Exploring the Realities of Digital Transformation
A surge of innovation has surfaced as people are getting excited over the advancement of technologies. As a result, companies and individuals strive to go above and beyond the existing possibilities. In addition, the sudden unfolding pandemic has sped the process of digital and technology adaptation. Digital transformation rapidly became a buzzword in recent years, and more people are utilizing technologies to overcome their challenges. However, despite the abundance of technologies used in our daily life, implementing these technologies could be challenging and tricky in reality. Thus, an adjustment of expectations is needed to achieve the desired outcomes.
As we move further into the 21st. century, technology continues to advance at a rapid pace. From artificial intelligence and machine learning to the internet of things and blockchain, emerging technologies have the potential to revolutionize entire industries. This excitement for technological advancement has spurred a surge of innovation as companies and individuals strive to push the boundaries of what is possible. Those advances are driving a digital transformation that is changing how we live and work. Additionally, the sudden emergence of the COVID-19 pandemic has sped up the adoption of digital technologies for individuals and organizations to survive and quickly adapt to new ways of working.
Digital transformation quickly became a buzzword that has become increasingly prevalent in recent years. With the rise of the gig economy, more and more people are finding work in flexible, technology-driven roles. The proliferation of mobile devices and the increasing availability of high-speed internet have made connecting with others and accessing information easier. This has given rise to a new generation of entrepreneurs and innovators using technology to solve some of the world’s most pressing challenges. Many organizations are looking to incorporate technology and digital strategies into their operations to stay competitive and relevant in a rapidly evolving marketplace.
According to a report by IDC in 2021, the global digital transformation market is forecast to reach $2.8 trillion by 2025, with a compound annual growth rate of 16.4%. This growth is transforming a vast range of industries and creating new opportunities for businesses to grow and thrive. Modus Create survey in 2022 stated that many businesses consider digital initiatives to be critical with various levels of digital awareness. Approximately 66% of executives in media/entertainment, 59% of executives in finance/accounting, 54% of executives in research/engineering, 50% of executives in manufacturing, and 45% of executives in healthcare feel that digital initiatives are extremely or significant to the success of their organizations.
A few breakthroughs stand out as upcoming technology trends that will be highly significant in the future. An example would be the development of virtual reality (VR) and augmented reality (AR) technologies, which allow people to experience digital environments more immersively. There is also the growth of blockchain technology, which allows for secure, decentralized data storage and transmission. Another notable development is the rise of 5G networks. These networks offer faster and more reliable data transmission than previous generations. As the world’s technological advancements progress, artificial intelligence (AI) continues to be one of the most highly anticipated technological advancements. The advancement of AI has enabled machines to learn and perform tasks previously only possible for humans.
A Gap Between Expectations and Realities
Despite the widespread adoption of digital transformation initiatives, these efforts’ expectations and realities can often be vastly different. While many companies may expect digital transformation to provide a quick and easy solution to their business challenges, the fact is that implementing technology and digital strategies can be complex and challenging, which requires a clear vision and a willingness to embrace change. Additionally, the benefits of digital transformation may not always be immediately apparent, and organizations may need to adjust their expectations to achieve their desired outcomes.
01. Global Digital Divide
The effort to push digital transformation forward globally can only be improved if technology development has been evenly distributed worldwide. Some countries, such as the United States and several European countries, have been at the forefront of technological advancement and have made significant contributions to the field. Most recent data from the OECD shows that the IT sector in the United States contributed nearly one-third to the global IT market (32.1%). This is 35% higher than the U.S. share of the overall international economy (ITIF, June 2022). Other countries, particularly those in the developing world, have different access to resources and opportunities for technological development and may lag behind in technological advancement.
Generally speaking, many developing countries may face challenges in achieving the same level of technological development as more economically developed countries. These challenges can include a lack of access to resources, inadequate infrastructure, and a shortage of skilled labor. Additionally, political instability, corruption, and other social and economic factors can hinder a country’s technological development. These problems, which hinder the equal distribution of technological development, can significantly impact a country’s economy and the quality of life for its citizens.
This is particularly true of Indonesia, which still has a long journey ahead in its digital development. Despite Indonesia’s status as a developing country, it has one of the most technologically savvy populations, which contrasts with its weak ICT infrastructure. A study in 2016 found that Internet usage by Indonesians was higher than average at that time, dominated mainly by social media and e-commerce. Social media usage in the country was among the highest in the world, surpassing the use of social media in digitally mature countries such as the United States, where these media have been around for a more extended period (Das et al., 2016).
Based on the Indonesian Digital Literacy Study in 2021, the National average score for Digital Skills is 3.44 from a score range of 1-5. In summary, the Indonesian people possess sufficient knowledge of, understanding, and ability to use digital operating systems and ICT hardware and software. Indonesia’s vast geographical condition adds another challenge to its digital transformation: bridging the digital divide in rural and 3T areas that tend to be more underdeveloped. It was reported that Indonesia ranked last in both 5G availability and availability of 5G among the 10 largest economies in Asia-Pacific (Jesemann, November 2022).
02. Cybersecurity Threats
The widespread adoption of new technologies and the increasing reliance on digital technologies raise concerns about privacy, security, and potential misuse or abuse. As our lives become increasingly digitized, we must understand how to protect our personal information and data. Without this knowledge, individuals and organizations are at risk of falling victim to cyber-attacks and other forms of digital crime. Indonesian Digital Literacy Study in 2021 showed that the general public awareness of personal data protection still needs to improve, with 53.6% of people having a low level of personal data protection. These behaviors are evident in the fact that many people choose to upload their cell phone numbers and birthdays.
Approximately 35% of respondents willingly shared their current location, downloaded an unknown application, and uploaded a photo of their ID card to their social media. It was also found that 67.3% of respondents had a low level of device security protection. A lack of digital awareness might lead to a slower adoption rate of new technologies, which can limit the potential benefits of digital transformation. Without digital awareness, people and organizations may be less likely to take necessary precautions to protect their systems and data from potential risks. Many organizations were forced to face cyberattacks due to the COVID-19 crisis, which arose because of the security vulnerability of remote work and the shift to virtualized IT environments. Globally, the number of exposed data records reached nearly 125 million in the fourth quarter of 2020, the highest number since the first quarter of 2020.
Recent statistics show that over 15 million global data records were exposed through data breaches during the third quarter of 2022. By comparison, the previous quarter’s number was up 37 percent (Statista Research Department, 2022). Specifically in Indonesia, National Cyber and Crypto Agency (Badan Siber dan Sandi Negara) stated that more than 700 million cyber attacks occurred in 2022 (CNN Indonesia, July 2022). A global cybersecurity company Kaspersky also detected 11,08 million cyber threats in the second quarter of 2022 on the computers of Kaspersky Security Network (KSN) members in Indonesia. A 2020 National Cyber Security Index (NCSI) report shows Indonesia’s cybersecurity ranks 6th among other ASEAN countries and 83rd out of 160 countries globally. The report also mentions the country’s low cyber security policy development, cyber security strategy, and implementation plan (NCSI, 2020).
03. IT Talent Shortage
Another challenging aspect of digital transformation is the industry’s IT talent shortage. The responsibilities of IT job roles include managing and developing information technology infrastructure and applications, analyzing business information systems, as well as performing data analytics. These roles typically focus on ensuring that an organization’s technology systems and processes are effective and efficient. A global shortage of IT talents has been observed in recent years since IT roles have remained one of the most difficult positions to fill worldwide since 2011 (Nithithanatchinnapat & Joshi, 2019). There are a few things that influence the emergence of the digital skills gap. There seems to be a clear gap between the demand and supply of IT talent. Companies are eager to hire proficient workers in digital technology.
Still, there are not enough qualified candidates to fill these roles. This mismatch has made it difficult for businesses to find the talent they need to thrive in today’s increasingly digital world. In Europe, only 58% of citizens over the age of 16 have been reported to have basic digital skills. Similar trends have been observed in Brazil, China, Indonesia, and Mexico (Feijao et al., 2021). Aside from the disparities between demand and supply, with the COVID-19 pandemic intensifying, there is an urgent need to create conditions that favor virtual work and commerce and effectively leverage digital solutions.
Limited access to digital infrastructure and development can also cause digital and social inequalities, which affect opportunities to develop digital skills. As a matter of fact, Japan, one of the most technologically advanced countries, also faces this problem, despite its high literacy rates. Japan is also struggling to fulfill the needs of IT professionals. This is caused by the unattractiveness of said jobs in their country. In 2016, a comparative study of IT personnel in Japan and the United States found that the average salary for IT workers in Japan was about half that of their US counterparts. In Japan, IT workers in their fifties had the highest salaries. In contrast, in the US, salaries peaked for workers in their thirties. Additionally, the salary difference was smaller in Japan than in the US (Ono, September 2022).
How To Shorten the Gap?
Digital transformation acts as a catch-all, including digitization and digitalization as its components. It is essential to an organization’s digital transformation (Savić, 2019). To achieve successful digitization, a country’s digitization level needs to be assessed using two key dimensions, landscape, and usage (Das et al., 2016). As part of the Landscape dimension, we need to assess the availability, quality, and capacity of the infrastructure that supports ICT in the country and how affordable it is to access ICT infrastructure. Regulatory support toward ICT development and business is also essential to this dimension. In the Usage dimension, we need to consider the level of ICT adoption by consumers, businesses, and the government for their commercial and everyday activities. For businesses, it is necessary to consider their internal business process and commercial use. General usage and transaction-related usage of the consumer are also deemed necessary. The government’s role is vital as the provider of online public services.
Digital transformation can’t be achieved without the participation of all parties involved, including businesses, the government, and the people themselves. Leaders of businesses need to clearly define their strategic vision and build a strategic direction aligned with the overall digital transformation goals. Leaders must also be pioneers in innovating digital transformation thinking and changing leadership methods to identify and implement the digital transformation plan (Hai et al., 2021). Digital transformation strategies need to include preparations and methods to create human resources capable of accepting new production technology trends.
One way to address the current shortage of technology talent is to implement digital upskilling and reskilling programs. These programs can help organizations stand out and gain a competitive advantage while improving their overall efficiency and resilience. By investing in their employees’ skills, organizations can better position themselves to succeed in today’s digital landscape (PwC, November 2022). Another effort organizations can make is creating or using a common skills framework to match talent with business skill demand.
An example of this is the launch of the European Skills, Competences, Qualifications, and Occupations (ESCO) in 2017, which is a European multilingual classification of skills, competencies, qualifications, and occupations designed to connect job seekers with employers and improve job mobility across Europe by offering a common language for occupants and skills (Feijao et al., 2021). Redistribution of labor and skills across businesses, creating digitally inclusive initiatives and programs, and cross-cutting partnerships between different stakeholders can also help tackle the skills gap.
The government must also help drive digital transformation by creating the right conditions for it to thrive. The government plays a role in creating a conducive policy and regulatory environment that encourages the adoption of digital technologies and a collaborative digital ecosystem. The government can also invest in infrastructure, such as high-speed internet, to support the growth of the digital economy. Additionally, the government can support businesses and individuals to develop the skills and knowledge they need to participate in the digital economy (Chen et al., 2021). Along with digital transformation efforts, the government is also responsible for ensuring the implementation of solid cybersecurity policies and regulations to ensure that organizations and individuals take the necessary steps to protect their systems and data from cyberattacks. Investing in cybersecurity technologies is also crucial to help protect their networks and systems from cyber threats.
In Indonesia, digital transformation has been a key focus in recent years, as the government and businesses have sought to leverage technology to improve efficiency, increase productivity, and drive economic growth. This has included efforts to improve internet connectivity and infrastructure, promote the adoption of digital technologies by businesses and individuals, and support the growth of the digital economy. As a result, Indonesia has seen significant progress in its digital transformation efforts in recent years and is well-positioned to continue building on these gains in the future.
The government, through the Ministry of Communications and Informatics (Kominfo), plans to close the digital divide by providing internet services in remote areas by doing cooperation with relevant local governments, ministries, agencies, and institutions following the Regulation of the Minister of Communications and Informatics Number 10 of 2018 on Universal Service Obligations (KIC & Kominfo, 2022).
According to a report, Indonesia’s government expects that by 2027, 4G will represent about 50.6% of all connections while 2G and 3G will represent about 2% (if not shut down earlier). 5G mobile subscribers are expected to represent 43.5% of all subscriptions. The efforts to expand the use of the 5G network in Indonesia aim to add 18 to 22% to enterprise revenues and 6 to 9% to consumer revenues by 2025 (Jesemann, November 2022). To address the IT talent shortage, the Indonesian government provides a few training programs that are not just targeted at the general public but also for the practitioner at the leadership level and workers at technical and professional levels (KIC & Kominfo, 2022).
It is difficult to say whether society, as a whole, is ready for digital transformation. While there is no doubt that technology has the potential to bring many benefits and improvements to our lives, it also presents challenges and risks that need to be carefully considered and managed. It is crucial for individuals, businesses, and governments to carefully evaluate the potential impacts of digital transformation and take steps to mitigate any adverse effects. (AAZ)