Businesses overwhelmingly recognised the importance of digital transformation and are deploying digital solutions to improve operational efficiencies (77%) and upgrading their IT systems (71%) ahead of improving product/services (65%) or customer experience (65%). Businesses are spending 11% of their budget on digitalisation and are well-invested in cloud, e-payment and cybersecurity. Artificial intelligence (AI), data analytics and Internet of Things (IoT) are identified as the next bound of digital technologies for investment.

These were among the key findings in the latest edition of the Singapore Business Federation’s (SBF) National Business Survey (NBS) 2024 – Smart-Enabled Businesses Edition. The survey, which was carried out from 23 May to 5 July 2024, drew responses from more than 500 companies across all industries, of which 82% were small and medium-sized enterprises (SMEs) and 18% were large companies.

Current State of Digitalisation

Overall, 94% of Singapore businesses recognise the importance of digitalisation. Businesses that have embarked on their digital transformation journey said they have seen an improvement in business performance in terms of optimising operations (67%), reducing operation costs (58%) and enhancing employee collaboration and remote work channels (49%).

However, the survey finds an increase in the number of companies citing high cost (73% vs 64% in 2023), expensive licensing payments (47% vs 31%) and upskilling of staff (47% vs 29%) as key challenges faced in technology adoption. While SMEs are more challenged with licensing payments (47%) over upskilling of staff (44%), large companies cite upskilling (57%) as a bigger challenge than licensing payments (45%).

The findings showed that companies appreciate having financial support for digital advisory and project implementation services tailored to their company’s specific needs (69%), a central reference for latest information (57%), and both offline and online platforms where they can learn about new technologies and best practices (52%). The Productivity Solutions Grant (67%), Enterprise Development Grant (64%) and Start Digital (54%) were identified as the three most beneficial government initiatives.

Future State of Digitalisation

In the next 12 months, businesses rank emerging technologies such as AI (70%) and cybersecurity (68%) as the top trends that will likely impact their businesses. For large companies, reduction of carbon footprint through usage of sustainable technologies (60%) was also raised.

The top three areas where businesses have implemented AI are in the areas of operational process automation (45%), cybersecurity defence (45%) and analytics, with large companies in the lead as compared to SMEs. The top challenges in AI adoption include high cost (66%) and lack of knowledge and expertise (61%); large companies also cited data privacy and security as a challenge (61%).

Large businesses expressed confidence in their cybersecurity measures (94%) compared to SMEs (75%). The survey shows that the key challenges faced by businesses in implementing cybersecurity measures include high cost of implementation and maintenance (56%), risks from third-party service providers and suppliers (50%) and employees’ lack of awareness on cybersecurity (39%).

Mr Kok Ping Soon, Chief Executive Officer of SBF said, “Businesses can achieve true value and success when their digital transformation objectives are aligned with their business objectives. The findings of this National Business Survey 2024 - Smart-Enabled Businesses edition show an increased appetite amongst businesses for AI and cybersecurity, but businesses face challenges of high costs and upskilling employees to adopt these new technologies. SBF will continue to work closely with the industry, associations, government and corporates to deepen capabilities among businesses to stay competitive amid the fast-moving business landscape.”

To better help companies utilise technology to improve competitiveness, SBF has formed the Smart Technologies Action Committee (STAC), led by the joint secretariat of SBF and SGTech, and chaired by Mr Wong Wai Meng.  The STAC will align efforts and combine capabilities from the two Trade Associations and Chambers (TACs) to provide feedback on business needs and challenges in digitalisation, initiate new programmes to help businesses build capabilities in digitalisation, and enhance the outreach of existing programmes.  

Mr Wong Wai Meng, Chairman of SBF’s Smart Technologies Action Committee (STAC) said, “With the progression in digitalisation such as GenAI, digital projects are getting more sophisticated and complex. The STAC aims to bring tech practitioners and the business community closer together to collaborate towards supporting effective tech adoption. The STAC will comprise three workgroups focusing primarily on advocating issues related to emerging technologies, scaling and advancing programmes with partners, as well as identifying areas to pilot new and emerging technologies.”