Digital transformation can help Hong Kong businesses to navigate the perils of an economic slowdown. However, they also need to start taking digitalization seriously as a companywide initiative.
Both conclusions came from two separate announcements by EY and Telstra respectively. Both highlighted the need for Hong Kong businesses to embrace digital transformation or risk being left out but called for companies to take a holistic view of technology, people and processes in their efforts.
Agility Counts in Retail
EY sees digital transformation playing a more significant role as global economic slowdown and international trade conflicts bite into profit margins. It believes that these factors will fundamentally shift consumer and buying behaviors. Those retail company who have improved agility through digital transformation will be able to respond to the shifting trends.
“It is important to note that in comparison to other major markets around the world, China’s overall retail figures are still robust and stable. We see the figures as a reflection of a change in consumption habits of the digital natives in China, where consumers become more impulsive in spending and are more reactive to digital sales events rather than promotions during traditional festivities,” said Benson Ng, EY Greater China Digital Strategy & Transformation Leader.
“In the face of the transition to an experience economy, retailers can capture higher market share by adopting digitalization to predict, create and provide products that consumers really need, and to deliver an experience that is memorable to the consumers,” he added.
EY also noted that digital transformation could help retailers expand their business into the Greater Bay Area. According to the blueprint announced by China authorities, Hong Kong and Macau will be connected with nine other cities in southern China to create the Greater Bay Area, aiming to make it a high-tech megalopolis.
“The geographical vicinity of the bay area means increasing synergy between markets and an increasing convergence in consumption habits, which will create new opportunities for all retailers. Large tech corporations tend to invest in online platforms and expand their product offerings, while small-scale online stores invest in content to maintain a niche positioning,” said Benson.
DX is Not a Tech Project
A Telstra study noted that Hong Kong business leaders need to stop seeing digital transformation as a technology initiative. It is contributing to a large number of projects falling short on expectations.
According to the study, 70 percent of Hong Kong respondents felt their organization makes technology decisions ‘well' or ‘extremely well.' Paul Abfalter, head of North Asia and Global Wholesale at Telstra said the study showed that while investing in the right technology is critical, placing too much importance on its role and not enough on people, processes and partnerships will hold back success.
“Beyond the right technology, successful digital transformation relies on people. You need the right culture and the right people, but also the right processes to support them,” said Abfalter.
“Successful digital transformation is a whole-of-business journey that involves upskilling and changing employee mindsets, adapting structures and ways of working, and creating teams that can maximize new technologies being introduced,” he added.
While the study found a company-wide approach to digital transformation is significantly more likely to result in success, only 24 percent said they have an integrated, whole-of-company digital transformation strategy (versus 31 percent globally).
The majority are done piecemeal, by departments or outsourced. Sixty percent said that their Hong Kong organizations are allowing business departments to drive individual digital initiatives, compared to 51 percent globally. An additional 14 percent said they outsource as much as possible (versus 15 percent globally).
“One of our global findings was that organizations that have a whole-of-business digital transformation strategy are significantly more likely to be highly digitally mature, make extremely good digital decisions, and see the impact of digital transformation across the business,” said Abfalter.
“The research demonstrates that Hong Kong organizations have an opportunity to integrate digital transformation activity across all areas of the business, but this needs to be led by a clear company strategy from the C-suite and company boards down.”