Thai digital transformation at an inflection point

Thai digital transformation at an inflection point

One year ago, the Thailand Management Association (TMA) and the Boston Consulting Group (BCG) conducted their first assessment of the state of digital transformation in Thailand against a global benchmark based on the Digital Acceleration Index (DAI) developed by BCG.

The DAI tracks the digital journey of nearly 10,000 businesses from around the world across 36 dimensions, categorising companies from Digital Starters, who take first steps with isolated digital use cases, to Digital Champions who derive significant new value from fundamentally transforming existing business models through digital means and ways of working.

Achieving status as a Digital Champion pays off -- our research shows that champions outperform peers across major metrics, with 2.1 times the revenue growth, 2.2 times the enterprise value increase and 1.8 times the digital return on investment, among other benefits.

Champions also demonstrated far greater resilience throughout the Covid-19 crisis with smaller declines and faster rebounds, demonstrating average market capitalisation growth eight percentage points higher than their peers since the beginning of the crisis.

Our study in 2020 showed that Thailand's businesses on average are at relatively early stages on the digital maturity curve, well behind regional and global peers. Yet the country appears to be approaching an inflection point, with Thai companies in a position to accelerate their digital advancements significantly, if their leaders make a commitment to a step change in digital investments.

Notable exceptions such as last year's Digital Excellence Awards winners have shown the way, proving that there is no reason why Thai companies should lag their international peers.


This year's study revealed that the hoped-for acceleration of Thailand's digital transformations has yet to take place. In fact, Thai companies have fallen further behind, with the exception of the financial sector that continues to perform on par with regional and global peers.

This is not to say that Thai companies have not stepped up their efforts over the last year. On the contrary, roughly a third (36%) of surveyed companies now dedicate at least 10% of their employees full-time to digital roles, a full 13 percentage points up from last year, and 57% plan to digitally upskill at least 10% of full-time employees over the next year, up nine points from last year.

Thailand's international peers, however, have further accelerated their own efforts, widening the gap. Insufficient levels of digital investment appear most critical, with only 33% of Thai companies spending at least 10% of operating expenditure on digital, virtually no change from the previous year. The global average, by comparison increased from an already high 75% to 84% over the same period.

Our data indicates that Thailand risks falling behind to an equal degree for other crucial digital accelerators. While 40% of Thai companies invest in application program interfaces to enable their businesses to form parts of digital ecosystems (up from 37% in 2020), international peers lifted that number from 62% to a whopping 83%.

We observe the same trend for data-centricity. While 40% of Thai companies have at least 10% of their data mapped to a unified data model (unchanged vs 2020), global peers lifted the average from 62% to 86%.

This year's winners of the TMA Thailand Digital Excellence Awards are inspiring examples of the impact that Thai businesses can generate from decisively investing in digital, often with significant impact to show within the first year.

Frasers Property Thailand was awarded the Digital Champion for Rapid Business Digitisation, Kasikornbank for Cultural Transformation, and L'Oréal Thailand for Go To Market Reimagination. These worthy winners show that internationally competitive digital innovation made in Thailand not only is perfectly possible, but already a reality.

Our study shows that the majority of Thai companies remain enthusiastic about digital transformation. Yet while a vast majority report having a digital strategy in place to turn this enthusiasm into actual results, our data shows that success will require a true step change in terms of digital investment.

Stepping up investments alone, however, will not be enough. Thai companies will need to make sure their digital transformation programmes are set up for success. A BCG study of close to a thousand transformation programmes shows that only 30% result in the desired levels of sustainable impact, another 44% create value but fail to achieve their targets in full, and 26% deliver less than 50% of the aspired value.


Our study identified six universal factors related to any transformation programme -- independent of industry, geography or scope -- that, if implemented in its entirety, lift the odds of success to 80%. Neglecting just one factor lowers the odds of success to 60%, two factors to 42%, three to 19%. The six universal success factors are:

1. An integrated strategy with clear transformation goals. It describes the why, the what and the how, which are tied to specific, quantified business outcomes.

2. Leadership commitment from CEO through middle management. The company has high leadership engagement and alignment, including often overlooked middle-management ownership and accountability.

3. Deploying high-calibre talent. Management identifies and frees up the most capable resources to drive the transformation programme.

4. Agile governance and mindset. Leaders address roadblocks quickly, adapt to changing contexts, and embed a cross-functional, mission-oriented, "fail-fast-learn" culture. They deal with individual challenges without losing sight of the broader goals.

5. Effective monitoring of progress toward defined outcomes. The company establishes clear metrics and targets for processes and outcomes, with sufficient data availability and quality.

6. Business-led modular technology and data platforms. The company puts in place a fit-for-purpose, modern technology architecture driven by business needs to enable secure, scalable performance, rapid change deployment, and seamless ecosystem integration.

Besides recommending a significant step up in digital investments, we encourage Thai businesses to assess whether their digital transformation drives are set up for success by reviewing whether all six universal success factors are in place.

If there are gaps, these should be corrected, which will flip the odds of digital transformation success. We remain confident that we will see Thai companies catch up with their international peers at next year's awards.

Benjamin Fingerle is a managing director and partner, and Boriwat Pinpradab is a managing director and partner with Boston Consulting Group.

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