Can the public sector spearhead digital transformation?

SUITS THE C-SUITE By Wilson P. Tan

Business World (12/03/2018 – p.S1/5)

(Second of two parts)

In the first part of this article, we recalled that both private and public sectors must take the business of digital transformation an utmost priority if the country is to achieve both local and regional economic success. In particular for the public sector, government must spearhead efforts to create a digitally-inclusive, technologically-capable nation. Otherwise, digital innovations will fall short of mainstream adoption. This idea was touched on during the ASEAN Outlook Conference 2018.

We also discussed the inconsistencies of digital infrastructure and implementation among member-countries in ASEAN — the Philippines included — and how national governments must proactively address the gaps in digital transformation if the region is to reach lasting economic prosperity. First, the Philippines’ public sector must see the merit in reviewing and harmonizing existing regulations and policies concerning digital infrastructures, which have grown outdated and outpaced by advancements in the digital field. Second, there are concerns about the actual building and scaling of digital infrastructure, which may deter economic growth.

The third consideration not to be overlooked is the relationship between technological advancements and the human element. Government officials should not forget to assist the work force with up-to-date skills that can navigate a digitally-ready economy. In this regard, there is room for improvement, specially in the Philippines. EY’s report, Driving digital into the heart of Asia’s financial services industry, surveyed over 140 senior executives in the financial services sector across Southeast Asia, and it shows that only 20% of financial institutions in the Philippines have fully embraced digital adoption. This is in comparison to Malaysia’s 36%, and Vietnam’s 33%. The most pertinent challenge pointed out by the study comes from legacy infrastructure — or the resistance against types of digital disruptions and interoperable technologies — which is felt the strongest in the Philippines at 50% among respondents.

Given that resistance to digital transformation involves user behavior as well, the public sector must also take this reluctance into account when implementing policies that directly affect the human work force. One such manner that may address the resistance is by championing diligent and insightful digital literacy, which can bridge the misunderstanding surrounding technological advancements in the workplace.

Case in point, a 2014 analysis from the Oxford Business Group wrote of digital literacy as a key factor for economic development in the Philippines as supported by the country’s widespread IT-BPO industry. Heavily backed by the Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO), respective LGUs across the country handled the physical facilities and computer centers for digital training, while the government office provided the content, curriculum, and institutional support.

More recently this year, even the Department of Education (DepEd) displayed a proactive initiative to empower the next generation with the necessary skills for digital transformation. Partnering with a telecommunications company, their aim is to implement a digital literacy program across 3,800 public schools in the region. It recognizes that more public-school teachers and students are gaining access to mobile devices and internet, requiring them to know about responsible digital citizenship, and how they can use these platforms to help find jobs later in life.

Finally, let us consider that the public sector’s heaviest task is to lead digital efforts with a strategic vision. Digital brings about a wave of changes to the way people do business. For truly lasting and impactful change, government must present an overview of purpose, where technological advancements are utilized in the right direction. This cultural shift must go together with agile leadership which understands where digital innovations are best put into practice.

The Philippines has crossed the stage of awareness, evident as far back as 2011 when the previous administration created the Philippine Digital Strategy (PDS) under the DOST-ICTO. Built upon the foundation of its predecessor, the Philippine Strategic Roadmap for Information and Communication Technology (ICT), the PDS encouraged the nation to become a globally competitive and prosperous society where every citizen from all walks of life could have affordable, reliable, and secure information access. It also emphasized the importance of a thriving knowledge economy between the public and private sectors, which would lead to a strategic thrust towards investing in people, not just in major cities but in the island communities, who could also benefit from proper ICT training. Seven years later, the same spirit of strategic digital integration is still present in the public sector. During the two-day APEC Economic Leaders’ Meeting in Port Moresby on November 17-18 President Rodrigo R. Duterte said micro, small, and medium enterprises (MSMEs) should have more reliable digital infrastructure to lean on, not only for the betterment of their business methods, but also to push the Philippine economy towards a digitalized business landscape. Meanwhile at the press briefing held on the sidelines of the APEC Leaders’ Meeting, Trade and Industry Secretary Ramon M. Lopez added that digitizing business is the inevitable path to progress, and both MSMEs and the incoming workforce of young adults should be prepared for it with human resource development and training.

At the very least, the public sector is starting to get a good grasp of the right direction for developing digital infrastructure for both businesses and everyday users while at the same time protecting them, beginning with a critical starting point – legislation.

The passing of the Electronic Commerce Act of 2000 was a milestone victory for digital legitimacy. There is also the Data Privacy Act of 2012, another important step in protecting the basic legal rights of every consumer online. In the same year, the Cybercrime Prevention Act of 2012 came to life as well, addressing multiple legal concerns of harmful online interactions such as cybersex, child pornography, theft, and illegal access to data and libel.

Lawmakers are in constant dialogue with the private sector, studying new ways to deal with the digital disruption of our time, in a way that co-exists with the legacy infrastructure that is unique to the Philippine’s economic landscape. Fintech has reached the front page, from paying for ride-sharing services remotely, to getting loans straight from your smartphone. The level of mobile penetration in the country increases rapidly every year.

Certainly, there is no one-size-fits-all solution to the digital evolution of a nation. But, as with all widespread socioeconomic transitions and industrial revolutions, the people rely on government and the public sector to set the tone for development as well as lead the way in navigating an increasingly complex digital world. It is definitely heartening that despite the country’s uneven level of digital and technological development, our people continually demonstrate the potential, enthusiasm and aptitude to thrive in a digital economy.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Wilson P. Tan is the Vice Chairman and Deputy Managing Partner of SGV & Co.