Digital transformation to revamp APAC by 2021
AN IDC STUDY commissioned by Microsoft predicts companies and the people in APAC will significantly benefit from digital transformations in the region.
In fact, by 2021, it will add an estimated USD1.16 trillion to APAC’s GDP, and increase the growth rate by 0.8 percent annually.
The study, Unlocking the Economic Impact of Digital Transformation in APAC, predicts a dramatic acceleration in the pace of digital transformation across Asia’s economies.
In 2017, about six percent of the region’s GDP was derived from digital products and services created directly through the use of digital technologies, such as mobility, cloud, Internet of Things (IoT), and Artificial Intelligence (AI). This is expected to surge to around 60 percent of APAC GDP by 2021.
IDC surveyed 1,560 business decision makers in mid and large-sized organizations across 15 economies in the region.
Findings suggest that companies feel digital transformation will help boost profit margins, productivity, customer advocacy and retention, cost reduction, and increased revenues from new products and services by at least 50% between now and the next three years.
Microsoft Asia President Ralph Haupter said:
“Digital transformation has a positive and measurable impact on Asia Pacific’s economy, and it is widely regarded that every organization needs to be a digital one.
“In fact, organizations are seeing tangible improvements from their digital transformation initiatives between the ranges of 15 percent to 17 percent today, which shows that digital transformation is no longer an idea, but a reality.
“We see AI as a primary catalyst for further growth. Our customers across Asia are already demonstrating a strong sense of urgency to integrate AI into their business as part of their digital transformation initiatives. The Study shows that AI is top of mind when it comes to investing in emerging technologies today.
By 2019, IDC predicts that 40 percent of digital transformation initiatives will be supported by Artificial Intelligence/ Cognitive capabilities providing timely, critical insights for new operating and monetization models in APAC (excluding Japan).
While 85 percent of organizations in the region are in the midst of their digital transformation journey, only seven percent can be classified as leaders.
Leaders, per the study, are organizations that have full or progressing digital transformation strategies, with at least a third of their revenue from digital products and services. In addition, they see between 20 – 30 percent improvements in benefits across various business areas from their initiatives.
However, the study indicates that leaders experience double the benefits of followers, and these improvements will be more pronounced by 2020. Almost half of the leaders identified by the survey have a full digital transformation strategy in place.
Key differentiators among leaders and the rest, according to the survey are:
- Leaders are more concerned about competitors and emergence of disruptive technologies
- Business agility and culture of innovation are key goals
- Measuring digital transformation successes are a strong business focus
- Leaders are more aware of challenges in their digital transformation journeys
- Leaders are looking to invest in AI and the IoT
According to the business leaders surveyed, digital transformations will deliver social benefits such as smarter, safer and more efficient cities, the creation of more higher value jobs, and potential increment to personal income through freelance and digital work.
“The study found that 85 percent of jobs will be transformed in the next three years, half of which will be redeployed to higher value roles, or reskilled to meet the need of the digital age. And, what is encouraging is that two-thirds of respondents are confident that their young employees already have future-ready skills that will help them to transition to new roles,” said Haupter.
Organizations in Asia Pacific need to accelerate their digital transformation journey to reap the full benefits from their initiatives and to address the invisible revolution brought by the mass adoption of AI.
To help them, here are some strategies their experts recommend CEOs follow:
Create a digital culture: An organization needs to build a culture of collaboration where it is connected across business functions.
It should have a data strategy in place and begin with the end in mind, having a plan with clear outcomes.
Importantly, a proper data strategy will allow businesses to start their AI initiatives to identify connections, insights, and trends.
Data capitalization would be key for all organizations to succeed in the digital economy.
Build a digital ecosystem: Digital transformation will not be optimized if organizations do not collaborate with their external customers and partners.
The key to becoming a leader is for organizations to enable data sharing and collaboration internally and externally in an open yet trusted manner.
Embrace micro-revolutions: In most cases, digital transformation efforts do not start with widespread change, but a series of micro-revolutions.
These are small, quick projects that deliver positive business outcomes and accrue to bigger and bolder digital transformation initiatives.
Bet big on AI: Organizations need to integrate AI into its business and identify areas where it can be used to augment higher-value activities.
Another key strategy that can help companies become leaders in digital transformation is building future-ready skills for individuals and the organization.
Organizations today must re-look at training and re-skilling its workforce so that workers are equipped with future-ready skill sets such as complex problem solving, critical thinking and creativity for the digital economy.
More importantly, they need to rebalance the workforce to attain and attract key digital talents, as well as be open in creating a flexible work source model where they tap into the skills-based marketplace.