sophisticated and expectations of transparency and efficiency rise.

“We can’t ignore technology if we want to survive in today’s digital economy,” Tommy said.

“We embarked on our digital transformation plan two years back. After a detailed analysis of current processes, we uncovered opportunities that technology can step in to help eliminate inefficiencies and drive productivity.”

Their client is now able to charter vessels on demand via a mobile application instead of going through the sales team. They also launched an automated system that uses digital scanners to generate passenger manifests. Before this, staff had to manually write down every passenger’s details. These digital reports allowed for easy analysis and provided insightful data to better manage the ferries. Moving forward, they are exploring the adoption of IoT on all their vessels.

Each stage of transformation will present challenges, and it is always the greatest to overcome at the start. Short-sighted SMEs may be quick to dismiss digitalisation due to costs and are afraid to take the bet on an uncertain future for fear of cannibalising existing profits.

“Resistance to change is one of the main reasons stopping many SMEs from digitalising their businesses,” according to Andrew.

“Many are skeptical about the benefits it brings. Especially when they are set against daunting amount of changes: 1. Costs of development and implementation; 2. Training and upskilling of workforce; 3. Overhaul of existing systems; 4. Loss of service and interaction touchpoints with customers. With such a short term cost-benefit mindset, it is no wonder business owners fear to go digital.”

40% of SMEs cite high cost of investment as the main reason for not digitalising or making more use of digital technologies and processes.² There is an enduring perception that going digital demands huge capital investments that may not see direct returns in the short term. Most tend to focus on cost-savings, but there is a need to have a perspective change to focus on the opportunities for improved revenue.

“There are initial costs to develop digital solutions and teething issues to manage after launching the systems. However, today we have gained the benefits in terms of efficiency and productivity,” said Tommy. “Enterprise Singapore has also been very supportive in aiding us through this process.”

All five SMEs recognised the importance of change management, not just in the integration of the solutions into existing processes, but in aligning employees with the digitalisation movement of the company.

“Making the switch from previous legacy systems to new ones is the biggest challenge. The leadership of the company needs to commit to the migration and communication is key. We work towards building a tech-savvy team with first-principle thinkers who are able to unlearn and relearn as necessary and adapt and grow with the company,” said Khairul Rusydi, CEO of Reactor, an entrepreneurship and innovation training academy.

“Getting everyone geared up for the digital transformation will reduce resistance and fear,” Andrew shared.

He recommends setting clear project milestones and ensuring key essential information are passed down correctly. Onboarding and development trainings are also necessary to equip staff with the relevant skillsets, and the management team will need to be ready to address any doubts and concerns that arise along the way.

Joey added, “We make the effort to explain to our staff the reasons for such changes, especially to those who are used to the ways of the past. This increases their willingness to embrace the changes.”

“Digital transformation cannot take a top-down approach. All stakeholders need to play their part in order for it to be successful and sustainable,” Tommy said. “We held briefing sessions to convey the purpose and goals of the changes. Our aim is to develop our employees to become digital change agents. With a strong sense of ownership to the cause, they will take responsibility to ensure smooth implementation. Cultivating the digital-first mindset in them also trains them to find opportunities in their work processes that technology can help to enhance.”

Andrew also highlighted the need for job redesign in order to ensure a healthy transformation, “Manual processes will be greatly restructured to cut down redundancies, and job redesign is an essential move.” This does not mean replacing humans with systems but putting the labour resources to better use so that they can focus on more important tasks.

With the multitude of digital solutions that have sprung up in just the past five years, SME owners are overloaded with options and end up unable to decide which will work for them. This syndrome is what we call the analysis paralysis.

“One of the challenges is determining, from the vast choices of digital solutions, which would bring real value to the business. There is a need to weigh the pros and cons of the implementation and be convinced by the potential long run benefits,” said Kelvin.

In response to this, the Government launched the Start Digital initiative to simplify the selection process as well as to lighten costs for SMEs. These businesses can now take up two basic digital solutions (from five categories: accounting, human resource management system and payroll, digital marketing, digital transactions and cyber security) for at least 18 months and have six months of costs waived.

This initiative targets the needs of SMEs by offering affordable, modular basic digital solutions that are curated and packaged.

"SMEs can simply plug and play from day one, and it makes it easier for owners to concentrate more on connecting with customers and growing their new business, without having to worry about the challenges of digital adoption later on," said Minister for Communications and Information S. Iswaranⁱⁱⁱ.

Kelvin is kickstarting Etuckshop’s digital transformation with StarHub’s In-store Analytics & Engagement solution which taps on the Guest Wi-Fi to capture customer information and generate business data. “This helps me to understand my customers and business better so that I can send out targeted marketing campaigns and improve current operations,” he said.

Another two new digital implementations will also be incorporated by the next quarter, namely QR code payment and Online supplier system which will enhance convenience for customers and employees respectively.

In this age of disruption enabled by digitalisation, SMEs need to stay on top of the ever-changing market trends and reactivity is key.

Joey emphasised on the importance of keeping up with constant industry developments, “If you choose to turn a blind eye to something as ground-changing as digitalisation, you’d be caught in the tidal wave, and before you know it, you’ll be struggling to stay afloat. We have to embrace it with open arms whether we love or hate it.”

In response, business owners should be open to innovate as technology attacks market inefficiencies and customer expectations evolve.

“Digitalisation is a strategic move to help us navigate today’s tech-driven economy,” said Tommy. “Our digital efforts have provided us with a strong value proposition to our clients. We take on a long horizon perspective to ready ourselves for future challenges and ensure long-term growth.”

Kelvin envisions in the near future, all F&B operators will be able to gather live data of their business and manage it from any part of the world, “We can all run our outlets while on the move and still have what we need all at our fingertips.”

Change is never easy, but it is necessary. SMEs, as the future drivers of Singapore’s economy, cannot afford to stay set in their old ways. In keeping up with the digital revolution, there is no better time than now.