Accelerating Digital Transformation
April 11th, 2023
The complexity and interconnectedness across sectors and between groups requires that all stakeholders – public sector, business, academia and civil society – embrace a collective responsibility to chart the way forward.
It is almost impossible to ignore the indelible mark technology is making on the human civilisation. It is evident in the dramatic changes human behaviour triggered by mobile devices and social media, to the almost magical role the internet is playing in removing distance and creating global opportunities for local entrepreneurs and businesses.
The technology advances in areas spanning artificial intelligence, machine learning, quantum computing, 5G telecommunications, nanotechnology, biotechnology, and even interplanetary communications, are simply astounding. Though many of these technologies are in their infancy, they have already hit an inflection point as it relates to shaping the trajectory of commerce, politics and society itself.
The unprecedented opportunities ushered in by digital technology, have been attended by heightened risks, mounting frustrations, and greater challenges to privacy, security, and equality. One of the most significant challenges facing business and government leaders is how to accurately decode the multilayered interplay between technology, business, Government, and society.
A collective vision for transformation
In this context, there exists significant uncertainty surrounding our capacity to not only leverage existing technologies, but to develop our own digital innovations and ecosystems. But one thing is certain: the complexity and interconnectedness across sectors and between groups requires that all stakeholders – public sector, business, academia and civil society – embrace a collective responsibility to chart the way forward.
The changes to how people now work, interact, express, and entertain themselves, are unlikely to be reversed. And the pace of digital change shows no sign of slowing. Organisations must now address the expectations of their employees and customers, or risk falling behind their competitors. Similarly, governments must meet the shifting demands of citizens, and corporations or risk falling out of power.
Yet, it is impossible to know just how the transformation driven by this current technological revolution will fully unfold.
Spotlight on local capacity
One of the more profound impacts of the pandemic is how emphatically it shattered the illusion that a local digital economy can be effectively built on a foundation of external technology and expertise. The surge in demand for critical technical skills to support rapid digitisation exposed the limits of local capacity to meet the need. It also underscored the urgency of the requirement for:
- education systems to be more deliberately calibrated to offer and emphasise the digital skills necessary for the digital era;
- businesses, large and small, to more strategic in supporting upskilling, mentoring and internships to develop greater in-house capacity; and
- tax and other incentives need to support this push to build greater indigenous capacity.
The equation is simple. For digital transformation efforts to be successful, mission-critical technology investments require complementary investments in local capacity, local talent and domestic internet infrastructure and facilitating public policy. Such investments are worthwhile, with proven returns.
Locally developed technology-enabled solutions can be developed and deployed to address long-standing issues, from improving the administration of justice and removing opportunities for corruption, to protecting the environment and improving access to education, healthcare and social services. Locally facilitated implementations help build much-needed local capacity, and confidence. Investments in local solutions also help keep the spoils of digital transformation within the local economy and help increase the perception of the value of local talent.
Financing the future
Development Finance Institutions (DFIs) can support the scaling up of technology companies by intervening more upstream through the development of the enabling environment for increased investment in digital infrastructure, technology companies, and digital skills.
Last July, for example, the Development Bank of Latin America, CAF, announced the issuance of a US$120 million loan to the Trinidad and Tobago Government to support the implementation of its digital transformation agenda. The funds will be used to accelerate the implementation of State digitalisation initiatives and the broader adoption of technology by the private sector and the general population.
The loan is also expected to help mitigate the impacts of the pandemic and close the country’s digital gaps. Specifically, the fund will be used to promote actions in the following areas:
- Digital Government: Creation of an institutional and public policy framework for the digitisation of the State, with initiatives such as the development of a cybersecurity strategy, updating of service platforms for citizens, interoperability between ministries, a digital identification project, investment in a data centre, development of a government cloud and an ecosystem for online tax payments, among others.
- Digital Economy: Support the strategic objective of increasing the contribution of the ICT sector to GDP and consider digital solutions for the development of productive sectors, such as the development of blockchain technologies for the agricultural sector and digital payment systems, use of ICT for climate resilience, the creation of a software developers’ hub, among others.
- Digital Society: Initiatives to massify access to ICTs, by fostering the digital inclusion of the population with less access. It seeks to support digital literacy and capacity building in excluded communities, as well as to invest in infrastructure for isolated areas and the provision of free wireless internet connectivity.
For a relatively small emerging economy like Trinidad and Tobago’s, the potential to deliver the long sought-after promise of economic diversification through knowledge-based services is real and attainable.
Digital growth ahead
A recent study conducted in the Caribbean region by International Data Corporation (IDC), a leading provider of global IT research, noted that in the region, business IT investment (excluding devices) reached a total of US$709 million in 2021 and is expected to grow nine per cent in 2022. This growth will accelerate hand-in-hand with the digital transformation process of organisations.
Investment in IT is expected to have an average annual growth of 12.5% between 2021 and 2025. The growth of infrastructure as a service (IaaS) stands out. In 2021, this represented 31% of IT investment. Between 2021 and 2025, that same investment in the Caribbean will grow at a compound annual growth rate of 45%.
Another study, published by the Inter-American Development Bank (IDB), noted that the growth in the FinTech sector in Latin America and the Caribbean was fueled by increasing demand for financial services not provided by the traditional financial sector. The study also noted that digital loans (19%) and crowdfunding (5.5%) sectors are registering significant growth in the region. These are followed by business technology platforms for financial institutions (15%) and business finance management (11%), among others.
Further, the number of Fintech platforms offering digital banking services, mainly through mobile apps, rose from 28 in 2018 to 60 last year and 36% of Fintech startups polled offer solutions involving segments of the population that are totally or partially excluded from the formal financial system.
People leading the way
Yet, the question remains as to how much of this growth will directly benefit local markets and how much of the economic value will be exported to the benefit of some other jurisdiction.
It often seems that the vision of a modern, technology-enabled society and economy – anchored in local services and powered by local talent – remains frustratingly out of our grasp. In this regard, the mark technology is making is as much an adornment as it is a scar to our development.
Thankfully, a new perspective on the role, significance, and value of “local innovation” is emerging as leadership’s attention shifts to domestic production and social stability priorities. At the same time, more voices are joining the chorus demanding that participation in the global digital marketplace be predicated on deliberate and strategic investment in the local digital economy.
We have certainly come a very long way on the road to digital transformation. However, on the journey towards a full, inclusive, digital economy and society, we still have a long way to go. The opportunity now is to transform short-term pandemic-triggered gains into long-term strategies for embracing new forms of business engagement, interaction, and innovation.
Seizing this opportunity is not a technology issue, it is a people issue. The key to staying the course, therefore, is to consider digital transformation as less of a digital challenge and more as a transformation imperative. This is a leadership responsibility, and those charged with leading digital transformation efforts must not only implement the right technology, but also inspire people to embrace the change that comes with transformation.