Digital transformation could add as much as $1.48 trillion to Asia Pacific gross domestic product (GDP), according to a Microsoft and IDC joint research.
According to Unlocking the Economic Impact of Digital Transformation in Asia Pacific in 2017, six per cent of the region’s GDP was derived from digital products and services created directly through the use of digital technologies, such as mobility, cloud, internet of things (IoT) and artificial intelligence (AI).
The research suggests this is expected to increase to 60 per cent of Asia GDP by 2021.
Benefits of digital transformation identified through the study include increased profit margins, productivity, customer advocacy, revenue from new products and services and more cost reductions. These benefits are expected to improve by approximately 50 per cent in three years.
“We see AI as a primary catalyst for further growth,” Microsoft Asia president, Ralph Haupter, said. “Our customers across Asia are already 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.”
Jobs of the future
The study found that digital transformation will also deliver three top social benefits: smarter, safer and more efficient cities; creation of higher value jobs; and potential increment to personal income through freelance and digital work.
“The study found that 85 per cent of jobs will be transformed in the next three years, half of which will be redeployed to higher value roles, or reskilled to meet the need of the digital age. And, what is encouraging is that two thirds of respondents are confident that their young employees already have future ready skills that will help them to transition to new roles,” according to Haupter.
The study found that 26 per cent of new jobs are expected to be created from digital transformation, which is about the same number to be automated, or about 27 per cent; suggesting a neutral effect..
Digital leaders see more benefits
Organisations that have full or progressing digital transformation strategies, with at least a third of their revenue from digital products and services have been classified as digital leaders in the study. This constitutes seven per cent of organisations in the region.
The study indicates that leaders experience double the benefits of followers, and these improvements will be more obvious by 2020. The study also revealed that almost half of leaders, or 48 per cent, have a full digital transformation strategy in place.
The study identified key differences between leaders and others in Asia Pacific, such as leaders being more concerned about competitors and emergence of disruptive technologies, with the rise of new type of competitors.
Leaders are focused on creating a culture of agility and innovation to counter competition when addressing business concerns whereas followers are more focused on improving employee productivity and profitability.
The survey showed that leaders are more focused on leveraging data to grow revenue and productivity, and to transform business models.
Leaders are more aware of challenges in their digital transformation journeys, such as skills and cyber security threats. Leaders have also identified the need to bolster their data capabilities through the use of advanced analytics to develop actionable insights in fast-moving markets.
AI and IoT are the areas of investment for leaders in 2018. Leaders also showed more interest in investing in big data analytics to mine data for actionable insights than others
Decision makers from 1,560 mid and large-sized organisations were surveyed for the purpose of the research in 15 countries including Australia, China, Hong Kong, Indonesia, India, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam.