Challenges in Digital Adoption (and How to Address Them)
BANDAR SUNWAY – From the onset, it seems that almost every business has taken steps to digitalise their business during the pandemic. From large institutions to roadside stalls, hordes of enterprises are riding the digital wave, driven by competition amongst peers as well as pressure from their clients, customers and partners.
However, a recent Forrester report has proven otherwise, with only 46% of firms currently embarking on a digital transformation journey. In fact, one in three Malaysian firms had only started planning their digital initiatives earlier this year, despite being under lockdown for an extended period of time.
The challenges
Why is the rate of digital transformation not up to expectation, despite various initiatives and grants being dished out by government institutions and private institutions? It turns out, Malaysian companies are taking steps to digitise their business, but it is not exactly the same as digital transformation.
The same Forrester report points out that they have witnessed improvements in IT agility and innovation amongst SMEs. This could mean bringing their operations to the cloud and enabling a remote/hybrid working environment. However, business processes have largely remained the same, and businesses are placing organisation agility significantly down the priority list.
In a KRI report, Microsoft Malaysia’s managing director K.Raman stated two reasons why businesses find it challenging to embrace digital transformation — namely a lack of technological knowledge and organisational silos.
“Firms committed to digitalisation face a myriad of challenges, such as not knowing where to start, how to implement their digital strategies, or where to find technologically skilled employees,” the report states.
“Second, 49% of firms cited organisational silos as a critical challenge in digitalisation. Some firms may have organisational structures so rigid that each department is in its own ‘silo’, acting independently and lacking coordination. This could be why 55% of Malaysian organisations do not have an integrated enterprise-wide digital transformation strategy.”
A third, hidden factor is the cost of digitalisation itself. With a wave of digital transformation initiatives comes new cost centres, such as internet connectivity, digital hardware, software subscription fees and worker upskilling.
The KRI report points out that half of Malaysian SMEs cite funding as a key roadblock to digitalisation. Even for large institutions, twelve surveyed say that they have digital growth strategies in place, but only two had adequate and dedicated budgets to implement these strategies.
A deteriorating situation
Consider these challenges for a moment, and readers might realise that these challenges impact smaller SMEs more than larger institutions. These factors have driven a wedge– widening an existing digital divide that exists between companies of various sizes.
Smaller SMEs routinely lag behind larger firms in adopting more complex digital solutions. A World Bank report states that “large export-oriented firms dominate the digital economy as they adopt e-commerce at higher rates than SMEs.”
The report also finds that digital adoption amongst SMEs is concentrated on front-end computing devices, and not enough effort is placed in back-end business processes such as inventory management and order fulfilment software.
Digital technologies were expected to empower small businesses, thanks to the open internet and greater accessibility. However, large institutions are miles ahead, capturing large volumes of data, giving them an edge when it comes to data analytics and Big Data storage. While larger firms can optimise their operations and maximise profit margins, smaller competitions are effectively being shut out.
Ways to resolve this
Each company is unique in terms of its barriers to digital transformation. However, there is a common theme that affects all companies regardless of industry and sizes — and that is the lack of talent.
A May 2021 report by TheEdge points out that digital job vacancies in Malaysia have almost tripled, with companies scrambling over a small pool of high-quality talent available in the market. In fact, more than half of these talents are based in Selangor or Kuala Lumpur, leaving organisations from other states accepting the dredges of what the industry could offer.
At times like these, upskilling existing talent pools might be a much more viable (not to mention cheaper) way to fulfil your organisation’s digital transformation needs. Here are a few reasons why:
| Upskilling helps enhances worker retention, engagement and motivation Not only are training programs a form of compensation for employees, but it also makes it easier for them to compete for more senior jobs within the company — introducing competition that results in better operational efficiency and product quality for clients. Less disruptive than external hires Appointing new employees, especially to fill in a core position, may stifle company culture and operations. New employees need time to build rapport and gather the reins for their new job. Reflection on management. Upskilling existing staff members is one of the most direct ways to show employees that you care about their career progression and their future within the company. It demonstrates the employer’s accountability towards its staff members, improving morale while portraying a positive image outside the organisation. Cultivate a culture of learning In a post-pandemic environment, no company can escape the need for agile workers that are passionate learners and are flexible in handling new business challenges that come their way. Upskilling employees help prepare them for such an eventuality. |
For most companies, sending employees for postgraduate degrees might be too expensive with diminishing returns. Thankfully, there are plenty of resources online that can resolve this issue.
There are courses tailor-made to the local market rather than focusing on a western audience. For example, this Digital Transformation Fundamental course by InfoTrek only costs RM2,500 spanning over 16 hours but can be transformational towards your business operations. For companies struggling with migrating towards the cloud, there are even courses on Microsoft Azure, Amazon Web Services, Cybersecurity and more.
Just two years ago, making the leap towards digital transformation was not an immediate priority, but this is a luxury that we cannot afford today. To stand still in digital adoption is to regress behind the competition. WISE AI hopes to help guide companies through this difficult period towards a truly technological savvy Malaysia.
About Wise AI
WISE AI is an award-winning Artificial Intelligence company specialised in digital identity technologies. We develop world-class emerging deep tech that is adopted by the government and multiple industries. Our AI-powered solutions include EKYC, digital ID, digital signature, and blockchain. Our technology is optimised for the recognition of ASEAN faces.
