84% of business leaders in Southeast Asia believe they need to be a digital business to succeed: Microsoft study

Business leaders in Southeast Asia are showing urgency in embracing the 4^th Industrial Revolution, where 84% of them believe that they need to transform to a digital business to enable future growth and 83% agree that new data insights can lead to new revenue streams for their organizations. These are some of the key findings of the Microsoft Asia Digital Transformation Survey* to understand how business leaders are embracing the digital era.

Technology advancements have ushered in the 4^th Industrial Revolution, where cutting-edge technologies such as Internet of Things (IoT), artificial intelligence (AI), advanced data analytics, and mixed reality are powered by cloud computing tocreate limitless possibilitiesin transforming the way people work, live and play. This revolution, together with rapid urbanization, emergence of the millennial workforce and a fragile global economic climate, is ushering societal and economic changes at an unprecedented pace.

The Microsoft Asia Digital Transformation Study surveyed 572 business leadersfrom Southeast Asia. All respondents were pre-qualified as being involved in shaping their organizations’ digital strategy.

Even as majority of business leaders are aware of the urgent need to transform digitally toaddress the changing business climate, the study found that the transformation journey for most Southeast Asian organizations is still at its infancy. In fact, only 31% of business leaders have a full digital transformation strategy and less than half 47% are in progress with specific digital transformation initiatives for selected parts of their business. 23% still have very limited or no strategy in place.

Vu Minh Tri, CEO Microsoft Vietnam said: “The Microsoft Asia Digital Transformation Study has shown that business leaders have started to act on the need for digital transformation to address the challenges and opportunities of the 4^th Industrial Revolution in the region. Lessons from past industrial revolutions have taught usthat organizations that do not evolve fast enough will be less competitive or even obsolete as they face disruptions in every industry. We urge organizations of all sizes to digitally transform themselves amidst changing demands externally and internally, to stay relevant. At Microsoft, we believe this involves transformation in four key pillars – empowering employees, engaging customers, optimizing operations and transform with new products, services or business models, and data and the cloud are key enablers of these.”

The Microsoft Asia Digital Transformation Study was conducted between October to November 2017 involving 1,494 business leaders in 13 Asia Pacific markets. The 13 markets include Australia, China, Hong Kong, Indonesia, India, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan and Thailand. All respondents were pre-qualified as being involved in shaping their organizations’ digital strategy, and are working in firms with more than 250 employees.

Clear priorities for digital transformation but true transformation lacking

Microsoft has defined what it means to transform in four key pillars, including Engagecustomers, Empoweremployees, Optimize operations and Transform products& business models.

The Study found that business leaders are putting people at the forefront of their digital transformation strategies:

Fig 1: Prioritization of Digital Transformation pillars among Southeast Asia’s business leaders today

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Said Vu Minh Tri, CEO Microsoft Vietnam: “It’s concerning to see that while there is widespread acknowledgement on the need to transform, they are doing so incrementally.

With constant pressure fromnewer, agile and tech savvy players disrupting across industries in Asia, thetransformation of products and new revenue models provides the greatest opportunity for organizations to truly lead rather than be disrupted.

Leaders need to rethink business models, find new data insights which lead to new revenue streams. And they need to do this by embracing a different way of bringing together people, data, and processes. which create value in a new digital business.”

Emerging technologies in demand

Cloud computing and the decreasing cost of devices have made it more affordable for companies of any sizes to transform digitally, according to 84%of business leaders in South east Asia surveyed. Majority of business leaders (81%) regarded cloud computing as essential in their digital transformation strategy.

In the next 12 to 18 months, business leaders in Southeast Asia are interested to explore a range of emerging technologies to accelerate and achieve digital transformation. The top five technologies identified by business leaders as being relevant to them in Asia are: Artificial intelligence, Internet of Things (IoT), Wearable technologies, Quantum computing, and Next Generation Computing.

Barriers to digital transformation in Asia Pacific

While there is no doubt that digital transformation will bring significant benefits for both businesses and employees, the path to digital transformation has been slow, given that only (31%) have a full digital strategy in place.

According to business leaders in the study, the top five barriers to digital transformation are, in order of priority: A lack of digitally-skilled workforce able to optimize digital businesses; Cyber threats and security concerns; Lack of organisation leadership skills; Lack of supporting Government policies and ICT infrastructure; and Uncertain economic environment.

Increasing security threats in today’s digital economies is real and cannot be ignored. There is a continued perception among business leaders that the cloud is less secure. However, they may be less privy to the advances being made in the cloud on security and privacy and need more exposure on how, with the current threat environment, it will be safer being in the cloud than relying on tradition forms of IT. In fact, a recent Microsoft Asia Pacific survey of 1,200 IT leaders showed that 87% believe that in the longer term, the cloud will be safer.

“People don’t use technology that they don’t trust. This is a golden rule that applies to organizations and individuals alike as we live in a mobile-first and cloud-first world. Ensuring security, privacy, and compliance are key to enabling businesses to carry out digital transformation with confidence.With the rise of mobile workers introducing new devices, apps, and data into organizations today, protecting sensitive company data requires a new and integrated approach, all of which we have invested in significantly,” Vu Minh Tri, CEO Microsoft Vietnam strengthened.

Microsoft’s mission is to empower every person and every organization on the planet to achieve more—building technology so that others can innovate, build their own technology, and create solutions that make things happen.Microsoft is uniquely able to enablebusinesses of all sizesto get from where it is today, to where it needs to be as digital business through its flexible technology solutions, integrated offerings and our investment in being the most trustworthy with investments in security, privacy and control, compliance, and transparency.