5 reasons why APAC businesses struggle with digital transformation
THERE is no doubt that digital transformation is a priority for Asian businesses — but have they reaped any rewards? Are businesses in this part of the world really making progress and moving up the digital maturity curve?
IDC APAC Group VP for ICT Practice Sandra Ng sees progress.
Her team has recently completed a comprehensive evaluation of businesses (for its digital transformation awards) across Asia and identified several digital success stories — such as CIMB’s EVA and Axiata’s Boost — which have delighted customers and provided the businesses with a strong competitive edge.
In an exclusive interview with Tech Wire Asia, Ng said that today, more organizations in Asia are further along their digital transformation maturity curve than 12 months ago, but emphasized that more needs to be done.
IDC predicts that at least 55 percent of organizations in the APAC will be digitally determined by 2020, transforming markets and reimagining the future through new business models and digitally enabled products and services.
Digitally determined organizations demonstrate the ability to vision, plan, and operationalize DX through ambition, grit, discipline, commitment, and hard work. Ultimately, all digital determined organizations aspire to become digital native enterprises.
“To be one of the digitally determined, APAC organizations require more than tenacity,” said Ng.
Here are the top 5 challenges that IDC sees organizations struggle with and believes that they must learn to deal with these if they want to succeed with their digital transformation agenda and move from running pilot projects to scaling those projects across the enterprise:
# 1 | Organizational structure
Most organizations struggle to innovate because they work in silos. Their organizational structure is designed in such a way that it compartmentalizes departments and limits the flow of ideas.
Since most digital transformation projects demand collaboration across business functions, a siloed organizational structure hinders progress.
In order to succeed, Ng suggests the creation of cross-functional teams that can create synergies for the business as a whole and help scale the digital transformation agenda across the business.
# 2 | Key performance indicators (KPIs)
Traditional KPIs don’t do justice to digital transformation projects and programmes. Companies need to realize this and create different metrics to help measure success.
One of the KPIs that Ng strongly believes in is the Net Promoter Score (NPS).
“It’s a better indicator of the success of digital transformation compared to the customer satisfaction index, for example, since it measures how many customers will really recommend you and speak positively about you to their peers. NPS is obviously a better indicator of digital transformation,” said Ng.
However, she emphasizes that each organization and project is different and they simply need to look beyond traditional KPIs when evaluating digital transformation projects.
# 3 | Talent and capabilities
Talent, or the lack of it, has been a topic of discussion for a while now — when formulating digital transformation programmes.
Most businesses are now training their employees to help with their digital transformation programs instead of trying to find talent outside because they’ve realized there simply isn’t enough in the market.
Ng too highlights this challenge and said it’s an important point to consider for APAC businesses if they want to make progress in the coming year.
# 4 | Tactical, annualized plans
One of the biggest challenges that Ng highlighted was that most businesses think of digital transformation in annual terms — to fit in with their annual budgets.
“This is something that many businesses are guilty of. They only plan for the year, and neglect the fact that digital transformation projects are usually massive, multi-year projects that should aim to transform the company,” said Ng.
# 5 | Bimodal IT
Companies run on several tech platforms. Some, the more traditional ones, have become a part of the company’s digital fabric despite being quite outdated in terms of capabilities. Others, the new-age platforms, usually purchased by business functions depending on workflow needs and customer demands, help them put their best foot forward in front of customers.
However, for companies to move along the digital maturity curve, these two kinds of systems — the old and the new — need to merge at some point.
“The lack of integration, the lack of a holistic platform, is what will limit companies from scaling up the digital transformation projects they pilot in one division or segment of the business, and disrupt the overall impact that those projects can have on the business,” said Ng.