A recent study posits that digitalization can prepare corporates in APAC for the unpredictable.
In these current uncertain global times, it is important that senior executives do what their people both expect and need from them: have the ability to lead in both the good times and those of challenge.
In a dynamic business environment, it does not matter whether the disruption is a global health epidemic, new competition, bushfires or Brexit. Agile, adaptable businesses with advanced digital capabilities are best positioned to weather any storm—and to create long term value. This is the hidden message in EY’s latest study, Tech Horizon: Leadership perspectives on technology and transformation.
The report finds that companies that lead in digital transformation make more money and are better equipped to operate in fast-moving, unpredictable conditions.
While Asia-Pacific currently trails in digital transformation compared to Europe, the report predicts that within just two years the region will lead the world, with 87% of business leaders expecting to be advanced on their digital transformation journeys.
This forecast should serve as a wake-up call to businesses dragging their heels on digital transformation. Disruption will not slow digital transformation. Instead, leaders understand they must redouble their efforts to better adapt to disruption.
As part of the study, EY surveyed 570 senior business leaders—a third from Asia-Pacific—to better understand the DNA of a digital leader. We found that four key characteristics separate a digital leader from a laggard—and these characteristics form a ‘to do’ list for those companies falling behind.
- Obsess about customers
Digital leaders are committed to their customers—and this is at the core of their digital transformation agendas. In fact, survey respondents said meeting the evolving needs of customers was their top priority, ahead of profitability goals, growing market share, keeping up with competitors and increasing revenue.
How are leaders obsessing about their customers? One large bank created a better experience for existing customers by consolidating multiple data sources, uncovering new insights with the help of data scientists, and building digital platforms that respond better to customer needs. The result? Annualized revenue has increased by US$35 million as customers access the right offers at the right time. The added benefit was an annualized saving of US$30 million on operating expenses by moving customers to digital platforms, eliminating paper and reducing delivery costs.
- Invest in AI and cloud computing
Corporates in the Asia-Pacific region have placed big bets on AI and cloud computing, with these technologies receiving the most investment over the last two years.
EY’s work in the mining sector has seen the uptake of AI and cloud to predict and prioritize problems in large logistical operations. Machine learning can analyse major risks to safety, productivity and business performance by using innovative direct-to-cloud systems that capture and display disparate data sources on user-friendly platforms.
Within three months one client utilized machine learning and increased output delivering a US$50 million annualized benefit. Further savings lay ahead as AI models continually learn and improve on their predictions.
- Focus on innovation
Our survey found that innovation is the top priority for tech teams, ahead of other considerations like improving security. But the biggest obstacles to innovation are ingrained: lack of collaboration across departments and a traditional corporate culture.
A leading provider of health care in Australia has solved the culture challenge by investing US$20 million to separate out a dedicated innovation team reporting directly to a senior business executive.
With a focused capability, the provider has uncovered patient and doctor solutions faster than its competitors. For example, where once health professionals would use primarily their own medical experience to determine the best course of treatment, now predictive analytics and machine learning capabilities assist in the creation of treatment plans with data-driven precision.
The health care provider narrowed more than 3,000 possible plans down to 30 core plans supporting doctors to operate within quality and safety guidelines. In addition, the innovation team worked with patients to develop an app to track their treatments, schedule bookings and provide real-time reactions to close the feedback loop.
- Plug the skills gaps
According to our study, 60% of APAC corporates acknowledge that accelerating their digital transformation means addressing the skills gap. Leaders are looking at a host of solutions, from training and incentives to innovation ecosystems. This helps companies to curate talent and technology, build skills and look at problems through a different lens.
Our study examined three financial metrics: revenue, gross profit and earnings before interest, tax, depreciation and amortization (EBITDA)—to see how these four characteristics play out. We found digital leaders are 50% more likely to see EBITDA increase by more than 15%.
Increasingly, the most profitable companies in the APAC are digital, which means they are also agile and adaptable. The laggards, meanwhile, are now realizing the role that digital transformation plays in preparing business for the unpredictable.