Think fast because Asia Pacific economies are set to get an extra US$1.16 trillion GDP jolt by 2021, as exciting digital technologies transform how nearly all goods and services are offered over increasingly smart and powerful channels.
Digital Transformation is poised to boost the combined growth rate of 15 economies, including the world’s most populous nations of China and India, the rising industrial powerhouses of Indonesia and Vietnam, resource-rich Australia, and the global financial hubs of Singapore and Hong Kong. Together, the region’s GDP is set to grow by more than US$32 trillion in four years.
At the same time, 60% of GDP will come from digital products and services directly created through the application of technology. This is a ten-fold leap from 6% in 2017 that will see a near doubling each year from 2017.
The world’s second-largest economy, China, has shown a knack for embracing the digital economy and driving innovation at scale. But smaller economies are also in the game. In Southeast Asia, the Philippines, Indonesia, Thailand, Singapore, Vietnam, and Malaysia together constitute a market of 600 million people. And, they are rapidly embracing digital-related technologies; although at different speeds. The same is for India, where its already vibrant tech scene has propelled many organizations on their own Digital Transformation journeys. There is also significant progress in Japan and South Korea, which together with China, are leading users of industrial robots to drive efficiency and productivity.
While none all these economies are the same in structure and development, they all require decision-makers in business, government, and education to build bridges into the future.
“Any organization, in any economy in Asia – developing or emerging – can make the Digital Transformation leap. Technology is a great enabler. You just need to be ready to experiment and be willing to learn or fail at lower costs. The more experiments that are run within an organization, the more chances it will have to find something that works.” said Daniel-Zoe Jimenez, Research Director, Digital Transformation Practice Lead, IDC Asia/Pacific.
To find out about what lies ahead for the region’s nearly 3 billion people, Microsoft commissioned IDC to survey 1,560 respondents in 15 Asia Pacific economies late last year. They represented a wide range of mid and large-sized companies and organizations in manufacturing, financial services, education, healthcare, government, and retail.
The result was a study, entitled “Unlocking the economic impact of digital transformation”.
“One of its broadest findings is estimation that the combined economies of Asia Pacific stand to gain an extra US$ 1.16 trillion boost to its collective GDP through digital transformation by 2021. It identified China, Japan and India as the biggest potential contributors to the windfall, followed by South Korea, Australia and Indonesia. Also, the study’s results suggested that different economies in the region are likely to keep moving at greatly different speeds. For example, fast-growing India and China are expected to enjoy comparatively high Compound Annual Growth rate (CAGR) of 1.0%, followed by New Zealand at 0.7%, while Singapore and Malaysia at 0.6%.”
The study also makes one important point very clear – if you are a business decision-maker, who is only thinking about Digital Transformation, you are running on empty.
“Digital Transformation is about reimagining how organizations bring together people, data, and processes to create value. In our digital-first world, technology is at the center,” said Ralph Haupter, President of Microsoft Asia. “It has a positive and measurable impact on the economy of Asia Pacific where every organization needs to be a digital one. They are already seeing tangible improvements from their digital transformation initiatives in the range of 15% to 17%. These benefits will grow by 50% or more in three years.”
“We see Artificial Intelligence (AI) as a primary catalyst for further growth. Our customers across Asia are 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,” added Haupter.
Ricacorp Properties Limited: Beating the competition in sales with AI
A practical application can be found in one of the world’s most competitive cities – Hong Kong.
Hong Kong is a financial and commercial powerhouse that embraces change at a furious pace. Real estate firm, Ricacorp Properties Limited, needs to stay one step ahead of its rivals. “The biggest challenge in real estate is knowing exactly what the customer wants and showing them the best properties fast enough before they find another property with a different agent,” said its CEO, Willy Liu.
To satisfy customer expectations with speed, Ricacorp has created an app called Rica +. Using Microsoft’s AI platform, Rica + takes in a customer’s initial property choice and then sifts through data like property valuations, recent transaction histories, listed prices offered by sellers and internal records, like customer preferences. The result is a highly targeted list of properties that have the best probability of being sold. It has proved to be an invaluable tool for Ricacorp’s agents to make a sale.
“After partnering with Microsoft, we are confident our turnover will be boosted by 20% to 30% and profits will increase by 40% to 50% in 2018,” said Liu. “With AI, we have an edge over our competitors in the market.”
Leaders and Followers
Across the landscape of Digital Transformation, the study identifies two broad types of players: Leaders and Followers. While 85% of the organizations surveyed by IDC have embarked on Digital Transformation journeys, only 7% can be classified as Digital Transformation “Leaders”.
These Leaders have a full digital strategy in place. They earn more than 30% of their income from digital products and services and they see greater benefits being generated from their digital transformation initiatives.
The majority of companies are Followers that are lagging behind on all the above counts. Their Digital Transformation efforts are slower, more conservative, and often disjointed. But even with these limitations, they are also seeing clear improvements in customer loyalty and productivity, profitability, and revenues from new products and services.
“Leaders are willing to pursue ways of trial-and-error as they adapt to the digital world. They take risks. They build agile and collaborative teams that focus on the success of the whole organization, not just individuals,” said Haupter. “That is encouraging because there is not one right way to tackle Digital Transformation. Learning from small projects that lead to bigger Digital Transformation strategies is essential for everyone.”
The study starkly bears this point out. It found that Leaders reap double the benefits in productivity, cost reductions, customer advocacy, revenue from new products and services, as well as profit margins when compared with Followers.
To progress along the path to leadership in Digital Transformation, companies must shift gears, and the survey provides guidance on how to drive change.
“The adoption of Big Data Analytics and AI is increasing in Asia Pacific. The survey shows that leaders not only have a holistic digital strategy but also tend to invest more heavily in these technologies. Having a digital mindset, together with the effective application of technologies, allows these organizations to increase their earnings and discover new and profitable business avenues.” said Jimenez.
Data as an opportunity
Leaders recognize data as a valuable asset and they leverage it as an opportunity. “The effective use of Big Data and Analytics tools allows an organization to capitalize on its data assets. Driving fundamental changes in productivity and profitability is a first step to becoming an information-based company,” said IDC’s Jimenez. “The next steps in the data story are monetization, productization, real-time orchestration, and service innovation.”
Read more about how Asia Pacific is transforming digitally:
- Unlocking the economic impact of digital transformation in Asia Pacific
- The US$1.16 trillion reason to take digital transformation & AI seriously in 2018
- Hot properties – Beating the competition in sales with AI in Hong Kong
- Digital transformation to contribute more than US$1 trillion to Asia Pacific GDP by 2021; AI is primary catalyst for further growth