BUSINESSES today stand at the cusp of what is being identified as the Fourth Industrial Revolution. They will be propelled by the rise of cyber-physical systems built on data, technology, the tenets of artificial intelligence, robotics, automation, cloud computing, mobility devices and augmented or virtual reality.
Already, there are early developments as the fourth industrial revolution gets underway. In Dongguan, Guangdong province in China, Changying Precision Technology Company, a cell-phone maker, operates one of China's first unmanned factories with just 60 people (previously 600) to oversee the running of the factory. This development is just the tip of the iceberg with more upcoming ambitious plans.
In Singapore, Robinsons uses an e-procurement platform to transact electronically with their two hundred small and medium sized enterprise (SME) suppliers. This move enabled SME suppliers in the programme to use their manpower for higher value tasks and to get data for better inventory management and supply responsiveness.
Increase overall trade transaction transparency
Recognising that access to formal credit is a challenge for SMEs, the European Digital Trade Chain Consortium, which consists of Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit, simplify and facilitate domestic and cross-border trade for small and medium enterprises in Europe, while helping to increase overall trade transaction transparency.
Block chain technology underpins this platform and enables SMEs to access credit, have visibility of trade transactions, save time on administration work and gain efficiency through the digitization of the supply chain process.
Such developments will only grow in the coming years and SMEs have to go all-in with digitalisation to break any growth rut and to capitalise on the opportunities that will emerge in the fourth industrial revolution.
In Singapore, SMEs continue to be challenged by rising costs, manpower shortages, access to credit, expansion ex-Singapore, a need to innovate and digitalise and the continued evolution of customer and consumer demands and needs.
In the midst of all these challenges, the need to digitalise is one of the most critical as it will pave the way to realise gains in productivity, increase potential business expansion opportunities by connecting with customers and consumers as demand and interest continue to be generated through online platforms and heighten exposure to new business models for potential adoption for the fourth industrial revolution. Importantly, digital maturity has a positive effect on profitability.
A 2013 initiative by the MIT Sloan School of Management indicated that digitally mature firms are 26 per cent more profitable than their peers.
How then do SMEs battling the headwinds of economic challenges actually embrace the digitalisation journey? It must begin with a belief, from business owners, that the firm needs to go digital as a means for the company to grow.
This belief or will has been identified as the most critical breakthrough. Dr Vivian Balakrishnan, Singapore's Minister for Foreign Affairs and Minister-in-charge of the Smart Nation Programme Office, explained why culture is the utmost importance to determining success.
I would paraphrase "culture" to mean a "mindset" that adapts and embraces that digitalisation is what will unlock opportunities for growth. Once the mindset barrier is overcome, then SMEs in Singapore have one of the world's most enviable digital transformation ecosystems to lean into.
A comprehensive "SMEs Go Digital" programme was launched in April 2017 to enable SMEs to embark on a systematic approach to digitalise.
Opportunity to conduct cutting-edge R&D
While this programme covers more of the 'bread and butter' issues of digitalisation, A*STAR's innovation and research and development (R&D) outreach provides SMEs with much needed access to world-class technology, capabilities, collaboration and for more mature SMEs, the opportunity to conduct cutting-edge R&D with a leading research facility.
All of these continue to be anchored by IE Singapore's International Marketing Activities Programme, or iMap as it is called, that helps SMEs venture overseas.
In keeping with the drive to go digital, there will be a bigger focus on digital-themed trade fairs to help SMEs build up their digital capabilities. However, despite this bonanza, it is still dependent on SME owners to take their first step and acknowledge the critical importance of digitalising their business and operations.
In the Shakespearean play Hamlet, the namesake character famously uttered what is most likely the most famous question in the world, "To be or not to be?". But while Hamlet was bemoaning the darkness and tragedy that had befallen, he also acknowledged that things could have been worse. As SMEs journey into the Fourth Industrial Revolution, unlike Hamlet, if they do not embrace digitalisation throughout their value chain, things will be worse.
In 2007, the founders of Airbnb were broke and made rent by putting up space on three air mattresses and breakfast, on a simple website, airbedandbreakfast.com. Today, that micro enterprise is valued at US$ 25 billion. And it all began with an idea, a will and a digital presence.
- The writer is managing director, Global Data Innovation Center, Dentsu Aegis Network