Early this year, Singapore’s Committee on the Future Economy (CFE) singled out the digital economy as the key to the nation’s future success. It believes that the power of digital connectivity and the usage of data as an economic resource allow businesses to go beyond geographical and resource limitations. Companies can take their products overseas easily, connecting with customers with just a few clicks of a button. Singapore’s Budget 2017 has also allocated more than S$80 million to help businesses embark on digital and data programs.
Digital transformation is moving forward with a strong momentum and more important to businesses than ever. Here are four reasons why it is an unstoppable force:
1. Customers have gone digital…and they want more
Asia alone makes up approximately half of the world’s internet users. On top of that, the region’s digital commerce is expected to be worth S$23.7 trillion by 2019. Rising incomes, increased consumption, acceleration of internet use, and higher levels of mobile broadband access are unlocking more demand for seamless brand experiences across the region.
As a result, more and more consumers are turning to digital channels to research products, make purchasing decisions, and engage with brands. Social media is a popular channel in markets like Singapore, Indonesia, and Thailand. In China, consumers prefer to use chat apps. Video ads work particularly well for search and discovery in Hong Kong. If audiences play in the digital space, so must brands.
2. Competition is now on a global scale
As digital technologies open up new markets, they also bring with them more competition. Companies that wish to break the local barrier must also be ready to have a regional—or better, global—strategy to enter new markets and tackle competitors. They must have visibility into new market insights and the agility to adapt to customer behaviors that are different from their native territories. At the same time, the reverse is also true. Companies that remain local for the time being will encounter new players from overseas, due to the power of digital connectivity. In other words, no business is safe from rising competition.
3. Disruption is still a reality
By 2027, experts estimate that roughly 75 percent of S&P 500 companies from 2012 will plunge into obscurity. However, only one out of five companies are adequately prepared for disruptive innovation. This is astounding news and should wake any business up to constantly reinvent themselves. New technology-enabled business models are disrupting traditional business ecosystems at a pace like never before. One of the best local examples is Grab, the leading ride-hailing platform. With the power of digital, it has changed the face of transportation both in Singapore and the region. This has challenged local taxi players and compelled them to evolve. Mobike, a new bike-sharing platform from China, is also poised to revolutionize the transportation landscape locally.
4. Technology is a double-edged sword
Technology continues to open new opportunities and present new threats. Mobile devices, IoT, analytics and the cloud have changed the way businesses operate and reach customers. At the same time, they have placed enormous pressure on organizations to shake up customer strategies, business models, and operational processes.
Big data, in particular, holds tremendous potential for businesses in the region. According to IDC, the big data market will grow to S$261 billion in revenue in 2019, with the third largest revenue source coming from Asia Pacific. This is driven by the desire to offer better customer experiences, usage of chatbots for information collection, and rising sophistication of machine learning.
The race to digitize business operations to stay competitive is heating up. Organizations that want to compete successfully should look towards driving their digital transformation initiatives together with a reliable partner that can guide them step by step.