Digital transformation in Asia Pacific is picking up speed

Jimenez said that by 2021, at least 60% of APeJ GDP will be digitalised.

There has been a sea change in digital transformation efforts in the Asia Pacific region recently. Daniel-Zoe Jimenez, Asia Pacific Regional Director & Digital Transformation Lead, IDC said that the consultancy had revised its forecasts for digital transformation substantially recently. 

"By 2021 at least 60% of APeJ GDP is going to be derived from new digital products and services," he said. "We estimated at the end of last year that it was 6%, now it's 60% by 2021."

Jimenez also said that digital transformation is "about the how and not the what". "Traditional incumbents are facing the challenge of creating new business models," he said. "We need to be capable of creating new business models."

IDC also predicts that by 2018 all digitally transformed organisations will generate at least 45% of their revenues from future of commerce (FoC) business models. By FoC IDC is referring to using what it calls third platform technologies and innovation accelerators to change the way commerce is done, ultimately delivering outcome-based products and services.

An FoC model example is Domino's Australia's Pizza Mogul programme, which invites users to create their own pizzas from a selection of 40 ingredients and earn royalties whenever someone buys a pizza made with their recipe.

"[When a company like Domino's] allows customers to design their own pizza [the customers] become an advocate for that company," Jimenez said.

US company Beam Dental has another creative business model, Jimenez said. Beam sells corporate dental insurance plans and the prices paid are lower if the group as a whole takes care of their teeth well. Beam knows exactly how well group members are performing with its free smart toothbrushes, dental floss and toothpaste. The data from the toothbrushes also goes back to augment products and services.

Jimenez also shared KPJ Healthcare's dynamic pricing model. The Malaysian company dynamically adjusts revenue structures based on changes in consumer behaviour and/or outcomes.

Jimenez outlines the different stages of maturity for digital transformation.

According to the IDC MaturityScape Benchmark: Digital Transformation in APEJ, 2018 there has been progress, with 25% of companies in Asia Pacific excluding Japan (APeJ) at stage 1 digital transformation, but the figure is still behind efforts in the rest of the world, Jimenez said.

Barriers to digital transformation, according to 78% of organisations, include change management, lack of executive commitment and limited organisational capabilities to accelerate digital transformation. 

Companies may be driving change in silos, or driving change without using relevant metrics to drive success, Jimenez said. "Digital transformation is all about scale, not siloed successes," he added. "Organisations are struggling with that."

In addition to traditional key performance indicators (KPIs) for success which are mostly finance-related, and trailing indicators of success which rely on past data, leading indicators of success are also needed as KPIs, Jimenez said. "You have to have a balanced scorecard that combines and traditional and new metrics," he suggested.

Such KPIs include the net promoter score (NPS), which ANZ Bank and Telstra already use across the board, Jimenez shared. Employee bonuses at both companies are pegged to NPS results.

Other advice from Jimenez included starting small, focusing on workforce roles that will be critical three to five years down the road.

Hewett is seeing momentum gather for digital transformation in the region.

Duncan Hewett, Senior VP & GM, Asia Pacific & Japan at VMware, agreed with Jimenez on the interest in digital transformation, which he said comes from companies of all sizes. "This shift is absolutely real...In the last 12 months we have seen more transformations across every industry," he said. "Leading clients are now at the stage of delivering services out to business to allow them to innovate at speed and at scale."

VMware customer Airtel is building a scalable private cloud that has made it easy to compete in the marketplace and bring on new subscribers, to the tune of onboarding 10 million subscribers a month, with 99.85% of customers digitally onboarded. "This is about providing a new function that can truly scale," Hewett said. 

BookMyShow in India, offering showtimes, movie tickets, reviews, trailers, concert tickets and events nearby its customers, runs on a completely virtualised platform. The new fluid infrastructure enables the company to manage scalable engagement with massive numbers of consumers, including large spikes whenever a new Bollywood movie comes online, Hewett said. 

A third VMware customer has a private cloud that is used to push 5,000 new virtual machines (VMs) every month to projects across the world. The platform is able to reharvest that capacity at the rate of 4,000 VMs a month, Hewett said. "You can't do it manually," he explained.

Tips for DX success.

Jimenez and Hewett spoke on the sidelines of the VMware CIO Forum 2018 in Singapore. Explore the related TechTrade Asia blog posts:

CIO trends for 2018

Overcoming hurdles to digital transformation

Singtel and VMware partner to accelerate digital transformation in Asia Pacific