A study commissioned by Workday, a global leader in enterprise cloud applications for finance and human resources, has found that eight in 10 (79%) organisations in Malaysia are still lagging in digital agility – being in the slow and tactical stages of digital agility maturity.
This is despite the opportunity to accelerate digital transformation and increased technology adoption during the pandemic. The study found that the lack of skills in both talent acquisition and talent retention were the biggest challenges cited by organisations in Malaysia in pursuing digital transformation.
Conducted in association with IDC, the IDC-Workday Digital Agility Index Asia/Pacific 2022 highlights the extent to which Asia Pacific (APAC) organisations have progressed in digital agility since the COVID-19 pandemic. First started in 2020, the study assesses and ranks organisations on the Digital Agility Index (DAI). From their scores, organisations are identified either as “Agility Leaders” if they are found to be in the agile/ integrated stages of digital agility maturity, or “Agility Followers” if they are determined to be in the slow/tactical stages.
The study found that across the nine APAC markets surveyed, progress in digital agility is uneven. Malaysia ranked seventh in this year’s Digital Agility Index – a position it also held in 2020. Organisations in Australia achieved the greatest progress in digital transformation efforts and ranked first this year. Singapore, which ranked first in 2020, dropped to second position, followed by New Zealand, Korea, and Hong Kong. Taiwan, a new addition to the study, ranked sixth. Indonesia ranked in eighth position, followed by Thailand.
From a regional perspective, only 38% of APAC organisations are in the advanced stages of digital agility. Still, progress is being made overall as this figure reflects an 18 percentage point increase when compared to 2020. For the 62% of organisations in APAC lagging in digital agility (i.e. agility followers), technology adoption is often driven by functional requirements and business needs such as for e-commerce, safety measures, and remote work during the pandemic.
Organisations in Malaysia should look to integrate digital tools and processes enterprise-wide to gain a holistic view of resources, enable data-driven insights, and drive greater digital agility. However, 4 in 10 (42%) businesses managed digital transformation initiatives at the functional level, as opposed to implementing such transformations at the enterprise level. In addition, IT and Finance leaders also highlighted function-specific challenges. A high proportion of IT leaders (73%) experienced challenges in choosing the right technology solutions that can help drive business agility. Similarly, Finance leaders (63%) surveyed highlighted challenges in identifying new growth opportunities while driving profitable revenue growth in a rapidly evolving business environment. The lack of an integrated finance processes supported by an enterprise-wide technology architecture drives fragmented financial reporting and hinders timely business insights and decision-making.
Leveraging digital transformation more aggressively can help companies achieve better outcomes in attracting and retaining talent. Over half (57%) of HR leaders in Malaysia said they are challenged in identifying the right skills needed to support evolving business needs. In terms of skills development, the study also found that about over half (67%) of HR professionals in Malaysia are solely focusing on core skills requirements, as opposed to adopting a holistic strategy based on employee engagement and data analytics to identify training needs and growth areas.
In the new norm led by a digital-first economy, leveraging digital agility can offer competitive advantages. This is only possible if organisations rethink their approach to closing digital agility gaps through technology and alignment of functional business requirements across the C-suite. For positive business outcomes, not only must organisations accelerate their digital transformation to narrow the agility gaps but also have an integrated approach as a strategic imperative. This requires CFOs, CHROs, and CIOs to collaborate and work on their cross-functional digital transformation initiatives, integrate digital talent management, as well as HR and finance processes.
“While there is considerable progress with more organisations making the leap to become agility leaders, the fact that the majority of organisations within Asia Pacific are still lagging creates an opportunity to help organisations digitally accelerate,” said Sandeep Sharma, President for Asia, Workday. “With agility now a key source of competitive advantage in today’s digital-first economy, organisations supported by data-driven processes and imbued with digital skills and work cultures are best positioned to thrive in today’s changing world.”
“The unprecedented disruptions brought on by the COVID-19 pandemic forced many organisations to fast-track their digital transformations. It is not surprising to see increased technology adoption driving agility improvement,” said Lawrence Cheok, Associate Research Director of Digital Transformation, IDC. “However, true digital agility is about capitalising on change in order to thrive. To do so, organisations need to emulate agility leaders and make the leap from tactical to strategic enterprise-wide transformations in their culture, people, processes, and technology implementation.”