Small and medium-sized enterprises (SMEs) in Singapore are the pacesetters within the Asia-Pacific (APAC) region in terms of digital progression, with 72% having a digital transformation strategy in place according to the 2021 DBS Digital Readiness Survey.

Hong Kong came in second place at 47%, followed by China (44%), Taiwan (38%), India (25%) and Indonesia (20%). 

However, the survey also found that the region’s SME segment lags behind large corporates and middle-market companies in terms of digital readiness with only 41% of  SMEs having a digital transformation plan in place, and 12%  with a clearly defined digital strategy.

The DBS Digital Readiness Survey, in its third edition, was conducted on 2,600 corporate treasurers, CEOs, CFOs and business owners across 13 markets in APAC, as well as the US and UK.  This year’s survey was also expanded to include the views of more than 1,000 SMEs, given that they make up more than 96% of all Asian businesses and are integral to the success of the region’s economy. 

 For large corporates and middle-market companies in APAC, the survey found that 70% of firms have a digital transformation strategy in place, with Taiwan leading the way at 95%, followed by Singapore (91%), China (87%) and Hong Kong (86%). 

See also: Jenfi makes growth capital more accessible to Singaporean SMEs

 This is a marked increase from last year, when the proportion of APAC businesses with a digital strategy was only 57%. There was also a significant jump in the proportion of businesses with clearly defined digital strategies to around 35%, up from 26% the year before.

 However, about half of large corporates and middle-market companies in the region remain in the nascent stages of digitalisation, having just started developing their digital roadmaps or with current plans remaining underdeveloped.

 Lim Soon Chong, group head of global transaction services at DBS, says that embracing digital is now a “non-negotiable imperative for corporates, regardless of their size”. “But the digital landscape is rapidly-evolving, and businesses have to keep pace with the latest developments while navigating ongoing economic headwinds,” he points out.

 Across the board, all businesses in the region have indicated they are facing external pressure to transform digitally, largely driven by customers and key market demand, growing supply chain complexities (26%) and the threat of competitors.

 However, DBS highlights that the challenges to digital adoption vary across large corporates and middle-market companies, and SMEs.

 For large corporates and middle-market companies, the main barriers to digital adoption include the speed of change and complexity in the enabling technologies (88%); execution complexity (87%); and the availability of digital talent (77%).

 Meanwhile, for SMEs, the largest barriers are the high costs of adopting new technology (63%) following by the availability of digital talent (37%) and cybersecurity concerns (23%).

 In terms of digital spend, around half of large corporates and middle-market companies in the region cite that trade and supply chain financing (65%), ongoing cash management (56%) and sales and distribution channels such as eCommerce storefronts (48%) represent the three most significant digital investment areas. 

 For SMEs, their top three priorities for digital investments are sales and distribution channels (55%), trade and supply chain finance (47%) and procurement (47%). In particular, when it comes to investments in digitalising sales and distribution channels, APAC SMEs as a proportion of their overall technology budgets, invest double that of large corporates and middle-market companies (21% compared to 10%).

 Looking ahead, the use of APIs and smart contracts is expected to continue gaining traction among businesses large and small across the region. 90% of APAC businesses see the use of smart contracts and 82% view APIs as a critical component of their digital strategies going ahead. 

Sustainability is also pipped to be the next growth frontier with businesses allocating greater digital spend towards ESG purposes over the next 12 months.

Photo: Bloomberg