Brace yourself for the fourth industrial revolution

Our industry has been talking about the arrival of the fourth industrial revolution for a while now. I believe it is well and truly here.

The physical, biological and digital worlds are being brought closer than ever before by new technologies such as the Internet of Things, artificial intelligence, advanced data analytics and mixed reality. In turn, the way we do business and interact with each other has and will continue to radically change.

A few months ago we released a report, Embracing digital transformation: Experiences from Australian organisations, based on qualitative interviews with 30 senior leaders of business and government organisations to uncover the success factors and obstacles involved in digital transformation.

But business decision makers across Australia continue to ask how they can take advantage of the immense progress being made and not be threatened by the disruption that comes with it. To help answer this question, Microsoft Asia commissioned new research that builds on the previous study and considers the experiences of Asia-Pacific businesses in the fourth industrial revolution.

The Microsoft Asia Digital Transformation Study surveyed almost 1,500 decision makers across 13 markets, including 126 Australian business leaders. All respondents work in an organisation with more than 250 employees and are involved in shaping their organisations’ digital strategies.[1]

Overwhelmingly, the study indicates that organisations tend to prioritise people in their digital strategies. This means that businesses predominantly see new technology as a way of firstly engaging customers and secondly empowering employees. The study shows Australian businesses focus more strongly on engaging customers than their peers in Asia.

The study also shows that businesses are using the same activities to fulfil these goals. The top two activities are engaging customers by adjusting product or price strategies based on customer data and empowering employees by automating repetitive tasks.

Other popular activities include:

  • integrating data to create a personalised or customised service or product
  • using technology to connect employees and provide work-from-anywhere capabilities
  • establishing new digital governance, transformation and management processes.

Interestingly, 83 per cent of business leaders in Australia agree that every organisation needs to transform into a digital business to allow future growth and 85 per cent agree that new data insights can lead to new revenue streams. Yet, despite these views, only 10 per cent of Australian respondents rank transforming products and services as the highest priority of their organisations’ digital strategies. While the ability to empower employees and consumers is a huge part of what will set organisations apart in the future, I would recommend organisations look at how they can transform products and services to build revenue.

This gap between beliefs and actions came up at several points in the Microsoft Asia study. For example, 80 per cent of those surveyed agree that every organisation needs to be digital to enable future growth, yet less than a third have a full digital transformation strategy. This echoes the findings of our Australia-only study in 2016, which found that while Australian organisations realise digital disruption is accelerating, they may have only recently created digital transformation strategies.

The problem could be a lack of leadership, which remains one of the biggest digital transformation challenges faced by Asia-Pacific businesses. To harness the power of the latest trends in data, analytics and cloud computing, leaders need to embrace the possibilities they offer and re-imagine their entire business models – or invent new ones. Australian organisations typically expect the chief digital officer to lead this change, but support from the board and executives will also be crucial.

Two organisations leading the way into today’s fourth industrial revolution – and considered by the Microsoft Asia study – are AIA, the largest independent and publicly listed life insurance group in the Asia-Pacific region, and Sodexo, a global facilities management giant.

AIA knows the key to staying competitive is using cutting-edge tools. Since it adopted Office 365’s collaboration tools and moved to a secure cloud environment, productivity has skyrocketed. More than 14,000 employees situated across 18 different markets use the company’s social network to collaborate and brainstorm – and so far, AIA remains ahead of industry trends. You can read more about AIA’s journey here.

Sodexo has created a powerful integrated information system with Dynamics 365, Power BI and Azure – including Azure’s machine learning and IoT capabilities. For the first time, Sodexo’s 420,000 employees can access the information they need securely anytime, anywhere to quickly make informed decisions. Sodexo’s clients are now signing up for a broader range of services – one client replaced 600 separate contractors with a one-stop service from the company. Impressively, another client reported annual savings of A$75 million as Sodexo could use the system to optimise its services to meet its needs. You can find out more about Sodexo and what else they have planned here.

This new report from Microsoft Asia offers powerful insights into the revolution occurring across the Asia-Pacific region and shows how the changes in Australia are part of a much larger and surprisingly consistent trend. I hope it gives you a new awareness of the goals, challenges and strategies you share with your peers and how you can differentiate your organisation.

Check out our earlier report Embracing digital transformation: Experiences from Australian organisations.

[1] Microsoft Asia Digital Transformation Study surveyed 1,494 IT leaders across 13 markets to understand how they are evolving their IT infrastructure strategies to meet the needs of a digital business. Microsoft Asia commissioned the study and a leading research agency in Asia, Asia Insight, based in Singapore, conducted the study between October–November 2016.