Image (IDG) - ICT trends
In conjunction with an extensive 2017 leadership insights roundup feature on Malaysia's ICT industry, Computerworld Malaysia interviewed Vijay Sundararaman (pic below) - Country Manager, IDC Malaysia.
His overview comments referred to IDC ways of classifying countries in Asia/Pacific, depending on the level of digital transformation journey happening within the countries. These three definitions are:
- Digital transformers: they seek innovative ideation, want design concept, desire a learn-fast work source environment and demand for on-time insights and experiential engagements; CxO engagements are very important
- Technology Optimisers: they seek modernisation with local traditions embedded; CIO engagements are very critical
- Technology disruptors: they seek creative/entrepreneurial and big-scale innovations with technologies at the core; CIO engagements are key but LoB stakeholders cannot be ignored
"The adoption of '3rd Platform' technologies - such as Cloud, Mobility, Social and Big Data/Analytics - has accelerated as enterprises commit to Digital Transformation (DX) on a massive scale," continued Sundararaman.
"In 2017, IDC predicts that DX will attain macroeconomic scale over the next three to four years, changing the way enterprises operate and reshaping the global economy and expects we will see in 2017 the dawn of the 'DX Economy'," he said.
"Currently, we see Malaysia as a 'Technology Optimiser', where adoption is proceeding at a brisk pace in many technology areas across industries, but there are local cultures, traditions that need to be embedded that slows the process down somewhat," said Sundararaman.
Every organisation now has cloud adoption
"For example, adoption of some of the 3rd platform technologies such as cloud and mobility has been increasing in the last two years. Based on our latest research there is no organisation in Malaysia that doesn't have some sort of cloud adoption plan, while almost 50 percent are using cloud services beyond one or two simple applications," he said.
"Similarly, only a quarter of the enterprises in Malaysia were not considering mobility adoption, with the remaining 3/4th of enterprises already deploying either devices or enterprise mobility management solutions and mobile apps," Sundararaman. "This is a sea change compared to a couple of years ago, when most enterprises did not have a good awareness about the role of mobility solutions in driving productivity and efficiency."
"In general, adoption data for Malaysian enterprises slightly lags some of the leading countries such as Singapore, Japan and Australia," he said. "Which is why we think the classification of Malaysia as a 'Digital Optimiser' is rather apt. Some of the things we will look at later will make this clearer."
"Beyond the individual adoption of technologies, the key question really is what is happening within the enterprises themselves, and what is the impact to the economy?" said Sundararaman. "Another area we are looking at this year is the impact of digital transformation in industry verticals such as retail, manufacturing and services within Malaysia."
Moving beyond the IT department
"It is vital that the benefits of cutting edge technology transformation move beyond the IT department, and business units (such as product, sales, R&D etc.) that help deliver the core services are able to fully adopt and utilise them," he said. "The pace of change has been rather slow in Asia compared to other regions globally. This is quantified if we look at the ratio of IT spend funding between the CIO/IT function and line of businesses (LoB) in this context."
"In Malaysia, 82 percent of the IT spend funding originated from the CIO's office, while only 18 percent was driven by LoBs," said Sundararaman. "Compare this to Australia where the ratio stands at 56 percent CIO / 44 percent LoB and Japan where it is currently at 67 percent /33 percent. So typically, we tend to see stronger partnerships between the CIO and LoBs in Japan, Australia, New Zealand, Singapore, and even China. Countries such as Malaysia, Indonesia, Korea, and Taiwan still seem to be following the traditional model where IT drives changes throughout the organisation. We expect this to change over the next two years."
"Speaking of challenges, one key external challenge that most industries (particularly consumer oriented) have been grasping with in the past year or so is the rise of digital platforms and the services they provide," he added. "They tend to be social in nature, usually free or ad supported, and decentralized. The consumer demographic is also very different today, and many companies that are more traditionally oriented do not fully realise the impact this can have to their organisations if they are not nimble enough."
"Globally, we expect half of global top 1000 organisations will see the majority of their business depend on their ability to create digitally-enhanced products, services and experiences," Sundararaman said. "Asia is the leader in these trends (in social adoption for example), hence the impact in countries such as Malaysia should not lag developed markets such as the U.S."
The need for DX strategy
"In Malaysia, specifically, most enterprises are keenly aware on the need to build a strategy around adopting these digital/transformative technologies," he said.
"However, there is a lot of noise in the market that buyers have to navigate to find the right solution for their organisations," said Sundararaman. "So much so that, having a clear understanding on what to adopt, how to adopt and what are the real values that can be derived from these implementations still seem to be slowing down adoption rates."
"With this in mind and with a view to allay some of these fears, IDC has been working with local organisations embarking on their digital transformation journeys equipping them with industry specific use cases, regional and local best practices/pit fall in tech implementation and assisting them to identify the right vendors who can support these requirements; cutting through the noise," he said.
"This way buyers can focus on the technology challenge and the solutions that will help them, rather that focus on variables such as uncertainty that can be mitigated through these learnings," said Sundararaman.
The Digital Economy and 2020
Asked about the emphasis in Budget 2017 on Malaysia's Digital Economy goals, he said that with 2020 ('developed nation status') looming: "Malaysia has generally done well in its journey towards a digital economy. Key focus has been the access, adoption and usage of digital tech towards both consumers and businesses."
"For example, high speed internet connectivity is one of the fundamental requirements in accelerating the adoption and usage of digital services in the economy, which produces a positive impact in overall GDP growth," said Sundararaman.
"Recognising its importance, the Malaysian government has placed a high emphasis in this area in previous budgets, and continues to make this a priority in the 2017 edition by mandating fixed line internet services to be increased to a baseline of 20Mbps," he said. "This will improve access, but adoption will still lag because cost of bandwidth is still high (for both businesses and consumers) in Malaysia."
"In my view, two important focus areas (if we are to meet the 2020 goal) should be: the Acceleration of digital transformation within existing business in the key industries of Malaysia such as Manufacturing, Agriculture, and Services; and ramping up SME sector performance, which can drive a much larger part of GDP than it does currently," said Sundararaman.
"Progress on the first point is what we have been talking about earlier," he said. "The government's role here is to be a facilitator for change, by creating the right environment for these businesses."
"The second point is where the government can take a more active role," said Sundararaman. "According to the government's own statistics, 73 percent of SMEs in Malaysia have little to no usage of ICT in their business operations, which implies awareness of the benefits of digital platforms to enhance their business may also be low. This needs to be rectified urgently."
"Most importantly, the spirit of entrepreneurship coupled with a deep understanding of cutting edge tech (e.g. Virtual Reality or Artificial Intelligence) is required for SMEs and new start-ups to really succeed in creating new digital businesses, and compete and thrive against their global counterparts," he said. "This will be crucial because the new marketplace is digital, and is borderless.
And what of realistically meeting the 2020 goal? "Will it be possible by 2020? With the right policies and a sense of urgency, it is possible," Sundararaman said. "Is it probable? I suppose we will have to find out in 3-4 years' time."
The first edition of this article appeared on Computerworld Malaysia 3 January 2016.
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