Steering Steadily in the Post-Pandemic World An interview with Chartsiri Sophonpanich, President of Bangkok Bank Social Media Enabling touchpoints beyond advertising How Boards Can Up Their digital game VOL.10 S$16.00
CONTENTS 01 CONTENTS 04 FROM THE EDITOR AT THE HELM 06 STEERING STEADILY IN THE POST-PANDEMIC WORLD an interview with Chartsiri Sophonpanich, President of Bangkok Bank Tan Chin Tiong VANTAGE POINT 10 CREATING THE CAPACITY FOR DIGITAL GOVERNMENT it’s more than tech Cheow Hoe Chan and Steven M. Miller 06 10 Given the uncertain times, Thai commercial banks are emphasising liquidity management and appropriately managing costs. - Chartsiri Sophonpanich, President of Bangkok Bank Vol.10 / Asian Management Insights
EXECUTIVE BRIEF 20 SOCIAL MEDIA enabling touchpoints beyond advertising Kapil Tuli and Sheetal Mittal Bhardwaj 26 HOW BOARDS CAN UP their digital game Terence Quek CASE IN POINT 32 ROBOWEALTH boosting financial inclusion in Thailand Chiraphol New Chiyachantana, David K. Ding, Pattarawan Mai Prasarnphanich, and Chan Chi Wei INDUSTRY WATCH 40 PARTICIPATORY DIGITAL FUTURES digital transformation made good for all Mark Findlay and Sharanya Shanmugam 40 58 46 HARNESSING THE POWER of video ads Linyi Li 52 REAL ESTATE ASSETS to build or not to build? Koh Chaik Ming THE ENTREPRENEUR’S CORNER 58 DON’T TRY TO BE A SUPERMAN an entrepreneurial journey in Indonesia’s solar power generation space N. Edwin Widjonarko A WALK THROUGH ASIA 64 HELPING ASIA’S ELDERLY to become digital citizens Wee-Kiat Lim PARTING SHOT 66 DON’T FEAR THE REAPER digital transformation in Singapore’s MICE industry Candy Mak and Poon King Wang 26 Digital transformation can fundamentally upend an organisation’s business model, and compel leaders who may have cut their teeth before the Internet revolution to get up to speed on digital skill sets and capabilities. - Havovi Joshi, Editor-in-Chief, Asian Management Insights 02
EDITOR-IN-CHIEF Havovi Joshi EDITOR Lim Wee Kiat DEPUTY EDITOR Alvin Lee CONTRIBUTING EDITOR Thomas Lim PRODUCTION EDITOR Sheila Wan EDITORIAL BOARD Indranil Bose Nykaa Chair Professor of Consumer Technology at Indian Institute of Management, Ahmedabad and Distinguished Professor at NEOMA Business School, France Goutam Challagalla Professor of Marketing and Strategy at IMD, Switzerland Roy Chua Associate Professor of Organisational Behaviour & Human Resources at Singapore Management University Robert J. Kauffman Professor Emeritus of Information Systems at Singapore Management University Michael Netzley Affiliated Faculty at IMD Business School Rajendra Srivastava Novartis Professor of Marketing Strategy and Innovation at the Indian School of Business Tan Chin Tiong Professor Emeritus of Marketing at Singapore Management University Philip Zerrillo Professor of Marketing at Thammasat University, Thailand CREATIVE DESIGN C2 Design Studio Pte Ltd Asian Management Insights (ISSN 2315-4284) is published thrice a year at a recommended retail price of S$16 by the Centre for Management Practice, Singapore Management University, 81 Victoria Street, Singapore 188065. We welcome comments and letters to the editor, which should be sent with the writer’s name, address, and phone number via email to ami@smu.edu.sg. Letters may be edited for length and clarity, and may be published in any medium and at the Editor’s discretion. All letters become the property of Asian Management Insights and will not be returned. Submissions: We encourage submissions. Proposals for articles should be addressed to ami@smu.edu.sg. Unsolicited manuscripts will be returned only if accompanied by a self-addressed stamped envelope. Subscriptions: Please email enquiry to ami@smu.edu.sg For further information, to advertise or request reprints, please contact: ami@smu.edu.sg Copyright © 2023 Singapore Management University. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission. The views expressed in articles are those of the authors and not necessarily those of Asian Management Insights, the Centre for Management Practice, or Singapore Management University. Authors may have consulting or other business relationships with the companies they discuss. All information in this publication is verified to the best of the publisher’s ability. Singapore Management University does not accept responsibility for any loss arising from reliance on it. 66 Vol.10 / Asian Management Insights
FROM THE EDITOR Digitalisation touches everything “There is no alternative to digital transformation…[and] those that don’t adapt will fail.” Compounded by the COVID-19 pandemic, the ongoing digitalisation wave has wrought changes that have unequivocally confirmed this assessment by Jeff Bezos, founder of the e-commerce giant Amazon. Digital transformation is not only difficult but also inherently disruptive. It can fundamentally upend an organisation’s business model, and compel leaders who may have cut their teeth before the Internet revolution to get up to speed on digital skill sets and capabilities. Boards must therefore understand the underlying macro changes to set the right strategic goals, while senior executives need to be prepared to lead their organisations in embracing novel ways of working. In this issue, Chartsiri Sophonpanich, President of Bangkok Bank, tells Tan Chin Tiong how Thailand’s biggest bank by assets is working with fintech start-ups to gain a competitive advantage while emphasising liquidity management in an uncertain economic environment. Khun Chartsiri is leading forays into areas such as enterprise blockchain for trade finance and low-cost cross-border QR code payments as the bank regroups in the immediate post-COVID-19 era. Beyond businesses, governments play a significant role in setting the stage for digital transformation. Cheow Hoe Chan and Steven M. Miller detail how Singapore’s Government Technology Agency (GovTech) has built a full suite of online public services that not only serves its citizens but also deepens the government’s digitalisation capabilities. Key lessons include engineering a ‘single source of truth’ in an organisation’s data architecture and policy, and thinking big, starting small, and acting fast. By highlighting how two companies on opposite ends of the spectrum have successfully conducted digital transformation, Terence Quek argues that boards can help their top management teams direct the the digitalisation path of their firms by asking the right questions and identifying the risks of disruptive change. Board members also need to be clear about the roles they play in the process, whether it is to advise, guide, or even warn the senior executives under their watch. However, a top-down approach to digital transformation may cause some segments of society to be overlooked. Mark Findlay and Sharanya Shanmugam advocate a co-creation process that seeks to address the power imbalance between decisionmakers and citizens to deliver digital transformation that benefits diverse recipient communities. Wee-Kiat Lim also argues for a ‘whole-of-society’ approach to help Asia’s elderly citizens navigate the increasingly digital-only landscape, emphasising it is not only the government’s job to make digital technology less intimidating to seniors; non-profits and private enterprises, for example, can take the lead in identifying vulnerable population segments and fund-raising respectively. Social media accounts for a significant share of digital marketing activities, but platforms such as TikTok and the like carry out more than just one-way advertising; the richness of digital content and two-way communication channels offer a wonderful opportunity to build and maintain customer relationships. Kapil Tuli and Sheetal Mittal Bhardwaj articulate how to embrace social media as an effective customer service platform and a strategic communication channel, while Linyi Li argues that video advertising has longer-lasting effects on a consumer’s consciousness, compared to display and search ads. Digital transformation was forced upon Singapore’s Meetings, Incentives, Conferences and Exhibitions (MICE) industry when safe distancing measures prompted by COVID-19-related concerns rendered physical conventions impossible. Candy Mak and Poon King Wang recount how the industry adapted and overcame the challenge, transforming its local, physical model into a global, hybrid version in an object lesson of capitalising on a crisis. Concerns revolving around the COVID-19 pandemic also sparked the widespread adoption of online grocery shopping and home deliveries. Should logistics companies and supermarket chains build their own cold chain warehouses to cope with the ever-increasing volume of goods they handle? Koh Chaik Ming takes a close look at the cold chain sector in China and proposes a hybrid model that combines warehouse rental and ownership. Over in Indonesia, N. Edwin Widjonarko is tapping into the country’s steadily growing solar energy market. Xurya, the renewable energy start-up he co-founded, is already one of the biggest with rooftop systems on top of some 60 commercial buildings, and he has some words of wisdom for budding entrepreneurs: don’t be a superman; build a team, and look for help where you can. We finish where we started: in Thailand. This issue’s Case in Point, authored by Chiraphol New Chiyachantana, David K. Ding, Pattarawan Mai Prasarnphanich, and Chan Chi Wei, looks at how Thai fintech firm Robowealth leveraged Artificial Intelligence (AI) to provide investment advice to Thais, including those in the lower rungs of society. Finally, we would like to take this opportunity to acknowledge the tremendous contributions of our former editor, the late Grace Segran, who was part of the AMI founding team. Even after relocating to the US a few years back, she continued to work closely with us right up till two weeks before her passing in October 2022. We will always fondly remember Grace as our wonderful ex-colleague, and an outstanding writer and editor. DR HAVOVI JOSHI Editor-in-Chief Asian Management Insights havovijoshi@smu.edu.sg 04
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AT THE HELM Steering Steadily in the PostPandemic World Chartsiri Sophonpanich, President of Bangkok Bank, speaks with Tan Chin Tiong about the future of banking in Thailand and the region as the world slowly emerges from the COVID-19 pandemic. How has the COVID-19 crisis changed your views on long-term investment in Thailand and the rest of the ASEAN (Association of Southeast Asian Nations) region? The situation has only served to reaffirm my confidence in the bright, long-term prospects for Thailand and the ASEAN region. Even before the pandemic, the US-China trade dispute spurred an increase in investment by Chinese companies across ASEAN member states as they began relocating to this region to circumvent US sanctions. As a result, Thailand, Vietnam, and several 06
other countries across this region benefited. Moreover, since the onset of the pandemic, more international companies have refocused their supply chains toward ASEAN member states to reduce and diversify their operational risks. As a regional production base and market, the ASEAN region has a lot to offer. It is on track to become the world’s fourth largest economy by 2030. At the same time, with about 700 million people in 10 nations, ASEAN is a significant market. Not only that, it also has a significant labour force with 61 percent of the population under 35 years old. The ASEAN economy is expected to lead the world in terms of export growth from now until 2026, with average export volume growth of 5.6 percent for each of the five years. One of the factors that will support growth is increasing connectivity across the region. Under the Belt and Road Initiative (BRI), China will be connected to mainland Southeast Asia through the China-Indochina Peninsula Economic Corridor. Thailand aims to become the logistics hub for this part of the BRI and has many infrastructural development projects underway, including ports, rail and road, and energy development. Several of these investments are based in, or linked to, the Eastern Economic Corridor, Thailand’s flagship project that aims to develop the country’s eastern industrial seaboard into a hub of high-value industries, innovation and logistics, as well as a regional gateway for trade and investment. Last year, ASEAN recorded a robust rebound in Foreign Direct Investment (FDI) inflows, which surged by 42 percent to US$174 billion. This increase to near pre-pandemic levels was a reversal of the decline in 2020 caused by the COVID-19 outbreak and reflects the region’s attractiveness to global investors. How are Bangkok Bank and the Thai banking sector in general coping with the current uncertain and volatile political and economic climate? Overall, we are coping well. We are growing our assets cautiously, both in terms of size and quality, while retaining strong capital adequacy and liquidity. We are prudently focusing on quality growth, closely monitoring the financial position and business of our customers, and setting aside sufficient levels of reserves to manage loan quality through challenging economic times. At the same time, we are closely monitoring global economic volatility, the prolonged geopolitical conflict between Russia and Ukraine, energy and commodities markets, as well as the local political and economic situation. Given the uncertain times, Thai commercial banks are emphasising liquidity management and appropriately managing costs. They maintain high levels of capital reserves and, according to stress tests by the Bank of Thailand, the sector remains resilient and able to resist future risks and uncertainties. This will allow the commercial banking system to support credit demand and manage economic volatility going forward. One prominent change that has persisted since the pandemic is the rapid pace and degree of digitalisation in the business world. How has Bangkok Bank leveraged and deepened digitalisation since then? We have been accelerating our digital transformation. We broke new ground in areas such as enterprise blockchain for trade finance, a new digital platform to digitise the procurement to payment process from end to end, and crossborder cash management services. We also introduced a Procure-to-Pay service using blockchain technology, which provides financing to the suppliers of one of the largest car financial services companies in Thailand. This not only simplifies but also speeds up the documentation process, ensuring that car dealers have liquidity when they need it. For individual customers, we have been focusing on the Bangkok Bank Mobile Banking app as part of our mobile-first strategy. Now, 80 to 85 percent of transactions can be carried out online, including those for e-Savings accounts, foreign currency deposit (FCD) accounts, mutual funds, government bond accounts, and trading accounts, using an e-Know-Your- Customer (KYC) process and facial recognition technology. This year alone, we added 50 new features to our app, which now has a total of 120 features. The highlights include a virtual debit card that allows customers to own a physical and/or digital card if they choose to do so, and features that provide insurance and online account opening for deposits, including FCD accounts. We now offer a full suite of wealth products, from mutual funds and government bonds to debentures, including perpetual debentures, via our app. With most people opting for digital-first in their banking activities, we have also become the first Thai bank to introduce an embedded insurance proposition within an app which uses data analytics to identify target customers. We are also the first bank in the country to offer products from our insurance partners (AIA, BKI [Bangkok Insurance], and BLA [Bangkok Life Assurance]) via the app, enabling people to buy insurance products with ease. Thailand is one of the leading countries in Southeast Asia when it comes to digital payments, and we have been supporting both business and individual customers by providing Vol.10 / Asian Management Insights
them with secure online payment systems that are convenient and facilitate e-commerce. These include offering our customers many options, such as the BeWallet app that allows customers to link their deposit account to their debit or credit card, after which they can scan a QR code to pay for goods and services while travelling abroad. We have also been working with Thailand’s central bank, in collaboration with other central banks, to pioneer realtime, low-cost cross-border payments using new technology platforms. An example is Thailand’s PromptPay system that links Thailand’s mobile banking services with those of partner banks in Singapore. Another innovation is a facility to make real-time cross-border QR code payments. This is now available in five countries—Vietnam, Indonesia, Singapore, Laos, and Cambodia. It can be used by our mobile banking customers, and customers from those five countries can do the same in Thailand. We are also harnessing technologies to make our work processes more efficient and upgrade our core banking system, platforms and networks. And we are applying Artificial Intelligence (AI) and big data analytics to deliver the right products to a wider range of customers, and ensure customers purchase products that truly meet their needs. Bangkok Bank started InnoHub, an initiative that not only tries to develop Thailand’s fintech start-ups, but also introduces a ‘start-up mentality’ within the bank. What has the bank learned from this experience thus far? InnoHub offers hands-on experience for our people to learn from growth-stage tech start-ups through real project execution. By working together with them, we can learn more about their approach to digital product development, agile ways of working, and experimental mindset. I believe that with limited resources and little branding, successful start-ups are often born out of a single innovative solution or service that solves specific needs. Incumbent banks, on the other hand, usually aim to address mass market requirements with a one-size-fits-all product. So through collaboration, the bank can enjoy the best of both worlds by using start-up solutions to gain a competitive advantage and tap its existing network for a quicker time-to-market. Moreover, we can gain customer insights from the way start-ups target segment their markets, for example, by using needs-based psychographics or AI to analyse a customer’s behaviour and then use the insights to develop an end-to-end customer journey for each segment. Through collaboration with tech start-ups, we can also encourage a paradigm shift among our employees, upskilling them through real project experience and training, while continually driving the new agile way of working and design thinking approach all in one go. Where do you see the Thai fintech industry going in the next five years? In particular, what are your views on the promise and peril of harnessing blockchain technology for banks? Blockchain and Distributed Ledger Technology (DLT) has been developing swiftly in recent years. Although the hype about cryptocurrency has declined during the crypto winter, the blockchain industry’s development continues. In fact, blockchain has been adopted by financial institutions for use cases such as trade finance and international money transfer due to its ability to develop digital trust. The Bank of Thailand also encourages banks to adopt blockchain to improve their products, services, and business processes by leading infrastructure projects such as Inthanon, Inthanon-Lionrock, mBridge, and digital supply chain projects. Cryptocurrencies and non-fungible tokens (NFTs), on the other hand, are considered digital assets, which have inherent risks. As a result, the Bank of Thailand does not allow banks to directly conduct business related to these assets or invest in them. Bangkok Bank has been experimenting with blockchain from the start to understand its potential and limitations. In our opinion, enterprise-grade, stable-value, and consortium-based blockchain solutions are more likely to be adopted by banks. With blockchain-based solutions, banks can enhance key factors such as traceability, efficiency, and speed of transactions which are becoming more and more important to our customers. However, blockchain is not a silver bullet. Some use cases can benefit from blockchain while others are better supported using other technologies. Introducing blockchain without careful consideration may instead bring about unnecessary costs and complexity to the business. Potential use cases of blockchain and DLT include trade finance, supply chain, cross-border transfers, and digital identity. For trade finance, blockchain projects such as Contour and Marco Polo allow the bank to collaborate better with all stakeholders such as trade counterparts, logistics services, and customs by improving traceability, time, and costs. In the past decade, technology has advanced at an unprecedented speed. However, it also comes with risks from cybersecurity, and governance and regulatory issues. Banks as service providers need to be continuously proactive 08
Chartsiri Sophonpanich is the President of Bangkok Bank Tan Chin Tiong is Professor Emeritus of Marketing at Singapore Management University about countermeasure solutions, technology governance, and emerging regulations in order to meet customers’ expectations and support the Thai and ASEAN economies for years to come. What are some specific domains that you are keeping a close watch on? How are you preparing Bangkok Bank to capitalise on emerging opportunities? One of our major strengths is in the energy industry. It is a complex business where we have been for many years, so our people have a good understanding of the sector. We arrange and fund many major energy projects, not only in ASEAN but beyond—our clients have investments in China, Japan, Australia, and the US. We help them to invest in greenfield developments and acquisitions, and also to develop whole new industries and supply chains. Now with the keen and growing interest in green and sustainable development, we are funding major investments in renewable energy, smart grids, mass transit, and evolving industries such as electric vehicles. Bangkok Bank plays a significant role in supporting fundraising efforts to achieve the sustainability goals of leading private companies in Thailand, both as a lender and as an underwriter for environmental, sustainability and governance (ESG) debentures. We are the leader in the underwriting of green and sustainable bonds with around a 70-percent share of the market in Thailand. We’re also financing many renewable energy projects internationally. We have been supporting development projects in Vietnam, Indonesia, Laos, China, and elsewhere. The proportion of renewable energy loans compared to our total energy loans is currently 27 percent, and we expect this to grow. Despite the many challenges, Bangkok Bank has successfully expanded to become the sixth largest bank in ASEAN and the largest bank in Thailand by assets. What would you say are the key factors for this success? We have been Thailand’s pioneering international bank since 1954 when we became the first Southeast Asian bank to open a foreign branch. We opened our first foreign branch in Hong Kong just 10 years after our founding in 1944. Since then, we have continued to expand and strengthen our international banking business to support our customers as they grow their businesses. Today, we have the largest network of any Thai bank with a strategic focus on the ASEAN region, operating 28 branches in 13 economies including Cambodia, China, Hong Kong, Japan, Laos, Malaysia, Myanmar, the Philippines, Singapore, Taiwan, the UK, the US, and Vietnam. In addition, we have around 270 branches through PermataBank, our subsidiary in Indonesia. We also have wholly-owned subsidiaries in China and Malaysia. Our branch network is the key to our success. It provides us with a strong competitive edge. Our overseas branches work very closely with one another, as well as with our head office in Thailand. This gives us the ability to serve our clients across the network; we support them in their local operations and when they expand across the region. By leveraging these strengths, we are able to retain our clients for the long term. Our customers really appreciate the full support we can give them, such as being able to apply for local loans and use cash management services in the countries where they operate. We understand our clients’ business and grow alongside them. We are really committed to our purpose to be a trusted partner and reliable close friend, ‘puan koo kit mit koo baan’ in Thai, which means we stay close to our clients to understand them better, build trust, and help them with their business and finances in good times and in bad. What has influenced you the most in your leadership style? I come from a banking family–my grandfather founded the bank, and my father was president and chairman of the bank, so I have lived and breathed the business from a very early age. Within the bank and also in our industry, I have had many mentors who have impressed on me the importance of integrity and building trust, and being customer-focused. I have also had the benefit of my education–I studied chemical engineering at Worcester Polytechnic Institute and the Massachusetts Institute of Technology (MIT), as well as management at MIT. This has helped me develop a systematic approach to management. I should also add that I have learned a great deal from our customers. I am keenly aware of what is happening in the economy and have a realistic perspective of where things are. Vol.10 / Asian Management Insights
Creating the CapacityDigital for Government VANTAGE POINT 10
igital transformation is a fundamental reality for businesses, given customer expectations of on-demand service and digital access, cloud-enabled cost efficiencies, and imperatives for data security, among others. Governments are not immune to these forces. Citizens and other legal residents are a government’s ‘customers’, interacting with it on critical matters such as housing, education, and healthcare. With digital technology increasingly woven into the fabric of everyday life, citizen interactions with their government have shifted to digital platforms accessible via mobile phones, computers, and assorted digital devices. Citizens also expect their government to function as effectively and efficiently as leading tech firms like Amazon and Apple. A well-thought-out data policy, supported by a tech stack and cloud infrastructure, an agile way of working, and coordinated whole-of-government leadership, are therefore fundamental to successful government digital transformation efforts, as exemplified by the Singapore government’s digital journey. ORIGINS OF GOVTECH In October 2016, the Singapore government set up the Government Technology Agency of Singapore (GovTech) to drive the development of technology and digital solutions needed for Smart Nation and related digital transformation efforts across the Public Service.1 Initially, GovTech was under the Ministry of Communications and Information, but it came under the purview of the Prime Minister’s Office (PMO) in May 2017. While GovTech is focused on technology capabilities, as well as the planning, design, execution, and operations of digital solutions, the Smart Nation and Digital Government Office (SNDGO)–its sister organisational unit and close partner which was formed in 2014–is responsible for the policy planning and coordination aspects related to Smart Nation and digital government efforts. Together, SNDGO and GovTech form the Smart Nation and Digital Government Group located within PMO.2 Although GovTech was created in 2016, it has a long lineage. Back in 1981, Singapore established the then National Computer Board (NCB) “to implement the computerisation of the Civil Service, coordinate computer education and training, and develop and promote the computer services industry”.3 In the early days of NCB’s public sector computerisation efforts in the 1980s, the government had to build its own D by Cheow Hoe Chan and Steven M. Miller It’s more than tech. Vol.10 / Asian Management Insights
internal information technology (IT) capabilities and manpower as the work was new to Singapore, and there was not much of a local IT vendor ecosystem, aside from a few multinationals like IBM which had local offices and their own IT services engineering staff. Over the course of the 1990s and the first decade of the 2000s, the pendulum for executing public sector IT efforts swung almost fully in the other direction towards vendor outsourcing. As a result, much of the internal technology and engineering competencies within the civilian sectors of government for hands-on designing and delivering IT applications dissipated. It was not until 2010, given the impetus of developments related to the Internet, e-commerce, smartphones, and the launch of commercial cloud service providers, that the rebuilding of internal capabilities for government digital services commenced. At that time, about 90 percent of the government’s spend on IT operations was outsourced to external vendors, and this lack of internal IT engineering and digital technology capability was a major bottleneck impeding the government’s digital transformation. In response, an experimental government digital services team was formed in 2010 with about seven people. By the end of 2015, this new team comprised over 100 people, who were split into a product development unit and a data science unit. By early 2023, about a third of GovTech’s total staff of approximately 3,600 people had been employed to handle product development, product management, and core digital technology competencies. THINK BIG, START SMALL, ACT FAST Given that GovTech serves over 60 ministries and agencies, the prospect of building core capabilities to drive digital transformation and provide new types of digital services was daunting. In the initial years of this capability build-up (20102016), technological developments such as cloud computing, Software-as-a-Service, Internet-of-Things (IoT), data analytics, and the machine learning subarea of Artificial Intelligence had already come to the fore and were fundamentally changing the IT services landscape. The term ‘digital transformation’ had emerged as an industry buzzword during this period to connotate going beyond just using more advanced IT solutions to creating new types of ‘digital-first’ services and rethinking what was possible from the confluence of new sources of data, new ways of processing it, and new ways of engaging with users. How was GovTech to deal with the seemingly vertical learning curve while creating new products as part of digitally transforming an organisation as complex as a government? The answer: start small and move fast. By doing so, through successive rounds of developing just-viable-enough usable product deliverables starting with a minimum viable product (MVP), improved iterations could eventually lead to realising the vision for a large-scale end-product. This type of learning-by-doing iterative approach is key to successful digital government efforts. Given that GovTech serves over 60 ministries and agencies, the prospect of building core capabilities to drive digital transformation and provide new types of digital services was daunting. 12
To facilitate thinking about new possibilities for MVPs, GovTech offers a mechanism called ‘Whitespace’, where anybody within the organisation can approach senior management with a promising idea beyond ongoing or planned digital product initiatives. The staff involved in approved Whitespace initiatives are typically given three months and up to S$50,000 to produce a working prototype. If the prototype is deemed feasible, both in terms of meeting a real user need and being realised technically, the development team gets another six months and S$100,000 to build a next-step prototype and work towards creating an MVP. Even if these projects are discontinued as a result of ongoing evaluation, they are not deemed a waste of time or money, as it is a small sum spent (compared to say the traditional vendor procurement system) to get hard evidence of whether a new concept has business and technical viability. More importantly, the experience gained in these types of early-stage exploratory efforts almost always generates capabilities that turn out to be useful for future projects and follow-on product building. THE HORIZONTAL APPROACH GovTech also identified the need to build horizontal platforms that provide common infrastructure and software services, as well as software application products that can be used–and re-used–by different organisational functions and business verticals. Within the government, this means common usage across the various ministries and agencies that are responsible for the multitude of internal and resident-facing government activities in areas such as education, environment, finance/ taxes/retirement funds, housing, law, manpower, trade and industry, and transportation. For private sector companies, this would correspond to common usage by different functional departments such as marketing, finance, human resources, procurement, operations, and customer support. Many organisations trying to ‘go digital’ pursue and often struggle with building these types of common platforms and products. The Government on Commercial Cloud (GCC) and the Singapore Government Tech Stack (SGTS) are examples of horizontal platforms at the foundation level and the middle level of architectural capability respectively needed to support a complex organisation like a government (refer to Figure 1). DIFFERENT LAYERS IN SINGAPORE GOVERNMENT TECH STACK Agency Specific IT System SG Tech Stack (SGTS) Service Layer REDESIGN COMPONENTS Base Layer STANDARDISED DEV TOOLS Network and Infra Services Government on Commercial Cloud (GCC) FIGURE 1 Source: GovTech Vol.10 / Asian Management Insights
Aspects of government cloud usage policies were ‘wrapped into’ specially crafted environments within the cloud services of several major commercial cloud providers to create a GovTech-specific platform within the more generic commercial cloud provider platform. The GCC environment also provided enhanced cybersecurity, simplified onboarding, automation of workflows, and the observability, auditing, and monitoring of service execution required to ensure continuous compliance with Singapore government policies for commercial cloud usage.4 This made it possible for an individual ministry or agency to use GovTech’s pre-specified GCC platform that has already been deployed for a particular cloud vendor (Amazon, Microsoft, or Google) to package requirements for compliance, security, data residency, and other complicated issues into one integrated solution. It also provided the framework and support infrastructure for working with more than one commercial cloud vendor, which made it substantially easier for each ministry or agency, including GovTech’s own divisions, to deploy allowable applications on the commercial cloud in a consistent, safe, and reliable way, and to do so more quickly and securely at reduced costs. As of December 2022, there were over 600 government digital services deployed across the various GCC platforms. SGTS, a suite of tools and services hosted on a common infrastructure, was built in parallel with GCC. The various platform tools within SGTS can either be deployed on an external GCC infrastructure or an internal government one. SGTS provides many types of software building blocks and services that can be used to create a wide range of IT applications and digital services. GovTech has been steadily expanding the libraries of these building block tools and services, using these common components to create a larger proportion of new government IT applications.5 As a result, the Singapore government has been making less use of ‘monolithic’ function-specific legacy systems, which are typically self-contained IT systems with their own servers and features built by external system integrators. The base layer of SGTS mostly consists of tools and software applications to enable and deploy a DevOps environment, within which software developers (devs) and operations (ops) teams are able to accelerate delivery through automation, collaboration, fast feedback, and iterative improvement.6 It also contains APEX (Application Programming Interface Exchange), a centralised Singapore government application programming interface (API) directory and gateway that provides a means of facilitating data sharing and exchange across the many Singapore public sector databases and software applications. APEX acts as a bridge that vastly simplifies information exchange between two different software applications, or between a software application and a data repository. It also contains coded rules that manage who within the government has the authorisation to access specific types of data and how that data gets transferred internally to support the needs of an approved digital service or IT application.7 Technology developers within the government can use APEX to discover the types of data available, identify where it is located, view the permissions and controls required to access and use it, and invoke the appropriate API to utilise the data as needed in the application being created. Using APEX, a government IT application or analytics model can access the required data from ‘a single source of truth’, which has the responsibility and accountability for the accuracy and management of that specific data item. Establishing this ‘single source of truth’ framework was a major policy initiative that SNDGO and GovTech orchestrated across the government. Because of APEX, government staff creating or enhancing IT systems and digital services can more rapidly locate and securely access government data, and subsequently incorporate it into a software application. The pre-built APIs in APEX eliminate the need to build direct connections to every system in order to access the data. This promotes secure and permissions-protected data sharing within the government, and greatly reduces digital silos and duplication of efforts. By continuing to create new types of Lego-like blocks (software tools, services and common applications), a wider and more sophisticated range of IT applications and digital services can be ‘built up’ without having to start from scratch. 14
The SGTS service layer, where higher-level reusable components and services are built, sits on top of the base layer. Singpass, the key enabler of Singapore’s National Digital Identity framework, is perhaps the best-known example of a service layer application. Instead of every government software application across different agencies having its own customised authentication service to verify users’ identities, they now all use Singpass. GovWallet, a common payment service for managing and executing government pay-outs to beneficiaries (e.g., a baby bonus payment or a Workfare Income Supplement), is another service built into this layer.8 These and many others available in the service layer are easy for developers to use, and are designed to be compliant with government requirements for security, privacy, stability, and operational sustainability. One could think of the lower layers in Figure 1–GCC, the network and infrastructure services layer, and the base layer of SGTS–as the ‘plumbing’ and other supporting ‘utilities’ for the entire system. When building a physical house, proper design and building of plumbing and electrical wiring lets one make alterations to the house without having to redo the pipes and wires. Similarly, a solid base in a tech stack enables government technology staff to focus on understanding, defining, creating, and testing actual use cases without having to wrestle with simultaneously building all the necessary lowerlevel infrastructure. Another way to understand Singapore’s tech stack approach is to think of them as Lego blocks. The pre-existing, well-designed building blocks of the tech stack–some for standard functions and others for highly specialised functions– are cleverly combined to create a much larger and more complex entity. By continuing to create new types of Legolike blocks (software tools, services and common applications), a wider and more sophisticated range of IT applications and digital services can be ‘built up’ without having to start from scratch. The combination of GCC and SGTS thus represents a particularly important shift in Singapore’s thinking about digital government. DATA ARCHITECTURE AND POLICY When GovTech was formed in 2016, government data policies still forbade the use of the commercial cloud for nearly all internal work except for some smaller scale pilots. GovTech had to quickly initiate work with SNDGO to craft policies for the usage of commercial cloud services. For the longest time, technology infrastructure meant having supporting data centres located nearby with tangible servers and firewalls that the organisation owned and maintained. With much of the need for physical infrastructure for data centres having disappeared with the steady growth and increased reliability and security of commercial cloud services (although restrictions for the cloud servers to be resident in the country are often applied), the new policies had to address specific issues like: what kind of government processes can (and cannot) go onto the commercial cloud? Where does the data reside? When must it reside in Singapore? Can it ever be outside the country? When must the government have physical control over some or all of this infrastructure? It would be impossible for each ministry to address and solve these issues independently. Before GovTech could build and implement the technology, it had to work closely with SNDGO to identify, define, and answer policy questions pertaining to data architecture, usage, and protection. Being under PMO, SNDGO and GovTech are positioned at the ‘centre of government’, making it possible to combine efforts to effect the necessary changes to data policies for proceeding with Smart Nation and digital government efforts. The concept of a ‘single source of truth’ illustrates the importance of good data architecture and coherent data policy. For example, until recently, when citizens and residents interacted with the government, their address was collected multiple times because every agency would do it separately. It was not uncommon, and very annoying for residents, to have as many as 20 instances of their address stored across various government databases. The concept of a ‘single source of truth’ illustrates the importance of good data architecture and coherent data policy. Vol.10 / Asian Management Insights
Clarifying responsibility within the government for which agency owns which particular type of data such as an address, birth date, or national identification document (ID) number is a foundational pre-requisite for realising a single source of truth. GovTech supported SNDGO in its effort to designate where the single source of truth for key data fields should reside and which unit in the government should manage it. For example, the Immigration and Checkpoints Authority (ICA) under the Ministry of Home Affairs was designated the ‘owner’ of a citizen or permanent resident’s official address. So when a person changes residence, it needs to be only updated with a single agency. Once done, ICA’s systems automatically disseminate the updated information to the many other government information systems that make use of that person’s address. Similarly, foreign workers in Singapore who hold various types of work visas report updates to their address and other visa-related information to the Ministry of Manpower as this agency has been designated as the single source of truth for people in Singapore on any type of work visa. Deciding which specific part of the government should be responsible for certain key types of data and even specific data fields might seem like a low-level execution detail, something that is very operational and even trivial. That is not at all the case. Singapore considers designating responsibility and accountability for the single source of truth for data items to be so important that there is a high-level committee which meticulously goes through and makes the final approvals on the designations for data responsibility. If the government can clarify ownership of the data, it can move forward with how to clean the data as part of maintaining and improving data quality, and how to best manage data updates flowing from the designated single source of truth to all other applications across the government which make use of that data. Another important government-level data policy decision was whether the storage of most civilian-related data should be centralised or handled in a more distributed fashion by each of the relevant agencies. The decision was made against centralisation because it then becomes a very high cybersecurity risk. Hence, different agencies were tasked to own the storage and protection of certain types of data, while closely coordinating with cybersecurity experts in GovTech and the Cyber Security Agency of Singapore. The substantial progress made with defining data policies and determining data ownership has amplified the effectiveness of APEX. Singapore has pre-vetted a large number of commonly occurring use-cases for cross-government data access, and it has either greatly simplified the approval process or pre-approved certain types of ‘lower-risk’ requests, though always with proper protections and controls. The review and decision process when special permissions for data access are required has also been shortened significantly. Now, even if data access is required from multiple ministries for an upgraded or new digital service, developers can simply make the request for access, and in most situations, that access is quickly reviewed and promptly granted in a matter of a few days. The contrast to the old way of working could not be starker. Prior to the 2017/2018 period, it was not uncommon for a data access request for an IT or digital services project within the government to take up to a year for review and approval. It would even be longer if multiple ministries were involved. This substantially impeded the rate of progress on Smart Nation and digital government initiatives. If the government can clarify ownership of the data, it can move forward with how to clean the data as part of maintaining and improving data quality, and how to best manage data updates flowing from the designated single source of truth to all other applications across the government which make use of that data. 16
SHIFT LEFT WITH INTERNAL TECHNOLOGY CREATION CAPABILITIES AND TOP-LEVEL LEADERSHIP COMMITMENT Platform and product development teams within GovTech have embraced and expanded upon agile development approaches based on rapid, continuous iterations, where software under development is updated and tested regularly. Even though problems will occur with the development of new software and digital solutions, the use of the agile approach results in them getting detected and addressed much earlier in the project cycle before the effects of the problem are magnified. In parallel, the increasing use of pre-built and pre-tested infrastructure services, software services, and common product modules has improved software and systems quality by substantially reducing the number of errors that arise when infrastructure and software are built from scratch. This is a concept in software and digital solution development referred to as ‘shift left’. When this is adopted, bugs are detected and fixed earlier in the lifecycle of the project. Cybersecurity compliance is addressed at the very beginning, not as an afterthought. Because of these cumulative efforts with the tech stack, data architecture and policies, and agile practices, several recent GovTech software application projects have gone live with only a small number of errors found during the final User Acceptance Testing (UAT) and other final pre-production tests. This way of building software substantially reduces the troubleshooting nightmare of traditional IT methods at the prerelease stage of UAT and cybersecurity penetration testing. It is not uncommon for an organisation deploying a large new system using more traditional development practices to uncover a huge number–for example 1,000 items–where the system does not pass the final UAT or penetration test. When these bugs are not discovered until the supposed end of the development effort, it results in an immensely stressful ‘death march’ for the development team to fix the typical 10 percent critical findings (100 bugs) and another 20 percent high priority problem findings (200 bugs) as quickly as possible, often resulting in blown budgets, delayed delivery, and a demoralised project team. ABILITY TO RESPOND TO URGENT NATIONAL NEEDS Agility during development and deployment in response to meeting an urgent national need was demonstrated by GovTech’s release of the TraceTogether app and hardware token in the early weeks of the COVID-19 pandemic in 2020. While the TraceTogether concept was simple–using Bluetooth on mobile phones to track interactions between COVID-19- positive individuals and others in public spaces–the implementation details and associated privacy protection issues were very complex. A team of engineers within GovTech was able to build and release the first working version of the TraceTogether mobile phone app in just four weeks. A traditionally executed software development project of equivalent scope could have taken months or even a year. The TraceTogether app worked fine for the many mobile phone users who knew how to install it on their phones and switch on Bluetooth. But there were other segments of Singapore’s population who were not capable, or regular mobile phone users, such as the elderly and young children. To meet the needs of these non-mobile phone users, GovTech also built a TraceTogether hardware token that could be conveniently carried or worn. The GovTech Sensors & IoT team designed the hardware token in less than four weeks, and it was launched within two months. Additionally, during the early days of the COVID-19 pandemic, another small team at GovTech developed and released the SafeEntry application used for check-ins when people entered locations with high footfall such as supermarkets, food outlets, and shopping centres. This application was developed in a remarkably short time, such that a working initial prototype was created within a couple of weeks.9 Although TraceTogether and SafeEntry served different purposes and each application had distinct functionalities, the two were combined into a common interface and application. This was also carried out quickly. Agility during development and deployment in response to meeting an urgent national need was demonstrated by GovTech’s release of the TraceTogether app and hardware token in the early weeks of the COVID-19 pandemic in 2020. Vol.10 / Asian Management Insights
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