Singaporean enterprises are witnessing a noteworthy shift in the mindset of customers, investors, and employees. While flawless digital experiences are a must, responsible and considerate ways of doing business are an equal priority as the significance of environmental, social, & governance (ESG) practices continues to grow.
As a result, digital transformation and sustainability have emerged as top priorities for businesses in the country. Companies are now focused on responsible operations while leveraging technology to stay competitive. Sustainable practices such as reducing carbon footprint and ethical sourcing, align with digital transformation efforts to enhance efficiency and customer experiences.
Interestingly, the shifting dynamics among businesses in Singapore were strikingly evident in our recent ASEAN-wide report. Digital transformation emerged as the number one priority for 55% of businesses, followed by sustainability (58%) and increasing efficiency (48%).
The pandemic acted as a catalyst for innovation and forced businesses to rethink their traditional approaches as companies realised that digital transformation was not just a competitive advantage but a necessity for survival in the face of disruption. While cloud-based tools, video conferencing platforms, and collaboration software transformed daily operations, organisations found themselves with a completely altered technology stack -- one they would need to continuously modify, monitor, and secure to serve a displaced workforce.
Can digital transformation and sustainability coexist?
In theory, digital transformation plays a crucial role in promoting sustainability within businesses. Embracing the right digital solutions enables improved monitoring and optimisation of energy usage, waste reduction, and streamlining of supply chains. By intertwining sustainability and digital transformation, businesses can not only drive positive environmental and social impact but also foster innovation and future-proof their operations in an ever-evolving market.
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But, currently, reality is playing out differently. The findings from our report suggest that businesses view sustainability and digital transformation in silos and not as intertwined.
Organisations are currently developing sustainability frameworks and digital transformation strategies in fragmented or disconnected ways. As a consequence, their resources, including budgets, time, and skills, are proving less effective. Additionally, they lack the necessary capabilities and expertise to fully develop a sustainability framework and effectively implement it, clearly highlighting a disconnect between the engaged sustainability practices and their digital transformation journeys.
Understanding the disconnect
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While sustainability ranks among the top three business priorities for the next three years, interestingly, it doesn’t even make it to the list of the top five challenges faced by businesses in Singapore. For instance, 79% and 66% of businesses in the manufacturing and public sectors respectively have a sustainable IT strategy in place. But like most businesses in other sectors, they continue to focus on addressing survival challenges such as intensifying competition, adapting to digital transformation, and driving revenue growth.
This disparity indicates that while sustainability is recognised as a crucial priority for the future, it may not yet be perceived as a pressing challenge in the current business landscape.
One possible explanation for businesses not perceiving sustainability as a challenge could be that they feel well-prepared. However, the findings in our report contradict this -- 53% of the businesses we surveyed in Singapore have only moderate to low in-house capability and know-how when it comes to sustainability practices. Other key barriers that were found to be leading concerns for Singaporean businesses included balancing the ESG metrics with growth targets (65%), cost of deployment to business (43%), and lack of measuring ROI for sustainability initiatives (53%).
This apparent disconnect between ESG practices and going digital, found not just in Singapore but in the Asean region as a whole, is that many businesses view sustainability and profitability as conflicting goals. As short-term financial gains are often prioritised over long-term sustainability efforts, sustainable practices, such as resource optimisation, waste reduction, and energy efficiency, can lead to cost savings and enhance operational resilience over time. This is currently turning out to be a missed opportunity for Singaporean firms.
Bridging the gap
Businesses must recognise the inherent mutual benefit between sustainability and digital transformation. By adopting digital technology, they can promote sustainable practices and drive increased efficiency and reduced environmental impact. Conversely, implementing a sustainability framework presents opportunities for innovation and differentiation, opening new avenues for digital transformation and growth.
One of the many ways organisations can actively bridge this gap is by leveraging digital tools, such as operational technology (OT), internet of things (IoT) sensors and data analytics, to optimise resource usage.
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For example, smart building systems can adjust energy consumption based on occupancy, leading to energy efficiency and cost savings. Similarly, AI-powered algorithms can optimise energy consumption in industrial processes. For instance, AI can predict demand and adjust production schedules, leading to reduced energy waste and increased sustainability.
Likewise, by integrating blockchain technology, businesses can ensure supply chain transparency and traceability. This allows consumers to make informed choices about sustainably sourced products, driving demand for eco-friendly options. Real-time monitoring of all the devices, systems, applications, traffic, and servers within an IT infrastructure ensures that all components of an ideal sustainable business, from the production process to energy usage, can be integrated with the overarching digital transformation strategy.
Going mainstream
Today, businesses are carefully considering their sustainability objectives, particularly as governments implement stronger regulatory standards. Sustainability is now a central topic in boardroom discussions, prompting the need for practical environmental insights to achieve sustainability goals. However, current strategies are often intricate, demanding extensive manual effort, personnel skilled in climate and data science, and significant computing power to effectively utilise data.
Through digital transformation, organisations can enhance their resilience, adaptability, and profitability for their sustainability goals. By leveraging digital tools, businesses can simplify sustainability efforts, making them more achievable and impactful.
As organisations expand in the hybrid realm and AI becomes a mainstay in enterprise tech stacks, leveraging data generated in the cloud both on-premises and off-premises will be critical. Furthermore, integrating this data into cloud-based remote monitoring tools will help businesses predict and prevent potential issues in their infrastructures at an exponentially faster rate.
By relying on such operational data and advanced analytics, organisations can implement condition-based maintenance which will help reduce downtime and maintenance costs significantly. This enables businesses to not only meet regulatory requirements but also create positive environmental outcomes while driving financial success.
As businesses navigate the challenges of a rapidly changing world, they must recognise that sustainability is not a contradiction to profitability but a pathway to long-term success. By bridging the gap between sustainability and digital transformation, businesses can hit the trifecta of meeting regulatory standards, cultivating a positive, eco-conscious future, and be fair on their bottom line.
Felix Berndt is the regional sales manager of Asia Pacific at Paessler
