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Digital transformation in PHL after a year of COVID-19

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Reynaldo C. Lugtu-125

FINEX Folio

It has been a year of COVID-19. Last year there was a lot of talk about the need for Philippine companies to adapt to the new normal by pursuing digital transformation strategies and pivot their business models. Organizations implemented work-from-home, and consumers drove the rise of e-commerce and the widespread use of digital wallets. There were expectations that companies and organizations will accelerate their migration to digital applications and platforms. So where are Philippine organizations now after a year of COVID-19?

A survey commissioned by Epson in mid-2020 revealed that 55% of the small- and medium-sized enterprises (SMEs) in the Philippines reported being at the “very early stages of digital transformation”; and more than eight out of 10 (86%) identified digital technology adoption as the way to improve business processes, especially customer experience. Nearly three quarters (74%) of the respondents have embarked on the digital transformation journey that mainly focused on the marketing and sales as well as customer interaction and servicing parts of their businesses.

Another more recent survey commissioned by Alibaba Cloud revealed that a majority (94%) of Philippine businesses view cloud-based technology solutions as an important factor in mitigating the impact of the pandemic. Furthermore, with cloud technologies being an enabler of digital transformations, 88% of Philippine businesses stated they are now more supportive of using cloud-based technology solutions to grow their businesses as compared to before COVID-19, among the highest of the markets surveyed. In addition, an increasing number of Philippine enterprises are turning to cloud-based technology solutions to navigate the new conditions with more than half (51%) of businesses reporting they have adopted more cloud-based technology solutions.

These statistics jibe well with actual cloud technology adoption figures. A global cloud technology vendor shared with me that in the Philippines, they have seen a 100% growth in private sector cloud adoption and a whopping 200% growth in public sector cloud adoption over last year. Cloud-based applications like collaboration and productivity tools, analytics, customer relationship management, and sales force automation grew by more than 60% in adoption in the country.

The financial services and the business process outsourcing (BPO) sectors are leading the migration to cloud technologies. In fact, the banking sector has seen an acceleration in digital banking initiatives as part of its digital transformation strategy.

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Data from the Bangko Sentral ng Pilipinas (BSP) revealed that electronic payment (e-payment) transactions coursed through the automated clearing houses of the National Retail Payments System rose to P444 billion as of September 2020. Payments made through PESONet more than doubled, with volume surging by 264% year on year and value rising by 160% over the same period.

BPOs, on the other hand, are leading the country in term of automation technology adoption. Driven by work-from-home arrangements, they are adopting remote desktop technologies running on cloud computing. Other industries like manufacturing and retail are also seeing a spike in their digital technology adoption.

While we are seeing an unprecedented growth in digital technology adoption driven by the pandemic, the challenge now for companies is how do you make these work in the medium to long term, given the issues in change management, culture change, and integration of all the new digital technologies. The pandemic has forced companies to pursue digital transformation strategies as a knee-jerk reaction, and not cohesive and integrated strategic action. More work must be done in this area.

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I will be speaking about “Humanizing Digital Transformation” in the Global Leadership Summit 2021 slated on Feb. 22-26, 2021. Those interested may register at https://bit.ly/3s1ud38.

 

Reynaldo C. Lugtu, Jr. is CEO of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is the chairman of the Information and Communications Technology Committee of the Financial executives Institute of the Philippines (FINEX.) He is fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA Program of De La Salle University.

rey.lugtu@hungryworkhorse.com

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