ABOVE AVERAGE: Gartner
Malaysian companies are above the regional average when it comes to digitalising their businesses.
In a Gartner poll involving 50 people, 22% of business executives and IT professionals state they were already doing some form of digital business.
Bard Papegaaij, research director at Gartner said, “That’s higher than the regional average of 19%. Digitalising doesn’t just mean being on social media. It has to go deeper than that. It involves taking physical businesses and virtualising them. ”
Papegaaij gave an example of a local construction company that developed a dedicated online platform for people to share and rate their experiences with renovation specialists. However, he declined to name the company.
Although Malaysian IT professionals are relatively proactive in digitalising their businesses, he felt there was still room for improvement.
To give an idea of how a company can transform its business, he cited SKF Group in Sweden, which specialises in the manufacturing of ball bearings. Due to intense competition from China the group’s margin started to shrink.
To fight back, it decided to value-add to its product by placing sensors on the ball bearings to collect data to determine when the ball bearings would break.
“This was a shift in the business model. The company went on to say that it wasn’t just selling ball bearings but was selling uptime, as ample warning was given when a ball bearing needed replacing,” he said.
He said that Malaysian chief information officers (CIOs) should aspire to this level of digitalisation. “Steve Jobs said a lot of times people don’t know what they want until you show it to them. That’s what is needed, if Malaysian companies want to progress,” he said.
He explained that most CIOs in general were afraid of not seeing any immediate profits for new digitalisation initiatives and felt it was risky.
He gave an example of one risk that did not pay off. British grocery chain Tesco created virtual store shelves in subway stations walls in South Korea. The plan was for customers buy to products by scanning barcodes with their smartphones.
“It was rolled back because Tesco didn’t realise that people would rather shop on their phones. But it’s this type of experimenting that is needed if companies want to progress in the digital age. For every 10 of these type of initiatives, eight will fail. But it’s still a step in the right direction,” he said.
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