KUALA LUMPUR: The digital economy is expected to contribute 21% of gross domestic product (GDP) growth in Malaysia by 2022, up from 18% now.
According to the International Data Corporation (IDC), Malaysian companies are also leading in the Asia-Pacific in expanding the returns from their digital transformation initiatives.
Malaysian companies saw returns of 58% last year from their digital transformation, compared with 34% in Japan and 47% in Singapore, according to Rob Wells, who oversees global enterprise technology and human resources as president for Asia of Workday Inc, an on-demand vendor of financial management and human capital management software.
However, there is room for improvement. Wells said 73% of human resource managers and 54% of IT administrators cited organisation silos as the key barrier to transformation.
“In Malaysia, a key challenge is that departments do not share operational information with each other,“ he said recently.
He pointed out that investments in technology could help break down silos and help an organisation stay competitive.
The study, titled “Digital Dysfunction in Asia-Pacific” and carried out in partnership with IDC Asia-Pacific, looked at the perspective of 1,000 C-level executives and business leaders.
It showed that more than two-thirds (69%) of these executives in Malaysia did not have a balanced scorecard approach to align and measure digital transformation initiatives.
A balanced scorecard approach provides executives with an overview of their business operation.
A total of 34% of C-level executives said their organisations needed to invest more in technology.
“There are companies that use 100 different systems to do recruiting and talent management, some of these systems are 20 to 30 years old. Therefore, you got this horrible mess of things that don’t integrate very well with the existing devices,“ he said.
More than half (52%) said digital transformation initiatives were uncoordinated, with 73% of HR departments lacking implementation plans for digital transformation, along with 50% of finance teams and 38% of IT teams, according to the data.
Almost all (93%) of HR leaders and 80% of finance leaders agreed that an integrated HR and finance technology solution was needed for greater visibility – the highest in the Asia-Pacific region.
One in five (20%) finance teams and 13% of HR teams have systems that are fully integrated and have been successfully transformed – which was similar to other countries in the region.
Under Budget 2019, the government has allocated RM3 billion in the Industry Digitalisation Transformation Fund under Bank Pembangunan Malaysia Bhd to accelerate the adoption of the new technology.
“The government has introduced several schemes worth billions of ringgit either through the provision of outright grants or financing guarantee programmes for Malaysian companies to promote digitalisation in the economy,“ said Finance Minister, Lim Guan Eng said in his speech last April at World Bank Headquarters, Washington DC.
While digital transformation was good for the economy as a while, the downside, according to Lim, was the erosion of the government’s revenue base. He said that in 2012, the government revenue amounted to 21.4% of GDP but by 2017, it had dropped to 16.3%.