Cisco unveils details about state of digital readiness in ASEAN

 IT leaders rate cloud, cybersecurity, big data and analytics, plus automation as the top technologies shaping businesses 

 Budget constraints, lack of adequate talent and unfit IT infrastructure are hindering technology adoption

 Almost all (94%) of ASEAN companies are confident their current digital transformation strategy is appropriate to help them stay competitive (84% in Asia Pacific)

 IT managers in ASEAN rate cloud, cybersecurity, big data, analytics, and automation as top technologies that are shaping the digital future of their businesses

There are always compromises when it comes to technology implementations, some which companies regret. On the other hand, companies in ASEAN are the most confident about their digital readiness across Asia-Pacific. These were just two of the findings of wide-ranging research* released by Cisco, titled Ready, Steady, Unsure – A Technological Perspective into Asia-Pacific’s Readiness for Digital Transformation. 

“Everyone in this part of the world that we polled has a digital transformation strategy, and they feel they're adequately prepared for it; they feel that they have all the relevant technologies,” said Vish Iyer, VP, Architectures, Cisco Asia-Pacific, Japan and China, noting that the numbers were much higher than for developed markets like Japan and Australia.

Source: Cisco infographic. ASEAN countries are the most confident about their digital future in the Asia-Pacific region.

The study shows that the majority of companies in the six largest economies of the ASEAN bloc are confident that their current digital transformation strategy is appropriate to help them stay competitive (94%), and that they are adequately prepared to adopt relevant technologies to accelerate digital transformation (93%). This confidence among ASEAN companies is above that of the rest of the Asia-Pacific region (84%). 

Iyer explained that companies are transforming to reap cost efficiencies, but also to differentiate themselves. "In Southeast Asia, across the board, one of the key drivers that we see is increasing revenue, but it is also a very cost-sensitive market," he said. "Productivity is a very key requirement."

"The focus now is how we can automate, not just the IT infrastructure, but also the operations technology (OT) infrastructure," he added. He feels that adoption rates are slightly slow in Southeast Asia, but that CIOs will be talking about it in the next six months.

He also noted that it is primarily a mobile-first market outside of Singapore. "It's all about the user experience, it's a mobile-first world," he said. 

While companies in ASEAN are prepared to accelerate digital transformation, confidence levels vary across companies. Larger companies may have not fully realised the benefits of their legacy technology as yet. On the other hand, younger and smaller companies, unburdened by legacy systems and large user bases, have a unique opportunity to leapfrog their IT development, Cisco said. 

Despite having more resources to do so, roughly two in 10 (19%) of IT leaders in large organisations - defined as those with more than 10,000 employees - do not think they are ready to adopt relevant technologies for digital transformation. In contrast, 7% in smaller companies said the same thing. 

Iyer said: “Modernisation of IT infrastructure is an absolute necessity to succeed in a digital world. Today, 95% of IT operations are still done manually, which means it is very hard and time-consuming for IT to keep up with the business demands and growing number of users and devices. 

"Cisco is helping companies make the foundational aspects – their networks, private and public clouds, and cybersecurity framework - much simpler to not just upgrade, but also manage, consume and protect. This way, we are able to help companies shift their focus from IT management to the realisation of new value, new innovation and new business models.”

When it came to naming specific technologies, IT managers in ASEAN rated cybersecurity, big data, analytics, and automation as the top technologies that are shaping the digital future of their business. Despite the awareness of technologies that shape digital futures for businesses, adoption rates are relatively low across the region. 

Big data and analytics adoption rates were at 55%, and 48% had invested in automation. Six in 10 of the ASEAN respondents have started to adopt cloud; and just 59% shared that they have cybersecurity solutions. Cybersecurity was largely a reactive rather than proactive play as well. Almost half of the respondents (47%) admitted to implementing security solutions and upgrades only after a breach. 

Developing countries seem to be moving much faster than more mature ones in parallel with the finding that smaller companies are more optimistic than larger ones about digital transformation. Drilling deeper, Vietnam stood out as being a technology-savvy country, whereas Singapore's lead in technology seems to have slowed: 

- Vietnam (77%), Singapore (64%) and Indonesia (63%)are leading in cloud adoption, with the education and retail sectors saying that cloud is the most relevant technology for them.

- For cybersecurity, Vietnam is again in the lead (88%), followed by Singapore (60%) and Thailand (58%). A high proportion of the financial sector (84%) named cybersecurity as particularly relevant.

- Singapore leads for adoption of big data and analytics, with 65% already invested in this aspect of technology, with Malaysia close behind at 64% adoption, and 56% for Thailand. Healthcare stood out here in terms of the main vertical which sees this as relevant.

- When automation is concerned, Vietnam had the highest rates of adoption at 63% and then Thailand at 59%, followed by the Philippines at 49%. Finance, healthcare and manufacturing see this technology category as particularly relevant. 

- The study also polled respondents about AI and the Internet of Things (IoT), both of which ASEAN lags in. Thailand leads in AI adoption (49%) followed by Vietnam in 45%, and then Indonesia at 42%. For IoT, the ASEAN adoption average is 28%, with Singapore and Vietnam tying at 36%, followed by Thailand at 32% and then Malaysia at 27%.

The IT leaders attribute low adoption rates to budget constraints (47%), lack of adequate talent (43%) and unfit IT infrastructure (42%). Although a majority of IT leaders (92%) in ASEAN say their companies have modernised the IT infrastructure – including networks, data centres and cybersecurity – in the last three years, almost half of them (46%) admit to ignoring innovation and post-sales support considerations in a bid to lower overall pricing. 

These cost-based decisions have led to regret among nearly four in 10 (37%) IT leaders and help to explain the lack of confidence that their IT infrastructure can support new technologies. "When you have a limited budget you have to make tradeoffs," Iyer explained, observing that buyer's remorse was seen not only at different levels within a company, but also across different functional levels.

"It was a key 'aha!' moment, that organisations are making sub-optimal decisions. It was the first time we saw 1,300 respondents actually agree on one thing," he said. "The performance didn't meet up to their expectations. Because of that they had to top up their investments."

Source: Cisco. Technology adoption rates across ASEAN for six types of technologies.

Naveen Menon, President, Cisco ASEAN said: “Over the next decade, technological innovation will accelerate the pace of change across industries. The ASEAN region, and companies operating here, have a unique opportunity to leapfrog the more developed nations on this front as they don’t have legacy IT infrastructure encumbering them. However, without the right resources - especially budgets and talent – companies will be limited in their ability to lay the right foundation to adopt and develop technologies they truly need to accelerate their transformation.

“This is the perfect opportunity for policy makers, academia and businesses to work collaboratively to groom future talent that can transform entire economies. At Cisco, we are proud of the role that our Networking Academy has been playing on this front. Since its inception, the Networking Academy has trained more than 885,000 professionals across ASEAN.”

The study’s suggested recommendations include the adoption of an integrated cybersecurity framework, optimisation of the network for cloud and the recognition of the long-term business value of a strong IT foundation defined by scalability, automation and security capabilities.

Hashtag: #DigitalReadyAPAC

*The Cisco study, conducted by a third party research company, interviewed 1,325 senior IT managers in companies with more than 500 employees from manufacturing, education, retail, financial services, government, and healthcare, in Australia, China, Indonesia, India, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.