Digital Innovation in Palm Oil Governance: The Role of K-SMARD in Enhancing Strategic Decision-Making

Abstract

Index K, a key basis for profit-sharing between palm oil mills and smallholders, often fluctuates due to inconsistent data input, varying calculation methods, and lack of standardized digital systems. This study aims to develop and validate K-SMARD, a digital system designed to automate and standardize the calculation and reporting of Index K while supporting more reliable and transparent decision-making processes. The system was developed using a structured software engineering approach and evaluated using real operational data from palm oil mills. Statistical testing using the Paired Sample t-Test method on 177 pairs of K-Index data from 183 pairs of data and 6 pairs of data not included in the sample shows strong evidence that the K-SMARD application is able to produce calculations comparable to the Excel-based manual method that has been used by the Palm Oil Mill and verified by the Plantation Service (DISBUNNAK). The results indicate that K-SMARD produces highly consistent outputs compared to conventional spreadsheet-based calculations. Statistical validation using a paired sample t-test shows no significant difference between the two methods (p > 0.05), while regression analysis demonstrates a very strong linear relationship (R² ≈ 0.99), indicating a high level of agreement. In addition, the system significantly reduces calculation errors and improves reporting efficiency. From a strategic perspective, the implementation of K-SMARD enhances data standardization, strengthens governance, and supports more informed managerial decision-making. The system also contributes to improving transparency and trust between mills and smallholders by providing more objective and accountable calculation results. This study recommends the broader adoption of K-SMARD as a standardized digital platform for Index K calculation at both regional and national levels. Future research should focus on system integration, mobile platform development, and the establishment of a unified national database to support the digital transformation of the palm oil industry.