There is a cardinal rule in business: do not change something that works. It is a time-worn mantra that has contributed to a culture of resistance and guardedness. This could partially explain IDC’s recent Digital Transformation Survey, which revealed that only 7% of small and midsized businesses have adopted a digital strategy beyond integration, despite over 40% of them believing in the importance of digitalization to future growth. The cause for worry does not lie in the lack of digital business readiness but the gap between the understanding the concept and action needed. Businesses understand that disruptions are not exceptions but a norm in today’s world. That said, how do organizations plan for the future? Specifically, how do organizations design a digital strategy that is dynamic enough to embrace future disruptions for growth?
Strategizing for disruptions
Businesses are increasingly investing in technologies of the future, forecasting future digital trends and recruiting the best minds to enhance their digital infrastructure. While these are encouraging moves, the most impactful strategy to combating the disruption would be to embrace it. A strategy for disruption is great news for everyone because disruption is no more than innovation in action. It is great for the consumer, especially since a major factor behind the current uncertainty is the incredible shift in power to the customer that has been seen over the last five years.
Power in the hands of customers
Some of the customer-centric issues that enterprises today face are as follows:
- Communicating and interacting through multiple channels
- Customizing products and services
- Incorporating customers feedback in product design
- Coping with customers that can source globally and compare prices globally
- Providing add-on digital services
- Dealing with the immediate influence of market opinions from anywhere around the world, anytime.
The banking and financial services industry is working towards overcoming customer-centric issues, where traditional banks in the region, such as DBS and Bank Rakyat Indonesia (BRI) are enhancing their mobile banking system and offering increasingly personalized services to consumers. Financial players are investing heavily in data analytics to draw actionable insights into consumer spending habits and transaction patterns. A recent study by Frost & Sullivan revealed that businesses in Asia are increasingly moving towards services-based business models to counter the proliferation of a competitive, disruptive environment.
The industrial Internet will have a bigger impact on digitalizing the world compared to the social or consumer phase. Businesses in this region are still in the early stages of the Internet of Things (IoT), and “the who, the what, the how and the why” of the industrial Internet are all wide-open issues.
Big data opens up doors
The solutions customers are building are changing the world on a daily basis and the technology portfolio driving this change is expanding too. The knock-on effect? The industrial Internet, the greatest integration program man has ever seen, provides the backbone for the amalgamation of Big Data. Big Data itself provides the fuel for machine learning and Artificial Intelligence, which forms the backbone for the next generation of IoT applications.
For the enterprise and government services, this means having IT and business departments use common tools, speaking a common language and co-developing new applications as rapidly as the market demands. It means having the ability to identify market trends early, spot individual business or external events in real-time and having the flexibility and agility to change your business operations to the “new” situation as fast as needed. Information, analysis and the ability to respond are key to future success.
The speed of adapting to change is of essence. The faster the enterprise moves, the easier it is to turn a business challenge into a new business opportunity. Only the slow movers will view digitalization as a threat.
The enterprise transformation driven by digitalization overpowers any other factors impacting the global economy - from low oil and commodity prices to sub-zero interest rates. For banks facing cost pressures and dealing with clients from across the region, it is important that they identify the impending digital revolution early and disrupt themselves before they are disrupted by new or old competitors.
From the proliferation of e-commerce to the surge of Fintechs in the financial services industry, Southeast Asia is facing disruptions from every corner. However, businesses are still trailing their western counterparts in taming the beast of disruption. This simply indicates that there is a lot of work to be done, especially if businesses want to harness the immense potential that the digital world has to offer.
2017 is indeed going to bring some exciting times, and only the enterprises with digital capabilities would emerge as winners in this evolving digital era.
Anneliese Schulz is Vice President of Asia, Software AG