Singapore SMBs hesitate when it comes to digitalisation

22 May 2020 | SMB, Digitalisation | 5 min read

The fifth edition of QBE Insurance’s annual survey into Singapore SMBs displayed some interesting results concerning digital transformation. The survey revealed an obvious hesitation from SMBs to take the necessary steps forward to digitalise.

Although Singapore is progressing well as one of the leading digital economies of the world, the survey has observed that SMBs still hesitate around digitalising, even though most of them are keen. Of those surveyed:

• 57% stated that government aid was crucial to their digitalisation efforts
  
• 41% felt investment costs are too high
• 39% stated lack of adequate financing as being the main barrier

Given that a majority of Singapore SMBs stated government aid was crucial to their digitalisation efforts, it is therefore interesting to note that the survey finds that only 31% of SMBs who were aware of government support initiatives actually went on to employ these resources.

Singapore SMBs’ attitudes toward technology-related risk further accentuates their lack of readiness towards digital technologies and processes for their business. The survey reveals that while 34% of Singapore SMBs are concerned around the risk of unauthorised access into their systems or computer, only 17% hold business insurance products that address this specific risk. Similarly, only 19% of businesses hold protection for data and information theft via the internet even though 37% of SMBs have expressed specific concern for this risk through the survey.

This finding from the survey indicates that SMBs are not prepared to protect themselves against risks associated with a digital business, even as they progress towards the digital future economy.

In QBE Insurance’s previous edition of the survey conducted in 2018, similar statistics revealed SMBs’ hesitance towards taking the plunge into digitalisation. The 2018 survey highlighted that 39% of SMBs were hesitant to digitalise due to the perceived high cost of investment, while 29% of them felt that they lack the skills needed to properly use and benefit from digital technologies, with cost being a consistent concern they’ve held over the past two years of them being surveyed.

Similarly, 90% of SMBs indicated that they were aware of the cyber risks posed against their businesses. However, there was still a quarter of them who do not hold any internal processes or policies to protect them from these risks.

It is apparent that the perceived costs in digitalising are the main stumbling block for SMBs as they continue to find their place in the future economy.  

The Singapore Government continues to find ways to provide the necessary support to SMBs to help them advance their business and economic interests over the long-run.

With the COVID-19 outbreak, many SMBs have retreated into their shells, and for good reason. However, there is a silver lining. An international lockdown might be just the thing that gives SMB owners the final nudge towards digitising their businesses. As citizens are confined to their homes, and traditional brick-and-mortar businesses are no longer able to rely on foot traffic, digital transformation is essential to ensure business continuity in the midst of social isolation.

Taking into account the valid concerns expressed by SMBs about going digital, the best way forward would be to provide adequate solutions needed to expel these safety and finance-related concerns. Support programs initiated by the Government like the SMEs Go Digital programme by the Infocomm and Media Development Authority (IMDA) makes digitalization even simpler for SMBs to protect and grow their businesses in the immediate-to-far term.

The natural next step of a business’ growth should see SMBs set their sights on international expansion. As they open themselves up to the multitude of opportunities that a digital business strategy model would provide for their business, they will find that international expansion is not as “out-of-reach” as they would perceive.

With government aid within close reach, and the challenging landscape forcing SMBs to digitalise, more SMBs can start to enjoy the benefits that digital technologies bring to their businesses. As more SMBs incorporate digital processes into their businesses traditional or new, society may soon start to see a landscape full of outward-focused SMBs that are born and raised in Singapore, expanding into the region and even internationally at some stage of their growth.

To view the full survey and infographic by QBE Insurance, click here.