In this roundtable discussion moderated by Francis Kan, leading industry players (Dr Min Sun, Chief AI Scientist, Appier, Dr Keeratpal Singh, Chief Data Scientist, Axiata, Saad Toma, IBM Asia Pacific, Global Technology Services, General Manager, Gustavo Fuchs, General Manager, Cloud & Solutions, Microsoft Asia and Dirk-Peter van Leeuwen, SVP & GM, Red Hat Asia Pacific & Japan) debate the pace and progress of Asia’s ongoing digital transformations.
The Business Times (BT): What progress has been made in terms of the digitalisation of business and the economy in Asia in recent years?
Min Sun: In Asia, business and governments across industries are aware of advanced AI and data technology. With more confidence in the technology as well as general pressure to prepare for the future, more institutions are starting to implement solutions. People use a lot of gadgets in Asia, which has driven many processes and services to become digitalised for use on handheld devices. People have come to expect access to products and services to be quick and seamless. For example, several cities are starting to use surveillance cameras with AI to track moving objects and use that information to optimise things like traffic signals and parking information.
Keeratpal Singh: More and more digital services have evolved in Asia from the past few years, and continue to emerge with a large number of users transforming from traditional touch points towards digital channels, engaging heavily in online shopping, online purchase of food, ordering taxis, booking flights, making payments through digital wallets, interacting with businesses through social media, and engaging with innovative digital services that continue to gain an increasing number of customers from various segments, providing them with interesting reward points.
Saad Toma: Asian businesses are pushing hard to deploy technologies such as cloud, APIs, mobile apps, resiliency and analytics to reap the rewards of digital transformation, increased market share and profits. Digitalisation, including Big Data, Internet of Things, SaaS and cloud, is the hallmark of future economies, and their combined impact has started reshaping standard business architectures. In tandem, Asian governments are moving to support the efforts of enterprise through planning, skills enablement and supportive regulation and programmes. Meanwhile, some industries such as transport, banking and retail are feeling dramatic effects from digitalisation through the creation of entirely new channels, offerings and client experiences.
Gustavo Fuchs: Within the last two years, significant progress has been made in the digitalisation of businesses and economies in Asia. In 2017, when we conducted the Microsoft Asia Digital Transformation Study, only 29 per cent of business leaders in Asia-Pacific said that they have a full digital transformation strategy in place. In a more recent Microsoft-IDC Study, we found that 85 per cent of organisations in Asia-Pacific are already in the midst of their digital transformation journey, showing that good progress has been made in accelerating digital transformation across the region.
Dirk-Peter van Leeuwen: Over the past few years, I have seen Asian economies and businesses outdoing their peers in other parts of the world. There has been a lot of innovation in the region, and this is growing because of the demand for better experiences from consumers, which is also fuelled by digital transformation and the rising need for technology and cloud services. Companies are realising they need to transform to compete better. The good thing is that Asia is so huge and diverse, and the opportunities for us to help improve people’s lives through technology are there.
BT: What industries or markets have done well in this area, and which are still lagging?
Min Sun: The retail sector is further ahead than other industries in implementation of technology such as artificial intelligence (AI). A recent survey conducted by Forrester and Appier found that 56 per cent of retailers in Asia-Pacific have either implemented or are expanding AI initiatives. Retail is a broad sector, with players both large and small, online and offline, and there are multiple ways to adapt to technology. These include streamlining payment processes with facial recognition, unifying the online and offline elements of the shopping journey, and using AI to most effectively target consumers and deliver the most relevant content at the right point in their customer journey.
Keeratpal Singh: Industries that have deployed automated scrapping of Web information pertaining to products and services relevant to their business, listening to sentiments from social media channels, analysing big data from their customer experience, followed by performing near real-time competitive analysis to recommend the most relevant packages and services to users are leaders who have done well. The companies that are just moving into digital transformation, lacking growth innovation and do not have an agile strategy are lagging.
Saad Toma: In Asia, similar to other regions, we are really seeing banks, and the financial services industry generally, take the lead in digitising and transforming their operations.
Some interesting examples we have seen in the region – Singapore’s DBS Bank was recently recognised as the world’s best digital bank, Thailand’s Bank of Ayudhya has embarked on a blockchain pilot and the Bank of the Philippine Islands is committed to building more APIs to continually improve customer experience.
Gustavo Fuchs: When we looked at the progress of digital transformation for some of the key industries in Asia-Pacific, we observed that healthcare and financial services organisations are experiencing higher levels of improvements of between 14 per cent and 21 per cent.
While manufacturing organisations in Asia-Pacific are seeing improvements of between 13 per cent and 17 per cent in productivity, profit margins, cost reductions, increased revenues from new products and services, and improved customer advocacy, loyalty and retention, the overall impact of digital transformation on the industry and the economy is massive.
Dirk-Peter van Leeuwen: I have seen huge strides in the digital transformation of the banking and technology industries. Governments and the public sector are also catching up.
We are now seeing startups disrupt many industries. For example, there’s Grab and Gojek, which are disrupting the transport industry, but they have also expanded into finance and food delivery. There are also traditional banks which have been ahead in adopting digital transformation.
BT: What are the challenges still remaining when it comes to getting governments and businesses to digitalise, and how can these be overcome?
Min Sun: The main challenges are lack of confidence in and willingness to invest in technology. Though there are strong early indicators of technology such as AI improving productivity and efficiency, there is a relatively limited number of full-fledged success stories. Proper research is critical to identify the best digital solutions. Aversion to AI adoption happens when leaders who are eager to see results implement AI too quickly and do not fully understand what a solution can and cannot do, and are then disappointed with the outcome, making them less likely to return to it.
Keeratpal Singh: The biggest challenges are creating motivation and developing the right competencies from top management all the way to frontline staff in government agencies and large traditional organisations. They find it hard to adapt to the digital culture. Also, in some organisations, data sources required for simple analytics purposes are still not ready, therefore implementing machine learning for predictive analytics and AI is far from practical.
Saad Toma: Some industries, such as construction for example, feel less compelled than industries such as media or retail to digitalise. But companies that overlook digitalisation leave themselves at potential risk of getting disrupted by more nimble firms offering new employee and partner experiences, with more agile operations and interconnected data. Often times, what’s preventing companies from digitising is lack of an overall digitalisation strategy, with the financing, structure, leadership and employee change management required to support the vision.
Gustavo Fuchs: In today’s environment where organisations are more open to cyber threats than ever before, the fear of cyberattacks is a key barrier preventing governments and organisations from transforming themselves digitally. Secondly, the need to foster a culture of agility and innovation remains a key challenge. As organisations face mounting pressure to be more innovative, more agile in the digital world, they should look at fostering a culture of collaboration across business functions to succeed. Thirdly, the need for future- ready skills and talents is a challenge that organisations in the region are facing.
Dirk-Peter van Leeuwen: Until today, one of the most popular but mistaken beliefs we are hearing from potential clients is that “digitalisation is handled only by the IT department”.
That is wrong because digital transformation should start from the top. Nevertheless, I can see that government officials and business executives in Asia are becoming more accepting of ideas like technological innovation and the open culture, where we accept that the best ideas can come from anyone in an organisation. So, it’s not just about adopting the right technology, it’s about having the right mindset as well.
BT: What will the landscape look like in Asia in 5-10 years’ time in terms of digitalisation?
Min Sun: We will certainly see businesses and governments gather and make more effective use of data, though this will require some existing challenges to be solved, such as data storage and connectivity. For example, city surveillance cameras provide valuable data about how an urban environment works, but strong connectivity is required for footage to stream consistently and be analysed in real-time. However, with this infrastructure in place, businesses and governments will be able to understand their customers and citizens much better and provide them with highly personalised products and services that improve their quality of life.
Keeratpal Singh: With emerging economies, more traditional factories would utilise AI, IoT and autonomous machinery for manufacturing. Newer townships will be transformed into smart cities and built with smart home facilities. IoT and cameras will be installed as part of surveillance, security and improving the quality of human lives. There would be more smart traffic lights and an improved transportation system. Digitalisation of businesses will provide better customised service with omni-channel customer experience. More jobs will also be created for innovation, R&D, supervising AI, developing and maintaining the digital ecosystem.
Saad Toma: We are going to see many tasks that were performed manually by workers become automated. This will increase efficiency and enable enterprise to reinvest in more transformation, continually improve customer experience and outcomes. The amount of data entering the enterprise in Asia is already considerable, but that number, driven by IoT, mobile apps and so forth will only increase, and we are going to see the enterprise become increasingly “cognitive”, using AI to predict outcomes, perform automated tasks and provide insights.
Gustavo Fuchs: In another two years’ time, we expect 60 per cent of Asia-Pacific’s GDP to be derived from digital products and services to be created directly through the use of digital technologies such as mobility, cloud, Internet of Things and AI, a massive jump from just 6 per cent of the region’s GDP in 2017. We believe that this will continue to grow in the years that follow, as more organisations embrace tech intensity.
Dirk-Peter van Leeuwen: Starting from a low base, Asia’s digitalisation efforts will progress well in the coming years. This will empower digital trade and e-commerce in Asia. Cashless payments, for example, like the ones we are seeing in China, will scale up and will be implemented across more countries in Asia. Governments will also provide more digital-based services to serve their citizens better.