The truth about digitalisation grants
Updated: Dec 2, 2020
A recent article on the Straits Times highlighted that many SMEs in Singapore are blaming Covid-19 for causing delays in the digitalisation plans. 83 percent of SMEs in Singapore have digital transformation strategies in place, but despite higher adoption rates, only 2 in 5 SMEs perceived their efforts to be successful. More than half the firms blamed Covid-19 while the other half mentioned that it was too expensive to digitalise. The lack of digital skills was also cited for their failed efforts. This article aims to explain what going digital entails and how grants might not actually help companies with going digital.
The Digital Transformation Smokescreen
Many SMEs find it hard to understand and navigate digital transformation because of the way it has been marketed. With so much hype about digital transformation and going digital, finding information with genuine intent on helping SMEs transform can be difficult. Many vendors sell 'cookie-cutter' solutions without learning about the problems the clients are facing which is a red flag as every business has different needs at every stage of the company's growth.
"Due to their size and structure, SMEs have unique needs and some lack resources to digitally transform." - Vivek Chatrath, Corporate Lead at Microsoft Singapore.
Truth is, many SMEs who want to go digital often look for solutions without understanding what needs to be solved. Investing in a business analyst who understands (1) the company's internal processes at the back of their hands, (2) knows the available technologies in the market and (3) has experience using those technologies will go a long way in ensuring a successful digital transformation. Unfortunately, not many SMEs are willing to hire a business analyst. On top of that, many SMEs have a huge misconception that digital transformation is just 'solving problems by purchasing software'. Truth is, digital transformation is an ongoing process - it is not a one-time affair. Transformation entails change which creates friction and resistance as we are all hardwired to remain in our comfort zones and would be reluctant to change the way we work.
The way many SMEs approach digital transformation is similar. Often times, they are 'digitally sick' - they have a few problems with the current way of working and they know they need some sort of software or system to manage their processes more efficiently. Instead of analyzing existing process issues and performing root-cause analysis to find out what they really need, many simply send out RFQs (request-for-quotation) to multiple vendors and evaluate quotations without a clear idea of what they actually need.
Will a digitalisation grant really help?
Whether it is PIC (Productivity and Innovation Credit Scheme), PSG (Productivity Solutions Grant) or EDG (Enterprise Development Grant), the instrument works the same - it help SMEs to defray digitalisation costs in hopes of boosting productivity and achieving operational excellence.
"A reason for firms failing in their digitalisation plans is due to the inappropriate choice of technology used. While SMEs implemented digital solutions that have been approved by government grants, they failed to consider if such solutions are the best to meet their needs." - Irene Boey, VP at ASME.
The high failure rate of digital transformation amongst Singapore SMEs is attributed to the wrong choice of technology. This is due to the lack of a digital strategy, resources (e.g. a business analyst) and proper education on what going digital entails. Buying software at a cheaper price (e.g. grant-approved) is not digital transformation - it is merely procurement. This is why choosing the right technology is very important for digital transformation to be successful. The chosen technology needs to be fast, adaptive to changes in processes and easily integrated with existing systems.
A better approach to going digital
In order to go digital successfully, SMEs need to identify the key objectives of going digital and work with the right expertise to analyze existing processes, imagine future-state processes and formulate a plan to get there.
"What we want to emphasise is that SMEs need to adopt an outcome-driven mindset when it comes to digital transformation - where they need to be clear of their business objectives and needs before identifying suitable types of digital technologies that can help achieve their desired outcomes" - Irene Boey, VP at ASME.
Skipping the necessary steps and going straight to submitting RFQs to multiple 'grant-approved' vendors is the best way to get a bunch of software you don't need that doesn't solve your process issues and create data silos. The better approach to digital transformation would be to work with digital transformation agencies who take you through the entire process from understanding your big picture objectives, analyzing your processes, formulating a digital strategy, implementing the right technologies and building solutions that actually work.