Why digitally-capable Southeast Asian firms are faring better

Southeast Asian companies that are able to make data-driven decisions are reporting stronger profit growth, higher employee engagement as well as more diverse work cultures.

A majority of Southeast Asian organisations are not prepared for digital transformation, which a new study by SAP SE and Oxford Economics found is holding them back from achieving stronger financial performance and happier employees. 

That's because less than one-quarter of Southeast Asian businesses are “digital leaders”, or organisations that employ executives who communicate company-wide digital strategies, keep management and worker skills up to date, and streamline organisational structures, revealed the Leaders 2020 study.

While this is higher than the global average of 16%, the study found that there was nevertheless more room to grow.

Another key quality of digital leaders is the ability to make data-driven decisions, of which 61% of Southeast Asian firms were found to possess.

Three in five local organisations also feel that employees are equipped with the necessary skills to keep up with digital technology, which is slightly above the global average of 59%

Companies which are staffed by digital leaders are also reporting stronger profit growth, higher employee engagement as well as cultures that are more inclusive.

  • Stronger financial performance: 76% of companies characterised as digital leaders report strong revenue and profit growth, compared to 60% of all other Southeast Asian entities who are not.
  • Satisfied and engaged employees: Effective digital leadership drives more than financial performance—it also creates healthier cultures. Nearly 90% of digital leaders have employees who are more satisfied, compared with just 51% for those who do not.  
  • Higher retention: 75% of digital leaders also have employees who are more likely to stay in their jobs if given the chance to leave, as compared to 45% in the region.
  • More mature talent strategies: Digital leaders are more likely to invest in talent and have much more advanced strategies for talent recruitment, development and retention. For example, 56% of digital leaders mainly fill roles from within the company, as compared to just 33% for the rest of the region.

While most Southeast Asian companies also agree on the positive impact workplace diversity has on culture, only those leading digital transformation are more likely to recognise the financial benefits of diversity.

“A diverse workforce encourages bold, innovative ideas to flourish and in turn, presents insights which are only made possible through that diversity. It is of little coincidence that these two capabilities – leveraging data for decisions and maintaining a diverse workforce – both occur for high-performing organisations,” said Scott Russell, president and managing director, SAP Southeast Asia. 

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