Artificial Intelligence Is Critical To Accelerate Digital Transformation In Asia Pacific

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1 Artificial Intelligence Is Critical To Accelerate Digital Transformation In Asia Pacific GET STARTED

2 Customer-Obsessed Firms Across APAC Leverage AI Technologies For Successful Digital Transformation Artificial intelligence (AI) is the key to digital business; it has the potential to transform everything from business operations to the customer experience. AI provides business and IT leaders the chance to help their companies rethink their business models and drive customer obsession. Customer-obsessed business and IT leaders consider these technologies as tools for reshaping customer experiences. Although sentient systems capable of true cognition remain a dream for the future, AI techniques are available in their nascent stage for firms across APAC to leverage for a multitude of purposes, enabling successful digital transformation. PROJECT METHODOLOGY Appier commissioned Forrester Consulting to conduct a custom study with 260 business and IT leaders involved in technology-buying decision-making processes, including artificial intelligence technology. The study was completed in June Key countries Industry groups Company size annual revenue Respondent job titles Japan (34), South Korea (32), Singapore (32), Taiwan (32), China (32), India (32), Australia (32), Indonesia (32) Equitable industry groupbased targeting Telecom (31), Insurance (34), Financial Services (including banking) (53), IT (58), Retail (84) > $250M: 36% $100M to $250M: 33% $50M to $100M: 31% Manager: 35% Director: 20% VP: 18% SVP and above: 27%

3 AI Drives Improved Digital Customer Experience And Greater Digital Operational Excellence AI is poised to completely reframe how businesses operate and consumers interact. AI is a liberating technology at its core, enabling businesses to become more innovative, creative, and adaptive than ever before. It can help raise top-line profits and win new customers as well as mitigate risks and increase the efficiency of the bottom line. AI HELPS FIRMS IMPROVE BUSINESS OPERATIONS Seventy-one percent of firms said that AI will improve business efficiency, allowing an expected 56% of firms to grow revenues. Fifty-nine percent expect efficient scalability, and 53% expect simplification of business operations and improved risk prediction. AI ENABLES FIRMS TO DELIVER ENHANCED CX Fifty-five percent of firms in APAC expect better customer behavior prediction, leading to improved product/services (62%). Forty-five percent of survey respondents mentioned that AI will help them in generating better customer insights and allow greater business agility and adaptation (54%).

4 AI Investments Are Significant But Still In Nascent Stages Thanks to recent advances in storage and processing power, AI technology is quickly evolving to automate many manual tasks. However, firms across APAC have yet to realize the true potential of AI capabilities, and AI-oriented investments are still in the nascent stages. COMPANIES ARE FOCUSING ON DATA MANAGEMENT FOUNDATION TO START THEIR AI JOURNEYS Sixty-one percent of survey respondents are implementing or enhancing their security- and data privacy-related capabilities through AI. Fifty-seven percent of firms in APAC are implementing AI-led tech for data cataloging while 58% are expanding capabilities to source external data. CAPABILITIES OF CUSTOMER OBSESSION WILL BECOME KEY DIFFERENTIATOR However, only 51% of firms are investing in AI to improve the customer view across digital channels. And only 49% are converting insights into actions by building datadriven AI applications.

5 Enterprises Are Facing Critical Challenges To Generate Customer Insights Today's customer analytics, led by AI technology, is no longer feeding data into the marketing funnel it is providing insights across the customer life cycle. Buyers have high expectations from a nascent technology and are left high and dry when the technology does not meet their expectations. Unsurprisingly, 53% of respondents biggest challenge with data-driven AI technology is gathering and integrating big data, followed by building a predictive analytics platform (52%). DATA INTEGRATION IS KEY CHALLENGE FOR ALL VERTICALS Each industry has unique AI challenges governance (52%), predictive insight generation (52%), and data sourcing (52%) challenge IT, BFSI (banking, financial services, and insurance), and retail verticals the most respectively, even as data integration stays the top challenge across (53%).

6 Firms Prioritize AI Initiatives To Strive For Customer Obsession Customer obsession will reach the spotlight, and digital business leaders must ensure that customers remain central in the discussion. Key to this transformation is understanding the customer better with the support of AI. Fifty-four percent of the respondents surveyed would like to prioritize speeding up customer insights generation through AI investments. COMPANY SIZE HAVE A BEARING ON EXPECTATIONS FROM AI The smaller the firm (USD $50 to $100 million in revenues), the more agility- focused it will be 51% prioritize agility in market response. The bigger the firm, the more product innovation-focused it is firms with revenues of USD $100 to $250 million want to prioritize developing new products and services while firms with revenues of USD $250 million or above target the same. FIRMS AI PRIORITIES ARE INDUSTRY-SPECIFIC Those in the IT/telecom sector want to leverage AI to predict the market better (55%) as their top-most priority. Those in the BFSI sector want to predict customer behavior better (54%) in a bid to cross-sell products and services better. Those in the retail want an improved ability to develop products (55%).

7 Assemble Core Pillars To Build A Comprehensive Big Data-Driven AI Platform Success of your organization s AI strategy relies on the solid foundation of its structural components. Some of the critical building blocks for AI are drawing insights from big data. Our survey revealed that 50% of APAC firms are either investing or increasing investments in data management, sourcing, and visualization technologies, while core AI technology-centric investments lag behind. THERE IS A LONG WAY TO GO IN BUILDING CORE AI CAPABILITIES Sixty-three percent of the survey respondents are not currently invested in domain-specific AI technologies, which are AI technologies for specific technical domains, such as computer vision, natural language processing, speech recognition and synthesis, and text mining. Sixty percent of the survey respondents are not currently invested in horizontal AI applications, which are enterprise applications in specific functional areas using AI technologies, such as chatbots, customer service robots, robotic process automation, media monitoring, and social surveillance

8 Firms Will Choose AI Partners With Strength Across Products, Engineering, And Data Management Emergence of AI as a viable capability has brought markets and businesses to a tipping point as the next cycle of technology disruption begins in earnest. Digital transformation touches upon reimagining business operations and customer interactions alike. Given the context, it is important for organizations to look for well-rounded capabilities in an AI vendor. What clearly stood out in our survey was the need for a comprehensive AI solution irrespective of the comparisons across regions or company sizes. This was highlighted by 56% of respondents as the most important criterion for AI vendor selection. There are some industry-specific differences: 54% of BFSI respondents look for out-of-the-box solutions while retail players look for better integration into legacy applications (49%). In terms of regions, India stood apart from the rest of the countries in APAC with a greater need for integration into legacy applications (55%) while other regions are looking for AI solutions for the entire life cycle and out-of-the-box solutions as their top vendor selection criteria.

9 1 2 Engage Customers Across The Whole Life Cycle To Address Varying Requirements Through AI By leveraging big data-driven AI platforms, enterprises can deliver business value throughout the entire customer life cycle. For example, regression-based predictive marketing mix models are critical to improving the effectiveness of channel interaction. Advanced predictive technology can help marketers predict a customer s likelihood to purchase through propensity models; deepen the insights from cross-sell, upsell, in-market timing, and brand affinity models; and improve the accuracy of customer targeting. Big datadriven AI platforms are also critical to regressively refining models that fundamentally affect the degree to which you can improve customer value and loyalty. Therefore, 59% of enterprise decision makers will enhance business process productivity or the marketing functions.

10 1 2 Focus Your AI Investment On Areas That Bring The Most Business Potential Although AI solutions seem to be omnipresent, smart business leaders understand the unique challenge in their industry and leverage AI solutions to maximize business potential. As telcos move beyond their traditional role as network infrastructure and connectivity provider, 56% of decision makers in telecom industry expect to leverage the data they own, and build AI capabilities to better target potential customers. Customer loyalty is crucial for financial services companies to sustain business growth. Sixty percent of leaders in financial services industry expect to use big data-driven AI to maximize customer value, so that they can improve the potential to upsell and cross-sell to their existing customers. The behavioral change of consumers are making business environments for retailers increasingly dynamic. As retailers gather more data from their customers from digital touchpoints as well as in store, 57% of decision makers believe AI could help them better understand customer behaviors and improve the precision of prospect profile.

11 Work With AI Partners To Predict The Future The emergence of AI technologies not only brings traditional big data analytics to the next level; it also introduces unprecedented opportunities for enterprises to obtain effective insights into customers and operations. The big data-based AI platform is a business-focused, algorithm-driven, and data-intensive initiative. To accelerate digital transformation in the age of the customer, business and technology decision makers in Asia Pacific must make big data-based AI platforms a strategic priority on their digital agendas. Companies that don t have sufficient internal experts on AI and data analytics must strategically work with partners that offer both specialized commercial solutions and comprehensive vertical experiences. This will enable companies to: Establish predictive analytics and machine learning capabilities across the entire customer life cycle. Improve data completeness, cleanliness, and consistency across back-end systems. Ensure data quality and regulatory compliance through data governance. Convert complex industry know-how and customer knowledge into business rules and predictive models for contextual and real-time insights. Set up SWAT team to manage and utilize data assets effectively, taking the lead in digital innovation. ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2018, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to forrester.com. [O ] Project Director Ayush Gupta Senior Consultant Contributors Reggie Lau Principal Consultant Diane Deng Associate Consultant