By Benjamin Fingerle, partner, Boston Consulting Group
Digital transformation is on the mind of all business executives and government officials in Thailand and across the globe. There is good reason for this. A recent study leveraging BCG’s Digital Acceleration Index (DAI) – a benchmarking methodology designed to assess the digital maturity of businesses with more than 8,500 participating companies across industries and geographies – reveals that companies at the forefront of digital transformation enjoy 1.8 times the annual earnings growth and 2.4 times greater growth in enterprise value than companies that are behind in the race for digital transformation.
Where is Thailand?
Digital transformation is a journey that not only encompasses the adoption of new digital technologies, but also new processes, new ways of working, new organisational structures and capabilities, and new cultural elements – fundamentally changing prevalent business models. This journey takes time, dedication and resources. Through a collaboration between the Thailand Management Association (TMA) and Boston Consulting Group (BCG), a survey was conducted to find out: where Thai companies are on this journey, and what would it take to accelerate digital transformation of the Thai economy?
Digital strategies in Thailand
Using DAI, we surveyed the digital maturity of 60 Thai companies representing key industries ranging from banking to oil and gas, benchmarking the results against regional and global peers. The study reveals that the majority (42 per cent) of Thai companies are still in the early stages of their digital transformation, so far pursuing only isolated digital use cases.
The study did find, however, that companies are moving towards an important inflection point. Most Thai firms score highly on the dimension of digital strategy, ie in line with international peers that integrate digital as driver of value creation in their overall business strategy rather than treating it as an “experiment” carried out in isolation. In other words, Thai companies on average may be “Digital Starters”, but they have the right digital strategies and implementation roadmaps in place to start unlocking significant value from digital once the implementation of these strategies reaches scale.
And there are shining examples of Thai companies that already do so. Particularly, but not exclusively, so in finance and healthcare — the industries identified by our study as the clear leaders in Thailand that perform well against regional and global peers. Four such exemplary companies were awarded the Thailand Digital Excellence Awards, namely Samitivej was awarded for Digital Business Model Innovation, Krungthai Bank for Tech Innovation and Artificial Intelligence, Siam Commercial Bank for Digital Culture and Talent, and Chevron Thailand Exploration and Production for Digitally Optimized Operations.
How to accelerate digital transformation?
But what does it take to accelerate the digital transformation of the Thai business landscape beyond these examples? Our study revealed a number of common shortcomings across several important dimensions of achieving digital maturity.
We found that less than one-third (32 per cent) of Thai businesses invest at least 10 per cent of their operating capital into digital. That compares to 75 per cent across the global average, and 86 per cent across Digital Champions. More specifically, the study found that just 23 per cent of Thai businesses dedicate at least 10 per cent of their people to digital roles, compared to 65 per cent and 79 per cent global average and Digital Champions respectively. This is an area in need of transformation, as talent forms the foundation of all successful implementation of digital strategies. Unified data models and process digitisation are further crucial enablers found not to receive sufficient funding today. Another area that does not yet receive the attention and funding it deserves is digital ecosystems. The concept of digital ecosystems provides companies with an efficient opportunity to partner for the benefit of scale and innovation, creating win-win-win scenarios for companies and customers alike.
Moving past inflection point
Thai companies are at the brink of harnessing substantial value from digital transformation. Decisive investments are required to make it past this important inflection point. With 80 per cent of executives anticipating the urgency for digital transformation to increase in the wake of Covid-19, we are hopeful to see companies taking the necessary steps to accelerate their digital agendas. Organisations such as Thailand Management Association and the Digital Economy Promotion Agency are keen to offer support. Ultimately, accelerated digital transformation will be crucial to boost Thailand’s competitiveness in the global marketplace.