Tech Talk with Puan Nuraslina Zainal Abidin, Managing Director of Genaxis Sdn Bhd, also Chief Executive Officer of IA Consulting Sdn Bhd (“iAC”)

DagangNetPOST recently spoke to Puan Nuraslina Zainal Abidin virtually to talk about digital transformation among small and medium enterprises in the country.

Is there a push for digital transformation after the Movement Control Order (“MCO”)?

Covid-19 has accelerated the move to digital adoption faster than we had imagined. The larger companies are accelerating their digitalisation measures as they say it an opportunity to reinvent. Often, they have five years to implement their digital transformation and some even bring forward to three-year plan. Most of their digital transformation processes involve a lot of "touchpoints" with their customers because they know that ensuring customer experience can help business continuity and mitigate any impact in the new post-pandemic norms.

Why is there still low adoption rate by smaller organisations or Small and Medium Enterprises (“SMEs”)?

The growing concern is that the SME sector will still take lightly the importance of digital transformation. They might feel that after MCO or post Covid-19, business is back to usual, and find no urgency to embark on digitalisation of their business.

Why is there still low adoption rate by smaller organisations or Small and Medium Enterprises (“SMEs”)?

The growing concern is that the SME sector will still take lightly the importance of digital transformation. They might feel that after MCO or post Covid-19, business is back to usual, and find no urgency to embark on digitalisation of their business.

Since IR4.0 was introduced, various initiatives have been introduced by the Government to further accelerate digitalisation efforts among the SME sector, but the "take up rate" by SMEs is not up to expectation. We need to identify or understand why this is happening. A possibility can be that SMEs do not understand the importance of digital transformation, and secondly the small first steps they need to take to implement their digital transformation

How do we motivate SMEs to implement digital transformation to their business processes?

The first step that SMEs need to take before making digital adoption in our opinion is that they need to check their main reasons for the move. It can be because they want to lower the costs of operation. Secondly, they might want to get more new customers through digital methods. It is as basic as who their target customers are, where they are, how their buying patterns are, and what they are buying and where they are making those purchases. This is all the data needed that can give value to SMEs.

The SMEs need to understand and realise how to use all this data in order to improve their business. Simply making a direct sale through a Facebook page or subscribing to the WhatsApp business app are not enough to say that they have implemented digital transformation in their business.

SMEs need to look back at which processes contribute to the highest costs, and then choose solutions using technology in order to improve business performance and reduce costs. What is happening now is that most SMEs will opt for workers layoff. For the last four to five months, SMEs may have experienced cash flow constraints. Therefore, they need drastic measures in order to reduce costs and this includes getting on board in a new business model.

What are the measures that SMEs can adopt to implement digital transformation?

4D (DEFINE, DESIGN, DEPLOY and DETECT) measures can actually be adopted by large and small organisations. DEFINE is the first step that helps us see the true business problems that need to be addressed.

For example, we can look at buying patterns, spending patterns, then unlock the real value of our business, are we spending at the right place, can we optimise spending so as to reach more customers and meet their demands in a limited time.

Those in retail line could use digital services to reach target customers based on age group, location or colour preference.

In the second step – DESIGN - we need to "design" solutions that suit our customers, their location, and how they make purchases. Are we ready for the mobile commerce era where all purchases are made at tips of our fingers? User experience is key in mobile commerce. The purchase experience needs to be convenient and speedy.

The third, DEPLOY, means finding the best way to implement digital transformation. We need to source the right solution, ensure all pain points are addressed and develop a plan and subscribed to it. Tell the story to our employees and customers how we will switch to digital processes.Managing change is the key ingredient in deployment. Customers may be more willing to switch to new technology but our employees may not sometimes have the appropriate technology skills to ensure we, as one organisation, move in the right direction together and achieve the desired digital transformation goals.

The fourth is DETECT or DeRISK. Here, we need to examine or identify any weaknesses from the first three steps and necessary improvements that follow. A digital system does not need to be rigid. We can actually “modify” technology solutions according to our needs. There are many businesses out there that adopt such "flexibility" which allows for any “tweak” in technology solutions. Digital transformation is not about purchase of assets such as computers, and servers. It is about changing the way we do business, manage customers and employees.

SMEs can opt for rentals as a cheaper alternative and plus, we no longer need to own assets. We can adopt "asset light" business model and Covid-19 pandemic has taught us to be "agile" and "flexible" in adopting technology solutions. Importantly collect data to evaluate the implementation outcome of digital transformation.

Digital adoption is low among SMEs probably due to “fear”. How can we address this?

This feeling of fear is normal. When we want to do something new, out of our comfort zone, we would experience fear. But as I suggested earlier, SMEs should not perceive digital transformation move as capital intensive. They need to be aware that the world is now heading towards digitalisation. They have no choice because business is digital, business process is already being digitalised and will continue to be digitalised.

If we want to stay competitive, we must head to this new norm. The power of purchasing now is in the hands of the digital generation. So, do not be afraid to get out of the comfort zone. Choose a solution that allows for trials which can be for three months or six months. This is because there are various solutions out there that allow us to sign up for a trial version. If it works, buy in small quantities and then add packages gradually. It is a journey, there will be many lessons learnt, embrace them.

How long until we see the impact of digital transformation to business performance after the implementation?

Digital transformation does not happen overnight. We can adopt digital transformation at an appropriate rate according to our requirements. Usually, successful digital transformation will take about as fast as 18 months.

There are those who take about up to three to five years to complete digital transformation journey, but 18 months is the appropriate timeframe to see its impacts on the business, whereby the processes will begin to show significant improvement in performance and reduction in costs. It is really not about the duration but about the experience we gain in adopting the digital culture.