Study: 73% of SG businesses see high costs as key challenge in tech adoption

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Artificial intelligence (AI), data analytics and the Internet of Things (IoT) are the next bound of digital technologies for investments for businesses.

Currently, 94% of Singapore businesses have overwhelmingly recognised the importance of digital transformation. In fact, many are deploying digital solutions to improve operational efficiencies (77%), upgrade their IT systems (71%), improve products or services (65%), or customer experience (65%).

On top of that, businesses are spending 11% of their budget on digitalisation and are well -invested in cloud, e-payment and cybersecurity.

Don't miss: Survey: 76% of SG firms lack enough or right data to make AI use effective

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%). This is according to survey results by Singapore Business Federation’s (SBF) national business survey (NBS) 2024 – smart-enabled businesses edition.

The survey 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.

The survey found that an increased number of companies cited high cost (73%), expensive licensing (47%) and upskilling of staff (47%) as a key challenge in technology adoption. While SMEs are more challenged with licensing payments (47%) over upskilling of staff (44%), large companies cited upskilling (57%) as a bigger challenge than licensing payments (45%).

Looking forward, emerging technology, such as AI (70%), and cybersecurity (68%) are considered the top trends likely to impact businesses in the next 13 months. Riding on the trends in AI, AI is used mostly in process automation for operations, cybersecurity defence and customer data analytics.

In tandem, as compared to SMEs, large companies have higher implementation rates of AI across all business areas, the study said.

According to the survey, adoption of AI allows businesses to reap the benefits of improved operational efficiency and time saving, and insights generation through data analytics. In addition, there is greater impact of AI on large companies, with more large companies having improved operational efficiency and time saving (77%) and identifying insights through data analytics (63%) than SMEs.

When it comes to AI adoption, businesses said that the high cost of implementation and lack of knowledge and expertise remain the top two challenges. Most of the challenges in AI adoption have been amplified this year, as compared to 2023, particularly the complexity of AI programme integration, which has increased by from 36% in 2023 to 46%.

This comes as brands in Singapore were reported to fall behind in AI adoption in February this year. Despite almost half of consumers in Singapore (42%) favouring artificial intelligence (AI)-assisted brand interactions, Singapore brands are falling behind global peers in harnessing the latest AI innovations for better customer experience.

Only 12% of brands are leveraging generative AI to enhance CX initiatives compared to 17% globally. This is according to Adobe’s State of Digital Customer Experience report.

Interestingly, 16% of brands in Singapore are currently establishing upskilling initiatives to work with generative AI, compared to just 11% globally.

Explore transformative trends to empower your brand for sustainable growth. Join 500+ marketing minds at Digital Marketing Asia 2024 Singapore on 1-2 October and uncover transformative trends to empower your brand, network with industry leaders and collaborate across industries, and discover real-life marketing wins and powerful ideas.

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