Why 60% of Singapore SMEs are falling in their digital transformation (and what you can do to overcome it)

Over half of SMEs in Singapore blame digitalization delay on coronavirus.

The Association of Small and Medium Enterprises (ASME) and tech giant Microsoft found this out in a poll with 400 SME owners and key IT decision makers between Mar to Jun 2020.

This is in stark contrast to the belief that the outbreak has fast-tracked digitalisation for many companies

Even though 80% of them are aware of digital transformation, 83% have strategies in place for digital transformation and an increase in 14% of adopting more advanced technologies such as collaborative tools, cloud storage, 60% of them perceived their efforts to be a failure.

Talk about expectations versus reality.

Further study reveals five key reasons that may shed light on their struggles:

Mr Vivek Chatrath, small, medium and corporate lead for Microsoft Singapore pointed out that “due to their size and structure, SMEs have unique needs, and some may lack the resources to digitally transform”.

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, vice-president of membership and training for ASME

That is the end of the article. As with similar reports and surveys that tell you the sky is falling, do a mic drop and walked away why you froze up with your jaw drop.

I am always solution driven. If a problem exists, it will not magically go away.

Even though Singapore SMEs is in a unique situation (small domestic market), there are still things we can learn and react accordingly.

Success leaves clues as Tony Robbins like to point out.

And with so many Singapore SMEs, there are bound to have some that did better against the odds.

Those are companies to learn from.

1. Not having the right technology partner

According to the Consortium of IT Software Quality, poor quality software costs US company $2.84 trillion.

And this is in 2018.

Although this is report unique to USA, the costs incurred in selecting the wrong vendor cannot be overstated.

Let me give you an example.

I had the chance to speak with a local bank a couple years ago and they were trying to digitize the performance management experience from pen and paper to a digital experience.

This is mainly coming from HR to eliminate the need to do manually compilation since there are open text.

So, they removed that in a digital attempt and only provided radio buttons.

Guess what? They continue to receive hundred pieces of paper because people still want to get their feedback heard.

Consequentially employees became disgruntled, and HR must unwind the whole thing.

Due to the ill-will, they had to lay low and ensure dust is settle before coming up with any new HR digital initiatives which rightly or wrongly may just bring back old wounds.

Because of the inability to transform digitally, profit will also take a hit as companies will still resort to doing things manually and would be unable to achieve the kind of economy of scale that digital transformation may bring.

So, when you first begin to source for your tech partners or vendors, remember what Warren Buffett said as his investment ethos – Don’t buy things that you don’t understand.

And just like the investment programs you get pitched whenever you want to start a YouTube video, if it is too good to be true, it probably is.

  1. Get them to explain until you understand – If tech is not your thing, have your vendor explain their tech to you as if you are a 10-year-old so you can understand. For example, if someone would come to you and say, I am trying to sell you an ATS which is supported by a crypto network, or through the blockchain technology? Why do you even need that, to begin with?
  2. Pick the referees – Get to speak with their existing customers and make sure you get to pick who you want to speak with rather than letting them assign since it is human nature to just cite the good referees.
  3. How long they are in business and where are their engineers – Unless you are cool with a pilot, you will not want to work with a vendor that just started as their chance of failure is high. And you will not want a vendor that outsources their development as that affects turnaround time.
  4. Where is the support team – if you are looking at vendor outside of Singapore, would they have their support team in Singapore? Would they be able to support you in Singapore during working hours? Get a clear picture of what is going to happen after you go live many times in an attempt to quickly seal the deal. A lot of post-sale items are just swept under the carpet to get the deal. Make sure these are in the contract.
  5. Attrition rate – you want to be certain the other people work well with you. And something that you also want to do some reference check on would be the people that you’re currently speaking with, how long have they been with the company, the last thing you want, and I personally experienced this before we sign a contract year-end, it’s the very early part of the year, three months later new contact person, and another three months later, another new contact person, you do not want to be at the receiving end of a revolving door. Next

2. Low awareness of government grant

I must be honest here. This is more of a lazy issue rather than anything else.

With the Internet, everything is at your fingertips.

And the Singapore government has made it so easy to learn about all these grants.

There is even a site to house all the available business grants.

Just short of having a personal concierge to come to your office and fill up the form for you.

Of course, it can still be overwhelming.

An easy way out is to speak with consultancies that help companies to apply for such grants. You may have to pay them a small fee, but it takes away any inconvenience along an otherwise DIY journey.

The good thing with consultants is they will share criteria that are otherwise not listed.

For example, there is nothing on Enterprise Singapore Enterprise Development Grant (EDG) landing page telling you that your business needs to have a certain headcount, a dedicated HR and not bleeding when it comes to evaluating your application for an HR EDG project.

3. Uncertain economic environment

I do not think you need a chart to know this is happening.

Over 8,600 businesses in Singapore have ceased in April 2021 alone.

Although interestingly, more businesses have been created.

We probably have seen this in quite several news article, especially for people who probably may not have even thought of starting their own business.

For example, I am seeing retrenched cabin crew going into F&B.

Even though it is a trying period, there are still plenty of opportunities.

More importantly, SME that digitalize in 2020 earn more.

This is backed by a UOB SME Outlook 2021 Study which found that two in five SMEs that implemented digitalization initiatives in 2020 had stronger revenue growth than non-adopters, with those who digitalized their entire business or multiple areas outperforming those who digitalised only one area.

Among non-adopters, six in 10 saw their 2020 net revenue decline from 2019.

The businesses that digitalized are also more optimistic about 2021 – three in five are expecting revenue to grow this year, and seven in 10 feels more prepared for a post-Covid-19 business recovery.

Imagine you are a food stall and refuse to jump onto the food delivery bandwagon during the height of Covid19.

You probably would be one of the 8,600.

There are also immense benefits to do your digital transformation right now as costs may be lower since vendors are more desperate for business.

Just make sure you pick the right one (Refer to #1)

4. Lack of digitally skilled workforce

Before I touch on this, I just want to share that I believe everyone, every employee, every human being would be able to learn and be digitally skilled.

The challenge here is the pedagogy.

How are you training them?

Expecting them to read through the 100-pages manual on their own?

Or providing them with the safe sandbox to try out without breaking things?

According to Richard Feynman, the best way to learn is to:

  • Pretend to teach a concept you want to learn about to a student in the sixth grade.
  • Identify gaps in your explanation. Go back to the source material to better understand it.
  • Organize and simplify.

Are you getting your early adopters to do teach back?

Age would not be an issue as long as the heart is willing.

This is obvious in the case of Synergetic Beauty System.

The company, which sells and distributes hair-care products and tools, consists of a five-person team. All except one are aged between 50 and 60.

Revamp its back-end processes as most operations were still being done manually. For example, the company was still issuing cheques and hard-copy pay slips and recorded each employee’s annual leave allowance in notebooks.

Adopting human resource management software and digital stock management inventory software helped it to reduce long administrative hours, which resulted in time-saving costs of about 20 per cent.

It’s natural for them to have this fear of digital tools. They were afraid of memorising the steps on how to use these new solutions. It took a lot of trial and error and now they are slowly building up confidence.

Mr Simon Lee, director of Synergetic Beauty System

Still on the fence?

Do not be shy. Reach out to Simon, buy him a coffee and get his time to learn from him.

Learnings are not in classrooms. It can be from others who have been there, done that and gotten the T-shirt.

At Tony Robbins famously said, “Success leave clues”.

5. High costs

Here are three software I like to share:

  • Appointlet – help you to automate meeting scheduling by integrating with your calendar and providing a public calendar page that people can go to, pick the slot, and book your time.
  • Perdoo – a performance management system to help you digitize your performance management and adopt an Objective Key-Results (OKR) philosophy.
  • Bitrix24 – Your company intranet + Workplace by Facebook + Slack.

Make a guess how much each of them would set you back?

Come back here once you have a number in mind.

You ready?

The answer is

Each of them starts from free and would be sufficient for most SMEs.


Most may not know about them which I allude to #2.

And I am not suggesting you proactively google for what is out there.

What I personally do is I subscribe to Product Hunt newsletter.

Product Hunt is a site where creators of new software like to get listed due to the traffic and the newsletter provide a daily top 10.

I will scan through them and find things that relate to what I am interested in.

This would be things like a better calendar app, a new note-taking app, etc.

It is an easy 1-min way to know what is out there and see how that can bring better outcome to your business.

In Singapore context, you have government grants that defray a huge chunk of the cost on tech adoption.

But key is to ensure the fit is right instead of buying something just because it is cheap. (Refer to #1)

Because if it does not stick, it will not just be a waste of money, but it will also drive ill will with your employees.

Once bitten, twice shy.

The next time you truly have a game-changer to deploy, people will remain skeptical and affect your active usage.

A good start is to solve the problem instead of looking at a solution and trying to find a problem to fit it into.

IHRP has a Human Capital Diagnostic Tool that can assess 11 HR process areas within an organization to let you know where you stand, where you should aspire to be and the wide of the gaps.

Oh, and it is entirely free as it is fully subsidized by the Ministry of Manpower.

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