Digital transformation starts with leadership

When employees understand the “why” behind a change, digitalisation becomes a shared journey rather than a top-down mandate.

Singapore’s small and medium-sized enterprises (SMEs) have embraced digital tools at a remarkable rate.

The IMDA Singapore Digital Economy Report 2025 reported that 95.1% of SMEs adopted at least one form of digital technology in 2024. On average, each SME deployed 2.3 out of the six digital areas (AI, cybersecurity, cloud, data analytics, e-payment, e-commerce) tracked last year – a clear indication that digitalisation is becoming more embedded across the SME sector.

Yet this widespread uptake alone does not guarantee business transformation. For many, the real challenge lies in translating digital investments into sustained productivity gains and scalable growth. Without a clear strategy, digital tools become isolated systems – underused, poorly integrated, and misaligned with business needs.

The urgency for strategic digitalisation is underlined by the broader economy. In 2024, Singapore’s digital economy hit $101b (S$128.1b), accounting for 18.6% of national GDP. Digitalisation is no longer the domain of the tech sector alone: two-thirds of this value add came from non-Information and Communications sectors such as finance, wholesale trade and manufacturing.

In this environment, SMEs that succeed will be those that treat digitalisation not as a grant-driven cost item or checkbox, but as a strategic capability that enables operational agility, workforce resilience, and long-term competitiveness.

The immediate need for strategic alignment
The next stage of Singapore’s digital progress will not be determined by how quickly companies adopt tools, but by how thoughtfully leaders align digitalisation with processes, capabilities, and long-term goals. This demands a mindset shift that places leadership at the centre of transformation.

Many SME leaders face a paradox. They know digital capabilities are critical – reflected in the UOB Business Outlook Survey 2025, where businesses highlighted the need to deepen digitalisation across internal and external functions – and they are pressured to move fast. Investments often become fragmented in this rush.

For example, a customer management system may be deployed without rethinking sales workflows, or automation may be introduced before operational bottlenecks are addressed. In these instances, hurried digitalisation upgrades add complexity rather than enabling meaningful change.

From my conversations across the SME community, successful digital transformation tends to start with diagnosing business processes. Leaders who take the time to map workflows, identify inefficiencies and reimagine how teams collaborate often find that technology becomes an impactful enabler.

This process-first approach ensures that digital adoption supports not just momentary efficiency, but sustainable growth. It shifts the focus from quick deployment to thoughtful integration, giving businesses a clearer path to scale.

Investing in digital capability
Technology can kickstart the transformation process, but its impact on the longer term depends on people. Many SMEs face challenges such as uneven digital literacy, unclear roles, or resistance to change. These are not merely technological obstacles, but a deeper leadership challenge.

Leaders running SMEs who prioritise team readiness – through training, change-management and role clarity – tend to see higher usage rates and better outcomes from digital tools. 

Whilst there is limited hard public data on post-adoption productivity gains, industry feedback that I have received consistently points to readiness and confidence as key factors distinguishing success from stagnation. For example, SMEs that pair new system rollouts with structured onboarding and role-based training often report faster adoption cycles, fewer workarounds, and higher utilisation of digital tools compared to peers who deploy technology without investing in people.

When employees understand the “why” behind a change, and when they receive support to adapt, digitalisation becomes a shared journey rather than a top-down mandate. Leaders can enable this by mapping critical workflows to identify bottlenecks, and by setting aside 10% to 20% of digital budgets for training and change management. Over time, such companies move beyond tool adoption to workflow evolution, data-driven decision-making and sustained efficiency gains.

Leadership as the strategic architect
Digital transformation in Singapore will accelerate not just through individual companies, but through ecosystem-wide collaboration. More SMEs are turning to sector-level initiatives, peer networks and industry bodies to share learnings, best practices and avoid common pitfalls.

Leaders who are open, curious and willing to learn from others in this collaborative environment have an advantage. They avoid the trap of reinventing the wheel and often fast-track their transformation journey by adopting proven workflows, skills frameworks and integration practices.

The tools available today – cloud platforms, automation, data analytics, AI – are more powerful, accessible and affordable than before. However, their true power emerges only when organisations apply them with strategic intent. The key to successful SME digitalisation belongs to those who recognise that transformation is not a solo sprint, but a collective relay. Leaders in SMEs will play a key role, not just directing change but enabling it through connections, shared knowledge and a culture of continuous improvement.

Leadership drives transformation
The next phase of SME digitalisation will not be defined by the number of tools adopted, but by how deliberately leaders apply them. Successful transformation rests on three leadership priorities.

First, leaders must redesign processes by auditing and streamlining workflows before investing in technology, in order to avoid fragmentation and underutilisation. At the same time, it is critical to invest in people by dedicating resources to team readiness, digital confidence and change management, ensuring that tools are adopted meaningfully rather than superficially.

Finally, leaders should connect to scale by leveraging ecosystems, peer networks and industry partners to access proven best practices and accelerate learning.

SMEs that approach digitalisation with this discipline move beyond experimentation. They build organisations that can scale, adapt and remain resilient as market conditions evolve.

For SMEs, the real leadership shift lies not in adopting more tools, but in enabling people and processes to grow alongside the business – this is what will define the next phase of successful digital transformation.