Driving APAC Towards the New ‘Asian Age’
By Chris Chelliah
Asia Pacific remains the fastest growing region in the world. It has grown to become home to more than half the world’s population and soon half of the world’s middle class. Additionally, if you take Sri Lanka, the economy advanced by 4.3 per cent YoY in the first quarter of 2021, the fastest expansion since the last quarter of 2016, as the economy continued to carry out most of the business activities amidst the ongoing pandemic.
However, growth won’t be even, with a growing gap between Asia’s advanced economies and emerging and developing markets, reflecting vaccination coverage and support. This will impact manufacturing output, the supply chain, and local economies.
As corporate and government leaders look ahead to 2022, they hold the future of their institutions in their own hands. Management guru Peter Drucker once said: “The best way to predict the future is to create it.”
For CXOs looking to create the futures of their tech-driven organisations in 2022 and beyond, here are some of the business priorities as starting points.
Boards will demand true transformation from their cloud investments
Organisations worldwide will spend an eye-popping US$1.78 trillion on cloud and other ‘digital transformation’ initiatives in 2022, according to Statista. IDC predicts that by 2023, half of all companies will generate more than 40% of their revenues from digital products and services, compared with a third in 2020.
Question is, are companies and governments investing to truly transform or just applying digital lipstick to business as usual? Forrester calls the latter “digital sameness, and it’s a dangerous trap, because as the lines between industries continue to blur amid the accelerating pace of technology and business change, enterprises need to reinvent themselves.
For example, Asia Pacific governments will take the lead in delivering world-class digital services in 2022, based on what Forrester calls the ‘three pillars of a digital society.’ Those pillars are digital identity (for security and privacy purposes), digital currency (led by China, where more than 20 million consumers use the digital yuan), and data interoperability (Forrester cites the Singapore-Australia Digital Economy agreement and the India-Singapore payments link).
In the private sector, one or more cloud-centric digital ‘outsiders’ already are disrupting just about every industry. If you aren’t building new digitally-based business models, revenue streams, and customer relationships, watch as the digital innovators pick off more high-margin parts of your business.
One company that’s on the front foot is Singtel, which is partnering with Grab, to offer banking services to retail and corporate customers in Singapore. Expect to see more such unconventional digital partnerships across sectors.
This is why the shift to cloud computing, including autonomous technologies, is so critical. Some organisations turn to the cloud for the short-term gains: the ability to move spending from fixed capital to ongoing operations; the ability to get regular technology updates without a lot of heavy lifting; the ability to scale their technology infrastructure and applications seamlessly. Most organisations are choosing multiple cloud providers, in part, to mitigate the risks of downtime and performance bottlenecks. All those benefits are important, no question.
But the big rewards come to those organisations that see cloud more as a liberator, freeing their technical people from spending most of their time on system security, maintenance, etc., letting them develop unique, profitable digital products and services. Gartner calls the cloud a ‘force multiplier’—the scalable, resilient technology foundation for long-term innovation and growth.
Previously, boards gave their management teams quite a bit of leeway to explore the benefits of cloud applications and infrastructure. As we emerge from the global pandemic, 2022 will be the year of reckoning, with boards asking their executive teams for evidence that cloud investments are positioning the organisations for long-term competitive advantage.
Machine learning (ML) and (AI) artificial intelligence will become a core competency for leading digital enterprises
With most enterprises are continuing to drown in data, ML and AL algorithms represent the life raft, helping enterprises analyse and continually learn from the data to improve decision-making and inform a range of next actions.
For the most part, enterprises are still experimenting with ML/AI. For example, marketers are starting to use ML-based tools to personalise offers to customers and measure how satisfied they are at different digital touch points. But a continuing challenge is finding the requisite skills.
While most companies and government institutions don’t have the resources to have qualified data scientists, a more practical alternative is to build smaller, more focused ‘MLOps’ teams—much like DevOps teams in application development. Such teams consist of data scientists, developers and other IT operations people whose ongoing mission is to deploy, maintain, and constantly improve ML/AL models in production.
Meantime, enterprises are taking advantage of cloud infrastructure and applications with ML and AI algorithms built-in. The KBot tool of retailer Kmart Australia, for example, uses AI-powered Oracle Digital Assistant cloud software to give home-improvement shoppers information about product dimensions and features, and it recommends complementary offerings based on previously viewed products.
Forrester predicts that one in five organisations will double down on what it calls ‘AI inside’—AI and ML embedded in their systems and operational practices. By 2025, Gartner predicts, the 10% of enterprises that have established ML/AI engineering best practices will generate at least three times more value from those practices than the 90% of enterprises that don’t. Seize the early-mover advantage.
People will evaluate your company through a sustainability lens
When buying goods and services or sizing up potential employers, many people-especially the youth-increasingly are evaluating companies’ sustainability progress. Enterprises are starting to do much of the same with their suppliers and partners, holding them-and themselves-accountable for adopting various sustainable initiatives including reducing carbon emissions.
In 2022, it will be almost mandatory for businesses to lay out and execute a comprehensive sustainability strategy. In APAC, this will require more focused leadership. Forrester reports in its Predictions 2022 report that among Fortune Global 200 companies, 92% in North America and 81% in EMEA have appointed a sustainability lead at the VP, director, or other executive level—but only 26% in APAC have.
“For most firms in APAC, sustainability efforts are driven by compliance and investor pressure, not strategic planning and risk management,” Forester says. “This shortsighted approach checks the box but will not materially affect climate change.” Nor will it fool environmentally attuned customers and partners.”
‘Real action’ requires enterprises to change some of the fundamentals of their business. Oracle, for example, has committed to running all of the cloud regions that power its infrastructure and application servers on 100% renewable energy by 2025. And it’s requiring that all its key suppliers-both for direct manufacturing and indirect procurement-have environmental programmes in place by 2025 that include emissions-reduction targets.
As Oracle’s Chief Sustainability Officer, Jon S. Chorley acknowledges: “Changing a system that has worked so well for so long for so many will not be easy, and there will not be a single answer. It will require behaviour change, policy and regulatory change, business model change, and technological change.”
Employers must reimagine their career-development and recruiting practices for the post-pandemic world
Hiring and retaining skilled, talented people continues to be the No. 1 priority of every company. Yet the Great Resignation spurred by the global pandemic suggests that employers have their work cut out for them. As businesses start opening up again, organisations need to be more proactive about charting a career path for your most valuable people and listening to their concerns about work-life balance and workplace flexibility.
Employees are more anxious and restless than ever before. Consider the evidence accumulated in the 2021 [email protected] report by Oracle and Workplace Intelligence, based on a survey of 14,639 employees, managers, HR leaders, and C-suite executives in 13 countries.
The vast majority of survey respondents said the pandemic has caused them to feel ‘stuck’ in both their professional and personal lives, pushing them to rethink their futures. As a result, in Japan and Asia Pacific (JAPAC) 84% of respondents said they’re looking to make career changes over the next year; 86% aren’t satisfied with their employer’s career support, and 91% said their employer should do more to listen to their needs.
In addition, 93% of respondents said the pandemic has made work-life balance, mental health, and job flexibility bigger priorities for them. That said, just 40% of APAC companies will pivot to ‘anywhere work,’ compared with 70% globally, according to Forrester, partly because of the region’s large manufacturing base, which typically requires a physical presence.
Workers have much different priorities now compared to before the pandemic. People are reconsidering the type of employer they want to work for, what they’re looking for in their careers, and the importance they place on their health and well-being. Companies must take these aspects into account to reimagine the post-pandemic workplace.
Supply chain disruption will become the ‘never normal’
The pandemic is forcing supply chain planners to reassess their priorities and how they apply the latest supply chain management (SCM) technologies, as ‘never normal’ becomes the new normal.
The supply chain disruption that we all live started about two years, at the beginning of the pandemic, when factories in Asia and other parts of the world were forced to shut down or cut production because workers were sick or in lockdown. In response, container-shipping companies initially scaled back as well. But as workers got vaccinated, and manufacturing and shipping started opening up to meet pent-up demand, containers started piling up in ports worldwide. Which brings us to today.
Whereas ‘just-in-time’ inventory was the pre-pandemic best practice for most enterprises, ‘safety stock’—or what is known as ‘just-in-case’ inventory management—is considered the new normal. The idea is for companies to stock a minimum amount of inventory as a buffer against demand surges or supply shortages. While even the most sophisticated supply chain technologies won’t fully anticipate the extent of market shocks such as a global pandemic, they can help companies figure out the right balance of safety stock.
As people’s buying behaviours shift from physical to online channels, companies will need to identify and react to those shifts, and plan for the ‘ripple effects’ across their plants, data centres, and extended supply chains.
By considering these key priorities in the context of business impact, opportunities and challenges, Sri Lankan businesses will be better able to boost their economic impact and help reignite the new Asian Age.
(The writer is the Senior Vice President, Customer Strategy, Insight & Business Development, Oracle JAPAC)