APAC to spend $375b on digital transformation this year

ORGANIZATIONS in the Asia Pacific (APAC) are forecasted to spend nearly US$375.8 billion on digital transformation this year.

The number might seem enormous at first, but given the various digital initiatives that companies such as P&G and Coca-Cola are launching in the region, and the numerous investments in technology being made by banks and financial services organizations, it’s easy to see where the money is going.

“[…]In running the company, we started to act less like a bank and more like a tech company. I believe that today, DBS has one of the most comprehensive transformation programs for a bank,” DBS Bank CEO Piyush Gupta said recently, highlighting the change in the way the region is thinking about technology.

According to IDC who provided this new forecast, investments in technology are expected to accelerate quickly, steadily expanding throughout the 2017-2022 forecast period, achieving a five-year compound annual growth rate of 17.4 percent.

“The adoption of emerging technologies supporting digital transformation strategies in APAC is shaping up as its helping to reimagine their businesses, re-evaluate their value chain, reconnect with their customers, and rebuild their organization into a digital native enterprise,” said IDC Senior Research Manager for IDC’s Customer Insights & Analysis Group Ashutosh Bisht.

“The pace of digital transformation has accelerated in the APAC region, and this will continue to drive significant investments in technologies in the next few years – from hardware and services to applications,” said IDC AVP – Digital Transformation, Future Enterprise, and SMB Daniel-Zoe Jimenez.

According to IDC, discrete manufacturers and process manufacturers will be the ones investing most heavily in digital transformation in the APAC — spending US$83.9 billion and US$46.8 billion respectively.

Discrete and process manufacturers seem most interested in building smart manufacturing facilities and in creating digital supply chain optimizations.

It’s interesting to note that the government sector is the next biggest industry followed closely by transportation and utilities when it comes to significant digital transformation spending this year.

“Government and enterprises in the region are understanding the value of what these new technologies bring to operational activities. They are also harnessing the potential of a lot of initiatives being launched to make the workforce well versed. Upskilling and future-proofing the workforce are on top of employers and the government’s agenda,” said IDC’s Bisht.

“Each of these industries will be pursuing a different mix of strategic priorities, from convenient access to healthcare for the government industry to digital supply chain optimization in the transportation industry, and building digital grids in the utilities industry.”

From a technology perspective, it is expected that hardware and services investments will account for more than 83.6 percent of all spending this year.

Services spending is expected to comprise of connectivity services (US$44.2 billion) and IT services ($17.6 billion).

Hardware spending, on the other hand, will include enterprise hardware, personal devices, and IaaS infrastructure. The fastest growing technology categories will be system infrastructure software, IaaS, and applications, according to IDC’s analysis.

Although Singapore, Hong Kong, and Australia seem to be doing a bit more in terms of digital transformation than others in the region, by the end of this year, a lot of exciting announcements are expected to make headlines — across the globe.

SME-focused initiatives from Singapore’s Infocomm Media Development Authority (IMDA), for example, such as the new Urban Co-Innovation Lab and the pledge from 100 Singapore-based infocomm companies to help local businesses prepare for the digital age, and similar initiatives from other agencies in the APAC are expected to help propel the region forward.

Overall, technology adoption is expected to increase rapidly in the APAC — and spending, naturally, is going to grow as a result of this trend.

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