Digital transformation could add as much as $45 billion to Australia's gross domestic product (GDP) by 2021, according to a new breakdown of joint research from Microsoft and IDC.
The Australian GDP growth rate is set to increase by 0.5 per cent annually according to the study Unlocking the Economic Impact of Digital Transformation in Asia Pacific in 2017.
It is unclear, however, just how reflective the findings may be of the bigger picture in Australia, given the study's sample size -- just 100 decision makers from mid and large-sized Australian organisations were consulted for this study. According to the Australian Bureau of Statistics there were more than 2.2 million businesses actively trading at the end of 2016-17.
Regardless, the study showed that benefits from digital transformation can vary from improvement in profit margin and productivity, and cost reduction and increased revenue from new products and services.
Challenges were also brought up including lack of skills and resources plus siloed organisations and cultures which are resistant to change
Microsoft Australia managing director, Steven Worrall, said that organisations are deploying artificial intelligence (AI) as part of their digital transformation initiatives, which could accelerate growth further.
“However, it’s important to note, transformation is about people as much as it is about technology," Worrall said. "The top two barriers to digital transformation cited in the study are strongly anchored in an organisation’s ability to empower their people and transform their organisations to take advantage of the opportunity that digital transformation represents."
That is also what Microsoft Asia president, Ralph Haupter, said in February when the study came out.
“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.”
Focus on reskilling and upskilling
The 100 Australian business decision makers surveyed believe the biggest benefit of digital transformation will be new higher value jobs.
Worrall believes that this will affect jobs in a way it will evolve and change.
"While it’s encouraging to see that 66 per cent of respondents are confident young professionals already have future-ready skills that will help them transition to new roles, organisations must focus on reskilling and upskilling those already in workforce who may not have the required skillset for the changing economy,” Worrall said
Among the important skills to focus on Microsoft listed complex problem solving, critical thinking and creativity. The report also suggested that businesses need to rebalance the workforce to attain and attract key digital talent, as well as be open in creating a flexible workforce model where they tap into a skills-based marketplace.
A LinkedIn study in Australia revealed the top in-demand skills are big data, mobile development, and user interface and experience design.
The APAC picture
Digital transformation could add as much as $1.48 trillion to Asia Pacific's GDP, the study revealed.
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.
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.
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 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.
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 cybersecurity 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.