COVID-19 may have helped accelerate digitalisation efforts for many organisations worldwide, but majority of small and midsize businesses (SMBs) in Singapore that are falling behind in their adoption of digital tools are smaller companies. They cite lack of funds, concerns about cybersecurity risks, and inadequate digital skillsets as key reasons for their hesitation.
Some 72% of the country's SMBs that had yet to embark on digital transformation were smaller organisations, which had an annual turnover of less than SG$10 million ($7.45 million), according to a study released Monday by local bank UOB. Larger SMBs comprised those with turnover ranging from SG$10 million to SG$100 million ($74.45 million).
Amongst small businesses, 34% cited cost as a key reason for not going the digital route, while 31% had concerns about cybersecurity and another 31% were worried about their employees lack of necessary digital skillsets. Some 28% found it difficult to justify the investment and 26% said they did not have sufficient funds to proceed with their digital transformation. Another 25% had to deal with interoperability issues between their old and new systems, revealed the study, which polled 782 SMBs in Singapore.
Across the board, 41% that had pushed on with their digitalisation efforts saw stronger revenue growth, compared to their peers that did not do so. These included those that had done so organisation-wide or across multiple areas, in comparison to those that had only adopted digital tools in one area of their business.
Furthermore, SMBs that had gone the digital route expressed more optimism for the year ahead, with 58% projecting higher revenue in 2021, compared to 32% of their peers that had yet to adopt digital tools. Another seven in 10 SMBs indicated more confidence in preparing for a post-COVID-19 growth, while just four in 10 amongst those that had not digitalised their business felt likewise.
Six in 10 SMBs that did not adopt any digital tools saw a dip in their 2020 net revenue compared to the previous year.
UOB's head of group business banking Lawrence Loh said: "Digitalisation offers businesses many opportunities, from improving their processes and reaching out to new customers to having a direct and measurable impact on their revenue. Close to one in two SMBs that proactively took steps to adopt digital tools last year are already seeing benefits such as greater productivity and efficiency gains, improved customer experience, and higher revenue, even in a volatile business environment.
"The digitalisation journey is a long one and we urge SMEs to stay the course to see their efforts pay off when they emerge stronger through the pandemic," Loh added.
The Singapore government last May set aside more than SG$500 million ($352.49 million) to support local businesses in their digital transformation efforts, which it said were increasingly imperative for enterprises to deal with the fallout of the COVID-19 crisis. The funds would go towards facilitating companies in their adoption of e-payments, e-invoicing, as well as more advanced digital tools.
Funds and manpower also were offered to help SMB retailers kickstart their e-commerce journey, with the government buffering 90% of the cost for them doing so. The "e-commerce booster package" aimed to provide aid for small businesses that had little or no e-commerce experience in their digital transformation.