AI to nearly double Singapore innovation rate by 2021

• Artificial intelligence (AI) will accelerate the rate of innovation and employee productivity improvements to nearly double in Singapore by 2021.

• Despite clear benefits in adopting the technology, only 59% of organisations in Singapore today have embarked on their AI journeys.

• Culture and skills are among key barriers for organisations to succeed in AI.

• Singapore needs to focus on improving its AI readiness, specifically in the infrastructure dimension, to ensure the success of its AI journey.

By 2021, AI will allow the rate of innovation and employee productivity improvements in Singapore to nearly double (1.9 times and 1.7 times, respectively), according to business leaders in Singapore. The study from Microsoft and IDC Asia/Pacific, Future Ready Business: Assessing Asia Pacific’s Growth Potential Through AI^* surveyed over 104 business leaders and over 102 workers in Singapore.

Source: Microsoft. AI impact on rates of innovation and employee productivity improvements today and in three years.

While more than 80% of business leaders polled agreed that AI is instrumental for their organisation’s competitiveness, only 59% of organisations in Singapore have embarked on their AI journeys. Those organisations that have adopted AI expect it to increase their competitiveness 1.7 times by 2021.

“Today, every company is a software company, and increasingly, every interaction is digital. To be successful in this new world, organisations need to be a fast adopter of best-in-class technology; and secondly, they need to build their own unique digital capabilities,” said Kevin Wo, MD, Microsoft Singapore.

“AI is the defining technology of our time that significantly accelerates business transformation, enables innovation, boosts employee productivity, and ensures further growth.  Economies and businesses that have yet to embark on their AI journey run a real risk of missing out on the competitive benefits that are enjoyed by leaders.”

For the organisations that have implemented AI initiatives, there were five top business drivers to adopt the technology. In order of priority, these were:

- Better customer engagement (32% of respondents named it as the No. 1 driver);

- Higher competitiveness (19%);

- Accelerated innovation (16%);

- Higher margins (15%); and

- More productive employees (6%).

Victor Lim, VP, Consulting Operations, IDC Asia/Pacific said that those who have started on their AI journey are already reaping benefits. "Three  years from now this improvement will go up to high percentages," he said.

He noted: “Last year, organisations that have adopted AI saw tangible improvements in those areas in the range of 16% to 26%. They forecast further improvements of at least 1.6 times in the three-year horizon, with the biggest jump expected in accelerated innovation.”
 

Source: Microsoft. AI improves business today and even more in three years.

 
The study also evaluated six dimensions critical to ensuring the success of a nation’s AI journey and revealed that Singapore needs to build upon its infrastructure in order to accelerate its AI journey.

“To succeed in AI race, markets in the region need to substantially improve their readiness. Organisations’ leadership should make AI a core part of their strategy and develop a learning agility culture. They have to continuously invest in this transformative technology for the long-term success, sometimes without immediate returns,” Lim said.

“There is an urgent need for talents and tools to develop, deploy and monitor AI models, along with the availability of a robust data estate with the adequate governance.”

Lim said organisations in APAC are generally not ready yet, lacking in strategy and infrastructure for example. They do not see AI as a game-changer, he noted. Singapore is not ready yet for AI as well.

"If Singapore wants to be a hub for APAC it needs to focus on these areas, improving capabilities of organisations, not just relying on Excel as their AI model," he said.

"Not enough C-level and board-level people have thought of AI as a game-changer and deployed KPIs for the management team to deploy AI," he added.

Building a data estate across the organisation will also be important, he said. The data has to be curated so that it is of high quality, and accessible to staff.

Business leaders who are adopting AI face three top challenges:

- A lack of thought leadership and leadership commitment to invest in AI;

- A lack of tools and infrastructure to develop actionable insights; and

- A lack of skills, resources and continuous learning programmes.

The study showed that to move ahead on their AI journeys businesses have to create the right organisational culture. More than half of the business leaders and workers surveyed believe that cultural traits that support AI journeys, such as risk-taking, proactive innovation, as well as cross-function partnerships among teams, are not pervasive today.
 

Source: Microsoft. AI readiness in Singapore. Scores up to 4.

 “Business leaders must now embrace a new culture, where innovation and continuous learning are core components of the organisational culture. It sets the stage for agility, adaptability and growth,” said Wo.

The study further found that Singapore’s business leaders and workers hold positive viewpoints about the AI’s impact on the future of jobs. The majority (62% of business leaders and 71% of workers) believe that AI will either help to do their existing jobs better or reduce repetitive tasks. 

“When it comes to creating or replacing jobs, 29% of business leaders believe that AI will produce new jobs, whereas 9% feel that the technology will replace jobs. Interestingly, workers are more optimistic, with only 4% expecting AI to replace jobs, and 10% anticipating AI to create new ones,” said Lim.

The study also found that workers are more willing to reskill than business leaders believe they are. While 20% of business leaders say it may be too difficult for workers to develop new skills, only 12% of workers felt that it was a challenge.

“Microsoft’s vision for AI is first and foremost about people. AI technology cannot progress without them. This means that millions will need to transform themselves into skilled workers as well as learners that an AI future needs,” said Wo.

“It is heartening to see that 80% of businesses prioritise skilling and reskilling of workers in the future. They plan to invest as much, or even more, in human capital than in new technology. Even so, 75% of business leaders have yet to implement plans to help their employees to acquire the right skills, which is worrying in today’s context. They must have the urgency to support the fundamental shift in training workers for the future.” 

“The jobs of today will not be the jobs of tomorrow, and we have already seen demand for software engineering roles expand rapidly beyond just the tech sector. However, building an AI-ready workforce does not necessarily mean an acute need for technological skills,” Wo added.

The top three future skills required by business leaders in Singapore include creativity, digital skills and critical thinking. The demand for all three is higher than the existing supply.

The study also uncovered that business leaders value soft skills more than workers expect. The biggest skills gaps identified were in:

- Adaptability and continuous learning (26-point difference)

- Creativity (14-point difference)

- Digital skills (14-point difference)

Wo discusses AI Leaders and how they differ from Followers.

Additionally, the study identified 6% of organisations which are AI Leaders. These organisations have already incorporated AI into their core business strategy and nearly doubled their business benefits today as compared to other organisations. Those which are at level 1 of AI maturity still consider it to be hype; those at level 2 are working on proofs of concept, while those at level 3 still have adopted some AI. The difference is that AI Leaders, at level 4, have implemented AI analytics and use it to transform the business.

Compared to the rest of the organisations in Asia Pacific AI Leaders are:

 
- 5.4x more likely to increase investments every year to support organisation-wide AI strategies
 

- 4.8x more likely to have staff who tweak and build AI models for different services, creating algorithms and finetuning them

- 3.7x more likely to use natural language processing (NLP), for chatbots and robots that listen and respond to human interaction, and robotic process automation (RPA)

- 3.6x more likely to have in-house developers and specialist engineers to deploy and monitor AI apps

- 3.4x more likely to have ongoing enterprise data governance practices performed jointly by IT and those in business and compliance functions

 
Wo noted that technology adoption is important, but what's going to be important is investment in human capital. "(Organisations) are willing to invest in human capital but haven't started. (Employees) have not got enough time to go into training, don't know where to get the training done and (see a) lack of training available to support them in this journey," he observed.

He suggested that individuals take the initiative to learn and adapt for the AI age rather than relying on organisations to provide training. Microsoft Singapore is offering AI-related training in conjunction with AI Singapore, and is a member of Singapore’s Advisory Council on the Ethical Use of AI and Data.

President of Microsoft Asia Ralph Haupter said there is more interest in getting companies skilled than in pricing discussions.

Andrew Pickup, Senior Director, Communications, Microsoft Asia, said that Microsoft helped shipping leader OOCL digitise their entire supply chain in 15 weeks. "Everything has a chip," he said.

With the addition of AI algorithms, the company was able save US$10 million, he said. The project led to OOCL asking Microsoft to train their engineers in AI techniques as well.

Explore:

Read more about the study


*In the study, 1,605 business leaders and 1,585 workers participated. Business and IT leaders from organisations with more than 250 staff were polled. Business leaders are defined as respondents who are decision makers involved in shaping their organisation’s business and digital strategy. Workers are defined as respondents screened have an understanding of AI today, and who do not play a role in decision making process within their organisation. 

Fifteen Asia Pacific markets were involved: Australia, mainland China, Hong Kong, Indonesia, India, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam. The industries polled included agriculture, automotive, education, financial services, government, healthcare, manufacturing, retail, services and telcommunications/media.