How COVID-19 is accelerating digital transformation
Some Southeast Asian governments instituted strict lockdowns to slow the spread of the coronavirus. As the region is slowly easing restrictions, businesses are reconfiguring offices and factories to allow for social distancing amongst returning employees. They are rethinking guidelines that govern working from home, refinancing debt, conserving cash, and controlling costs.
They are also acting on another lesson learned during the lockdown.
In recent videoconferences, members of the Association of International Certified Professional Accountants Regional Advisory Panels for the Middle East and Asia talked about a strong push to accelerate digital transformation.
In Indonesia, banks are moving teller services online. In India, a manufacturer is rethinking its business model and distribution channels. Plans to digitise existed before the pandemic, regional advisers said, but they weren't the top priority. The economic and health impacts of the pandemic ratcheted up the urgency to implement the plans.
Revamping distribution channels
Going into a strict lockdown two months ago, the Indian manufacturer followed a multichannel distribution model to sell its merchandise wholesale, in brick-and-mortar stores, through institutional buyers, and online. Coming out of the lockdown, the e-commerce model is on top of everybody's mind, and online has become the most important distribution channel.
The shift was fuelled by the tremendous growth in the e-commerce business company leaders saw during the past two months. The increase in online sales underscored another lesson: the speed, adaptability, and agility of the e-commerce model.
To further its online business, the manufacturer plans to overhaul its distribution channels. Instead of sending merchandise to hundreds of locations across India and building up stock in anticipation of sales, the company plans to aggregate inventory in two central locations. As online sales come in, merchandise will be distributed from those two locations several times a day.
The strategic shift to an e-commerce model follows a rapid increase in smartphone users in India. The number of smartphone users in India is estimated to reach about 440 million in 2021, about 19% of the global population using smartphones and more than double the number in 2015, according to Statista, an online portal for market statistics. Only China has more smartphone users.
What to consider when going digital
Surveys Deloitte conducted suggest digital transformation can increase sales and profits by increasing product quality, customer satisfaction, and workforce diversity, all while reducing environmental impact. But the performance gains rest on these seven digital pivot points:
- Infrastructure: Technology-related assets and capabilities should balance cybersecurity and data privacy with the business's ability to ramp capacity up or down depending on demand.
- Data: Siloed, unused data on products/services and operations should be gathered and analysed with the goal of optimising efficiency, revenue growth, and customer engagement.
- Talent and skillsets: Training and recruiting programmes should be retooled to allow rapid access to talent and skillsets according to need.
- Outside resources: The business should tap external business partners, such as research and development organisations, tech incubators, and startups, where they find resources such as technology, intellectual property, and people.
- Organisational processes: Company workflows should be updated and expanded to put human and technological resources to best use.
- Customer experience: Digital and human customer interactions should be coordinated business-wide to ensure a seamless customer experience.
- Business model: Business models and revenue streams should be optimised and expanded to ensure the business is able to adapt to changing economic environments and market conditions.
For more news and reporting on the coronavirus and how management accountants can handle challenges related to the pandemic, visit FM's coronavirus resources page.
— Sabine Vollmer (Sabine.Vollmer@aicpa-cima.com) is an FM magazine senior editor.