- Survey of 800 business leaders finds just 18% describing their digitalization efforts as ahead of the curve
- Vast majority still consider themselves disrupted by tech, rather than a disruptor
The pandemic has had a transformative effect on the digitalization of companies across the Asia Pacific region, but the vast majority of companies still believe they are either barely keeping pace with their industry from a digital perspective, or in many cases actively falling behind.
This is according to a new report, Riding the Next Wave - Digital Transformation Strategies in Asia Pacific, which has revealed a huge acceleration in business digitalization, but also deep anxieties around the pace and risks associated with this digital transformation across almost every market and sector.
In fact, 79% of executives see themselves facing significant competitive headwinds, describing themselves as digitally disrupted within their industry, compared to just 21% that see themselves as proactively disrupting their sector. This is even starker than in 2019, when the same survey showed that 75% said their organizations were among the disrupted.
Across the region, Singaporean business leaders are most confident that their companies are leaders in their respective industries with 30% saying they are in fact digital disruptors. Respondents from Hong Kong (28%) and Mainland China (27%) were also reportedly more disruptive than in other parts of the region, underlining where disruptive companies may more likely be headquartered today.
Despite the misgivings of many business leaders, the pandemic has unquestionably accelerated their digitalization efforts, with 72% of respondents saying that the impact of Covid has been a major accelerant, including almost a third describing it as transformative.
According to the report, the key areas that are seeing the greatest digital investment include sales and distribution channels, enhanced Customer Relationship Management (CRM) systems, supply chains and compliance functions.
When asked about the greatest technology-related risks facing their businesses, regulatory investigations topped the list, followed by theft of sensitive information and major systems failure. This focus on regulatory pressures was also highlighted by the fact two thirds of respondents predicted tech and data related regulatory and compliance enforcement would become significantly more rigorous in the year ahead.
Commenting on the issue of regulatory pressure, Paolo Sbuttoni, Partner, Baker McKenzie, Hong Kong, said: "Mapping regulatory risks is crucial for businesses currently undertaking digital transformation activities. Companies active in many jurisdictions need to ensure they can comply with regulatory requirements in different geographies and stages of digital transformation. At a time where many businesses are focused on strengthening their digital transformation capabilities to ensure that they can continue to compete in the increasingly online business environment, an early assessment of the global and regional regulatory hurdles is essential to ensure a smooth roll out of digital transformation projects.”
One area where businesses have improved their operations significantly is around the managing and protecting of data. Almost two thirds (64%) of respondents now describe their business as somewhat or highly adept at data protection, with only 8% believing their data and tech risk profile was getting worse.
Digital transformation is also driving deal making. In a previous report in this series focused on M&A trends in the Asia Pacific region, when asked what the key drivers of their own deal activity would be, more than half of respondents (57%) cited acquiring new technology and associated expertise, which jumped to 74% of healthcare companies, 85% of financial institutions, and a full 92% of technology, media and telecoms companies. Therefore if companies are not able to build or lease solutions, they are clearly open to buying businesses to move up the digitalization curve.