Transformations demand customer-centricity, troves of data, and multiple AI-powered innovations for enterprise growth
In an interview with CNA938’s Work It, co-hosts Chew Wui Lynn & Cheryl Goh, as well as KPMG in Singapore’s Nicki Doble, Principal Advisor, Financial Services Advisory, shed light on the pivotal role of digital transformation in modern enterprises and the key strategies for successful implementation.
CNA938: Tell us more about the key findings in the survey “Transforming the enterprise of the future” which highlights that less than a third of senior leaders consider their technology foundation readiness to be very high.
Nicki: Digital transformation is vital as it allows organisations to stay relevant to their customers. It helps them remain competitive by driving down costs. Furthermore, new and evolving technology will enable us to continue to innovate as well as create new products and services for our customers and clients.
CNA938: Could you give us some examples of how digital transformation can be carried out successfully?
Nicki: We have seen many different digital transformations over the last 10 years, and the successful ones generally have common elements. Firstly, transformations need to be customer-led and customer-centric. This will allow businesses to really understand the customer experience that they're trying to create, and what problems they are solving for the customer. For example, a healthcare provider may pursue a digital transformation to offer a very personalised service to their patients, enabling portable medical data access across different specialists. On the other hand, an online retailer may want to develop an app to facilitate seamless delivery, or an insurer may want to roll out a new technology system to introduce pay-as-you-go policies for the new and large economy.
Secondly, understanding the customer is crucial for becoming data driven. Businesses should embrace new technology to capture various types of data, such as with customer or financial data. In the realm of digital transformation, having a wealth of data and thoroughly reviewing processes from end to end is essential. Many organisations need to adopt this mindset shift to achieve a successful transformation. They must examine their business operations comprehensively, from the front to the middle and back office.
Thirdly, organisations transform, not necessarily according to their organisational structure but based on how a customer moves across the organisation. The key takeaway from KPMG’s survey is that organisations no longer expect just one transformation; instead, they are running multiple transformations at one time. Our research shows that in fact, 88 percent of enterprises now are running two significant transformations simultaneously, and 54 percent of those are running three or more transformations.
This is significant because the push for digital maturity at the leadership level is immense. There is extensive coordination required across the organisation, including managing the workforce as they navigate constant changes to their roles and business processes. These elements are crucial to ensuring a successful transformation.
CNA938: Now we've heard a lot of hype about AI. Is digital transformation required to incorporate AI into companies? Or are you seeing that the AI itself can help companies transform and become more efficient?
Nicki: I am really excited about artificial intelligence (AI) because businesses do not necessarily have to be big organisations to adopt generative AI. Generative AI will be integrated into various platforms, making it accessible to smaller businesses as well. For instance, small businesses with a subscription service model for software will be able to use Generative AI, as large organisations or software providers will start offering it. Generative AI will appear in multiple forms, and organisations don't necessarily need to build it themselves—they just need to understand how to utilise it effectively.
Interestingly, unlike previous technologies, Generative AI significantly impacts the human element, prompting organisations to evaluate the skills it affects. Currently, organisations take a job-based approach, focusing on the number of roles they have, such as 600 accountants or four business analysts. However, they may find that specific skills are impacted by generative AI, rather than entire jobs. Therefore, organisations need to shift from being job role-centred to skills and task-based. This is an intriguing development, as it is less about technology and more about how we view people and talent.
CNA938: Are there particular industries that are in urgent need of digital transformation?
Nicki: All industries are moving forward, albeit at different paces. We have seen significant changes in the financial services sector as they transform how they serve clients. These shifts have led to substantial advancements across various sectors. Among the key drivers of these changes are sustainability and ESG, which are having a massive impact. Now, we are witnessing large-scale transformations in critical infrastructure and energy sectors, which are also spreading to other industries as well. As governments move towards mandating sustainability reporting, even traditional companies that never anticipated using high-end technology are now utilising blockchain technology to demonstrate that their products are ethically sourced.
Sustainability is also driving the adoption of generative AI. Additionally, security and privacy are other critical factors that will affect different sectors. Customers are becoming increasingly aware of the value of their data to organisations, but also of how easily it can be manipulated by hackers. As a result, they will demand that their data is taken more seriously and better protected. The impact a sector experiences will largely depend on how it addresses these three drivers.
CNA938: How do companies in the Asia Pacific fare when it comes to digital transformation compared to their western counterparts?
Nicki: Transformation is happening everywhere. Having worked with global firms across different regions, I have noticed that some organisations tend to focus their digital transformations on getting their foundations right by removing legacy systems. These companies have been around for a long time, and some of their systems may have been in place for 30 years, so their focus is more on optimisation and modernisation.
In the Asia Pacific region, which is a fast-emerging market, transformations here are more focused on capturing new market share or creating regionally specific products and services, rather than simply lifting and shifting something from another region. The focus is much more on innovation and the development of new products and services, rather than fixing outdated systems, which is more common among large corporations in other regions.
CNA938: Certainly, sounds like a very different approach to carrying out digital transformation. Nicki, you talked about how multiple transformation programmes tend to be carried out simultaneously. Give us a sense of the kind of transformational programmes that senior leaders are banking on.
Nicki: There have been many transformation programmes implemented. Based on past trends, businesses primarily focused on front-end services. For example, in banking, transformations centred around how customer engage with their banking apps. What we are seeing now, which is likely a reflection of global economic conditions, is a shift towards reducing the cost to serve. There is a significant focus on transforming corporate services by reducing and automating costs. Generative AI will play a key role in automating many of these processes. These shifts represent the corporate transformation changes that are emerging.
CNA938: Well, your survey also found that less than a third of senior leaders considered their technology foundation readiness to be high. Why is that? What's holding them back?
Nicki: Many systems have been in place for a long time and can be very expensive to replace. Achieving a return on investment (ROI) for these system replacements can be challenging, so businesses must carefully consider their spending and the returns they expect. Therefore, it is crucial to focus on the specific problem that the business is trying to solve. This could involve identifying the customer problem, the potential uplift for the customer, or the cost-saving benefits if the transformation is solution-focused rather than problem-focused.
Sometimes, businesses might implement new technology that does not actually address a problem, leading to poor ROI. Hence, businesses need to be very targeted in their approach, which helps build a strong business case. One reason businesses may feel they lack the necessary foundations is that, in the past, they have not effectively articulated a business case to justify these changes. There is often an element of taking a leap of faith. As leadership's digital maturity evolves over the years, they begin to intuitively understand that, while they might not be able to quantify the benefits immediately, they know these investments will deliver results in the future.
CNA938: So, a lot of changes in the pipeline, it must be quite overwhelming for staff that need to deal with this. Do you have any advice for companies on how they can help their staff cope or even become more digitally literate?
Nicki: It is important to build a culture of resilience and make the workforce feel secure. Trust is essential, so clear leadership and sponsorship are needed to communicate what is being achieved. Questions such as “why it's being done” and “how employees will evolve with the organisation” are important to consider. Upskilling and reskilling are crucial, especially in a competitive talent market. The focus should be on identifying the skills that will be impacted, rather than specific job roles, and creating courses or on-the-job training that helps employees understand how their roles will evolve and how they will use the technology, rather than being replaced by it.
The key message is that change is constant, and this is the reality of the market. If people feel safe, included, and aligned with the corporate vision, most will embrace the changes. It's vital to ensure that the vision is clearly articulated, with a focus on people-centric values in what businesses are delivering, rather than being solely technology-focused.
CNA938: Now I know you said that it's quite easy to impose generative AI systems, but you also said it could be quite expensive to replace some of the older systems. What advice would you have for smaller companies that may be thinking that they don't have the budget for reinvention?
Nicki: For local companies, there are several initiatives by the Singapore government aimed at assisting businesses in adopting new technologies. For instance, the recent Singapore Budget 2024 allocated about S$1 billion to support enterprises in adopting generative AI. Additionally, there is ongoing work on workforce skills and skills-based training at a global standard.
Smaller enterprises looking to embark on their transformation journey can start by exploring these government initiatives and grants. The strategies provided locally are well-structured and easy to utilise, making them a valuable resource for businesses that may not have the budget for large-scale reinvention.
Nicki Doble
Principal Advisor
Financial Services Advisory,
KPMG in Singapore
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