Hong Kong’s economy has come to a juncture where it is now encountering several hurdles: shortage of labor, high cost of operation and keen competition from emerging economies. 

To overcome these, Hong Kong enterprises have to resort to digital transformation to revamp themselves. Digital transformation is the process of changing how an enterprise leverages technology, people, and processes to improve business performance and embrace new business models. 

Accelerated digital transformation is rapidly creating a world of ever-faster technological developments. By leveraging digital solutions, businesses can streamline operations to save costs, improve customer satisfaction, and drive innovations for new products and services.

 A 2020 study by Boston Consulting Group (BCG) analyzed digital transformation in 825 organizations. It showed that “successful transformations created, on average, 66 percent more value, improved corporate capabilities by 82 percent, and met 120 percent more of their targets on time than those on the other end of the spectrum”.

The use of digital transformation is driven by mega trends. First, the advent of COVID-19 has changed the business environment so that many daily activities are now conducted online such as working from home and virtual meetings. 

Second, our competitors (especially emerging economies) are using a new technology to build new platform economy, aiming for higher efficiency and lower costs. Third, there is a pull from clients and business partners to be more responsive to changing market conditions and meeting their needs more promptly. As a result, it is imperative to focus on adapting to a changing business landscape.

There is no shortcut to digital transformation. A survey by Harvey Nash/KPMG CIO in 2020 concluded that “only 41 percent of companies have an enterprise-wide digital strategy, and only 18 percent of companies rate their use of digital technology as ‘very effective’”. 

With this in mind, before an enterprise starts taking action, it must define its end goal, find out which problems it is going to solve, decide how it can improve internal processes in its teams, and finally, how it can serve its customers better.

Generally speaking, there are five building blocks of digital transformation:

1) Digital transformation strategy: to identify threats and opportunities, quantify value at stake and optimize the use of resources; 

2) digital value capture: to transform its core business and develop new ones; 

3) foundational digital capabilities: to build the critical capabilities required to rapidly scale digital; 

4) digital culture, talent and organization: to transition to a digital way of working; 

and 5) digital integration roadmap: to build an integrated roadmap with clear prioritization criteria and sufficient flexibility.

Many Hong Kong companies have pioneered digital transformation. For example, CLP Holdings has utilized digital transformation to modernize its energy infrastructure and improve customer services. It has implemented smart grid technologies, advanced metering systems, and data analytics to optimize energy distribution, monitor usage patterns, and enable energy efficiency for its customers. 

Cathay Pacific has also embraced digital transformation to enhance the travel experience for its customers. The airline has invested in mobile apps, self-check-in kiosks, and digital boarding passes to streamline the check-in process and provide seamless travel experiences. The company also utilizes data analytics to gain insights into customer preferences and personalize services. Hong Kong universities are also playing their part in this endeavor. For example, The Digital Transformation Centre of PolyU Business School caters for the needs of business communities by promoting and enhancing the understanding and management of digital transformation through research, training, and consultancy. 

It provides a platform for collaboration and partnership, sharing expertise and resources. The Centre has established a connection with many successful high-tech startups and companies in the Guangdong-Hong Kong-Macao Greater Bay Area in the realm of digital transformation. The Hong Kong Special Administrative Region government has made strenuous efforts to back digital transformation through funding programs such as the Public Sector Trial Scheme, the Technology Voucher Programme, and the Re-industrialisation Funding Scheme. 

There is no place for complacency. The 2020 study by BCG also issued a dire warning: 70 percent of digital transformations fail, falling short of their objectives, which often have profound consequences. Digital transformation is important for enterprises to maintain a presence in their sectors, it’s even more important to get it right from the very start. Concerted efforts by the government, academic institutes, professional firms, and enterprises are greatly needed.

In conclusion, digital transformation offers significant opportunities for Hong Kong enterprises to enhance their competitiveness. By embracing digital transformation, Hong Kong enterprises can gain a competitive edge, ride out the storms, and thrive in a high-tech era.

The author is the former head of financial management (general manager) of Bank of China (Hong Kong), director and deputy general manager of Nanyang Commercial Bank and an alternate director of Shanghai Commercial Bank.

The views do not necessarily reflect those of China Daily.