NAVIGATING THE DIGITAL FRONTIER

Unveiling Sri Lanka’s pioneering corporate Digital Readiness Index (DRI)

By Dr. Ajith Mendis, Dr. Sugeeth Patabendige and Thilina Karunanayaka

In the annals of business evolution, the 21st century stands as an era defined by the convergence of technology and commerce. The emergence of digital technologies has fundamentally altered the business landscape, propelling businesses into uncharted territories of innovation and opportunity.

At the heart of this transformative wave lies the concept of ‘digital readiness’ – a term that encapsulates not only the adoption of digital tools but the holistic integration of technology into every facet of business operations in Sri Lanka.

Sri Lanka has progressed over the past few years in entering the digital arena by introducing many initiatives but the pace and extent remains in question. Meanwhile, the government has taken steps to digitalise public services and improve the overall efficiency of state operations to some degree.

Initiatives such as online portals for state services and digital payment options are being implemented. Various state services – including tax payments, vehicle registration and public utility services – are available online, thereby reducing the need for physical visits and paperwork.

Moreover, the implementation of the National Fuel Pass was an eye-opener for many private sector organisations complaining about consumer readiness.

Digital transformation in education is also taking place with technology integrated in many schools and universities. This includes online learning platforms, digital classrooms and e-libraries.

And the adoption of mobile payment platforms and digital wallets is increasing. This in turn is facilitating easier and cashless transactions.

Despite this progress, there are challenges such as disparities in digital literacy, uneven infrastructure development between urban and rural areas, and the need for more robust cybersecurity measures to protect digital assets.

Under such circumstances, the Business Design and Transformation Cube of the University of Kelaniya, along with IQ Global and LMD, unveils Sri Lanka’s inaugural Digital Readiness Index (DRI); and it is hoped that organisations, policy makers and the public will take cognisance of where the nation and its businesses stand in the context of digital tech adoption.

Understanding Digital Readiness At its core, digital readiness refers to an organisation’s ability to adopt and leverage digital technologies for growth, sustainability and competitiveness.

It’s not merely about the presence of technology but a company’s capacity to utilise it effectively.

The DRI gauges a company’s and an industry’s digital maturity, assessing factors such as technological infrastructure, workforce digital skills, data security and regulatory frameworks.

This embodies a strategic approach to digital transformation, encompassing not only the implementation of software and hardware but also the cultivation of a digital first mindset among employees and stakeholders.

Digital readiness represents a journey rather than a destination – a continuous process of adaptation and optimisation in response to the ever evolving technological landscape.

THE BIG PICTURE Digitally ready companies and industries fuel economic growth and optimise internal processes, reducing manual intervention and enhancing efficiency.

Automation of repetitive tasks, streamlined communication channels and real-time collaboration tools lead to improved productivity. In logistics, digital systems enable real-time tracking, route optimisation and inventory management, reducing costs and enhancing service delivery.

Companies embracing digital technologies are better positioned to innovate vis-à-vis their products, services and business models. Open innovation platforms, data driven imagination and collaboration with startups fuel creativity. What’s more, digital tools facilitate rapid prototyping and testing, enabling businesses to swiftly bring innovative ideas to market.

Furthermore, digital readiness revolutionises customer experiences, ensuring that they’re more personalised, responsive and immersive.

Customer relationship management (CRM) systems integrated with AI enable businesses to anticipate consumer needs, tailor product recommendations and deliver exceptional services.

And e-commerce platforms leverage augmented reality (AR) and virtual reality (VR) to create interactive, lifelike shopping experiences. Social media analytics and sentiment analysis tools provide valuable insights into customer preferences, enabling businesses to tailor their marketing strategies accordingly.

Digital readiness transcends geographical boundaries, enabling businesses to tap into global markets.

E-commerce platforms, digital marketing and online marketplaces provide avenues for reaching international customers. Language translation tools and localisation services facilitate communication with diverse audiences. Digital payment gateways and secure online transactions facilitate cross border trade, fostering economic growth and expanding market reach.

Businesses that are at the forefront of digital readiness have a competitive edge.

DIGITAL READINESS IN SOUTH ASIA The digital readiness of South Asia has been a topic of discussion in recent years as the region undergoes rapid digital transformation.

However, significant challenges need to be addressed to ensure that the region is fully prepared to take advantage of the opportunities offered by the digital age.

One key challenge is the lack of digital infrastructure in many parts of South Asia – particularly in rural areas. This can make it difficult for businesses to connect with customers and suppliers; and it limits their ability to leverage digital technologies to drive growth.

Another challenge is fostering digital skills among the region’s workforce.

While there has been some progress in this sphere, a glaring skills gap needs to be addressed. This includes technical and soft skills – such as creativity, problem solving and collaboration.

Managing change is also crucial for businesses in South Asia to be digitally ready. This includes adapting to new technologies and processes, and ensuring that employees are engaged and motivated throughout the digital transformation process.

Collaboration is another important factor in developing digital readiness in South Asia. This includes working with partners in the private sector, and collaborating with government and civil society, to ensure that policies and regulations support digital transformation – and the benefits of digitalisation are shared fairly across society.

Overall, digital readiness is crucial for businesses in South Asia to thrive in the digital age. By developing a digital strategy, investing in technology infrastructure, fostering digital skills, managing change, collaborating with partners and ensuring data security and privacy, businesses in the region can position themselves to take advantage of the opportunities offered by the digital age and drive sustainable growth.

COMPONENTS OF DIGITAL READINESS The DRI consists of two levels that combine to illustrate the digital readiness of an organisation.

The first level comprises dimensions – i.e. specific features that demonstrate the digital readiness of businesses. Strategy, people, processes, technology, infrastructure and literacy are considered dimensions.

And the second level identifies specific attributes that drive the dimensions. These drivers are expected to be significant in maintaining or altering patterns within the dimensions. The six drivers are vision, values, systems, know-how, competencies and policy.

MEASURING THE DRI MODEL The six dimensions and related drivers are measured through 30 questions. The same questions related to their industry were asked, enabling researchers to form a perception score.

The difference between the expectation and perception scores is expected to highlight the digital readiness gaps of an organisation.

INDUSTRY WISE COMPARISON The summary comparison of expected and perceived average scores for each industry provides insights into which industries are bridging the gap and those that are lagging in digital readiness.

Insights may be gathered by checking whether a particular industry or sector has relatively high or low expectations, and how close it is to bridging the gap between the expected and perceived.

One clearly observes an asymmetric distribution of expected levels of digital capability and perceived levels of readiness achieved across different sectors or industries.

For instance, sectors such as software, transport and logistics have very high expectations, while manufacturing and education have made significant progress towards bridging that gap.

In contrast, sectors like energy and retailing demonstrate lower digital readiness expectations within the sample.

INDUSTRY EXPECTATIONS VS PERCEPTIONS More insights are apparent when comparing how different sectors or industries have scored in each of the six parameters scoped within the study (i.e. infrastructure, literacy, people, process, strategy and technology).

For example, the accompanying chart summarises the comparison between the software and insurance sectors.

It is apparent that the perceived levels of literacy and process parameters, and the expected level of strategy parameter, are much higher in the software sector. In addition, it’s evident that the insurance sector gap in expected and perceived levels of technology is higher.

INDUSTRY VS ORGANISATIONAL LITERACY READINESS Detailed insights may be gathered at an organisation level by comparing how each survey participant’s sub-parameter scores have fared in comparison to the average score of similar companies within the same sector or industry – as well as the highest sector or industry benchmark.

The accompanying chart illustrates this comparison for the literacy parameter for a single survey participant. This clearly highlights where the organisation needs to improve in bridging the gap between expected and perceived readiness; and in comparison, to the competition for every survey question.

ACCELERATING DIGITAL READINESS The question is whether the current level of digitalisation is different to what was digital prior COVID-19. The answer lies in pace. The speed of adoption and urgency to act within a short period have become key.

With the advent of the ‘new normal,’ digitalisation has redefined how businesses work, compelling organisations to reinvent their operations from supplies to services, thereby putting digital at the forefront.

The following developments are rapidly advancing in the present business era.

AI AND MACHINE LEARNING INTEGRATION Artificial intelligence and machine learning (AI/ML) technologies continue to advance, enabling businesses to automate processes, enhance decision making and personalise customer experiences.

From chatbots and virtual assistants to predictive analytics, organisations integrate AI/ML into their operations to improve efficiency and offer innovative solutions.

CLOUD AND EDGE COMPUTING Cloud computing provides scalable and cost-effective solutions for businesses, allowing them to store, manage and process data remotely.

Edge computing – which is an extension of cloud computing – involves processing data closer to the source of data generation (e.g. IoT devices).

This trend reduces latency and enhances real-time processing capabilities, which is crucial for applications like autonomous vehicles and smart cities.

IOT AND CONNECTED DEVICES The IoT landscape continues to expand, connecting various devices and systems ranging from smart home appliances to industrial machinery. IoT enables data collection and analysis, efficiency improvements, predictive maintenance and better customer experiences.

The proliferation of connected devices enhances digital readiness across sectors and industries.

CYBERSECURITY ENHANCEMENTS With the increasing frequency and sophistication of cyber threats, many organisations are investing in robust cybersecurity measures.

This includes adopting advanced encryption techniques, implementing multi-factor authentication, and leveraging AI driven security solutions to detect and respond to cyber threats in real time.

Enhancing cybersecurity is essential for digital readiness as it protects sensitive data and digital assets.

AR AND VR ADOPTION Augmented reality and virtual reality technologies are transforming various sectors and industries – including gaming, healthcare, education and manufacturing.

Businesses are leveraging AR and VR for immersive training, virtual product demonstrations, remote collaboration and enhanced customer experiences. These technologies are driving digital readiness by enabling interactive and engaging digital interactions.

MANAGING CHANGE A critical aspect of digital readiness is change management. Sri Lanka’s business landscape is diverse with organisations ranging from traditional family owned businesses to multinational corporations.

Business leaders must adopt change management strategies tailored to specific cultural and organisational contexts. This involves proactive communication, stakeholder engagement and addressing any resistance to change.

By managing change effectively, businesses can navigate the complexities of digital transformation and seize new opportunities.

CONCLUSIONS Sri Lanka’s corporate Digital Readiness Index (DRI) serves as a road map for organisations, sectors and industries, guiding them through the complexities of the digital landscape.

Embracing digital readiness is not a choice but a necessity for organisations aspiring to thrive in the next decade. They can navigate the digital transformation journey by investing in technology, upskilling the workforce, ensuring data security and creating supportive regulatory frameworks.

As sectors and industries become more digitally ready, they secure their future; and it follows that they contribute to the nation’s economic and social progress, creating a win-win scenario for all stakeholders.

Digital readiness is no longer an option but a fundamental requirement for businesses seeking sustained success in the digital age. Companies can navigate the challenges by embracing digital technologies, fostering innovation and enhancing customer experiences.

The writers are attached to the Department of Marketing Management of the University of Kelaniya.