Microsoft Digital Transformation Study In partnership with IDC Asia/Pacific

Transcription

1 Microsoft Digital Study 2018 In partnership with IDC Asia/Pacific

2 How is an organization being digitally transformed? How is an organization business model being digitally transformed? DIGITAL TRANSFORMATION

3 Every company is a software company. You have to start thinking and operating like a digital company. It s no longer just about procuring one solution and deploying one. It s not about one simple software solution. It s really you yourself thinking of your own future as a digital company. SATYA NADELLA CEO, MICROSOFT

4 Unlocking the Economic Impact of Digital in Asia Pacific Digital economic impact on countries GDP Digital economic impact on organization s business What sets Digital Leaders Apart? Digital Impact on society

5 Unlocking the Economic Impact of Digital in Asia Pacific and Australia Digital economic impact on GDP Digital economic impact on organization s business in monetary terms What sets Digital Leaders Apart? Digital Impact on society

6 Asia Pacific Australia s DIGITAL TRANSFORMATION IMPACT ON ASIA PACIFIC GDP (US$ BILLION) , ,498 6,685 1, % CAGR forecasted growth DIGITAL TRANSFORMATION IMPACT ON AUSTRALIA GDP (US$ BILLION) 0.8% CAGR Digital will add to GDP ,205 1, % CAGR Digital will add to GDP 3.0% CAGR forecasted growth Legend Forecast additional GDP contribution by DT based on projected GDP (nominal) growth by the World Bank, forecasted based on revenue growth projections by companies undergoing DT and discounted by percent of companies undergoing DT.

7 Unlocking the Economic Impact of Digital in Australia Digital economic impact on GDP Digital economic impact on organization s business What sets Digital Leaders Apart? Digital Impact on society

8 Top Benefits #1 Improvement in profit margin #3 Cost reduction Increased revenue from existing products and services #5 Improved customer advocacy and loyalty #2 Improvement in productivity #4 Increased revenue from new products and services Base: All respondents (n=94) respondents who indicated no strategy but plans to build one have been removed for this analysis. A5. What are the top 3 benefits that your organization has observed from their current Digital initiatives? Please indicate the degree of improvement for these three.

9 Top benefits: Improvements now and in three years Top 5 benefits of digital transformation contribute significantly to bottom-line today, and will see even greater improvements by 2020 By 2020, organizations will see at least 40% improvements tracked in every of the key benefits identified 20% 1.5X 1.4X 1.4X 1.8X 1.7X % improvement in profit margin 29% % improvement in productivity 23% 33% % cost reduction 23% 33% % increased revenue from new products and services 40% 22% % increased revenue from existing products and services 20% 34% 1.8X % improved customer advocacy, loyalty and retention 21% 37% N=46 N=44 N=36 N=20 N=29 N=25 Base: Respondent counts vary across all options as this is a top 3 question so not all benefits are chosen by all respondents. A5. What are the top 3 benefits that your organization has observed from their current Digital initiatives? A5b: Please indicate the degree of improvement from last year. A5c: Please indicate the expected improvement in 3 years

10 Challenges #1 Lack of skills and resources #2 Siloed and resistant culture #3 Lack of advanced analytics to develop actionable insights #3 Lack of thought leadership in driving digital transformation Base: All respondents (n=100) B1. What are the top 3 challenges your organization has faced or is facing in its digital transformation journey?

11 KPIs Surprisingly, organizations in Australia today are already using non-standard business KPIs to measure digital transformation outcomes 47 % 46 % 40 % 31.3 % Process/Service Effectiveness Customer Advocacy Employee Advocacy Base: All respondents (n=100) B11. When measuring overall DT journey success, which of the following key performance indicators/metrics (KPIs) are you using? Please select all that apply.

12 Technology investments for Digital for 2018 CORE TECHNOLOGIES EMERGING TECHNOLOGIES 17.8% 17.8% 16.9% 9.3% 8.9% 6.9% 8.9% 4.4% 2.8% 2.0% 0.8% Cloud Mobility Big data analytics Security Social media ecommerce AI/ Cognitive/ Robotics Internet of Things (IoT) Next gen interface Mixed, VR, AR Blockchain Base: All respondents (n=100) B6. Relating to the use of technology for your DT initiatives, which of the following digital technologies are your organization going to heavily invest on in 2018?

13 IOT EXPLOSION ARTIFICIAL INTELLIGENCE INTELLIGENT CLOUD ADVANCED ANALYTICS INTELLIGENT EDGE

14 Unlocking the Economic Impact of Digital in Asia Pacific Digital economic impact on GDP Digital economic impact on organization s business What sets Digital Leaders Apart? Digital Impact on society NOTE: No country breakdown for this section as leaders only formed a total of 103 respondents in the total sample

15 7 % LEADERS 93 % FOLLOWERS Base: All respondents (n=1560) A1. Which of the following best describes your organisation s digital transformation strategy? A6. What % of your revenues / fees / incomes / fundings are derived from digital products and/or services? A5. What are the top 3 benefits that your organisation has observed from their current Digital initiatives? Please indicate the degree of improvement for these three.

16 full digital transformation strategy ecosystem centric approach Almost half of all Leaders have a full digital transformation strategy in place Leaders also benefit from an ecosystem-centric focus on customers, employees and partners % of Organizations with Full Digital Strategy 47.6% A full strategy refers to having mature and developed digital processes, people readiness, and support systems in place. 17.3% This enables new & timely ways of engaging with customers, employees and partners; enabling continued growth & innovation and ultimately, reap higher benefits as a truly digital organization. Leaders Followers

17 Highest Digital Improvements Leaders experience double the benefits of followers, and these improvements will be even more pronounced for leaders by % improvement in customer advocacy, loyalty and retention % improvement in productivity % improvement in cost reduction % improvement in profit margin % increased revenues from new products and services 46% 45% 45% 41% 39% 33% 28% 30% 33% 33% 27% 2.2 X 22% 2.1 X 2.4 X 23% 22% 2.5 X 1.9 X 23% 15% 14% 14% 13% 14% Leaders Followers Leaders Followers Leaders Followers Leaders Followers Leaders Followers Base: Respondent counts vary across all options as this is a top 3 question so not all benefits are chosen by all respondents. A5. What are the top 3 benefits that your organization has observed from their current Digital initiatives? Please indicate the degree of improvement for these three.

18 disruptive technologies competitors emerging While all respondents shares similar concerns, leaders are more concerned about competition and emerging disruptive technologies. KEY DIFFERENCES IN BUSINESS CONCERNS Emergence of disruptive technologies More competitors entering my market Leaders Followers Base: Leaders (n=103), Followers (n=1457). Respondent counts vary across all options as this is a top 3 question so not all business concerns are chosen by all respondents. A2. What are your CEO s/organization s top 3 business concerns other than meeting financial goals?

19 business agility culture of innovation TOP 3 PRIORITIES TO ADDRESS CONCERNS Improving employee productivity and profitability Developing a culture of innovation and continuous learning Improving business agility to respond quickly to market trends and opportunities Leaders Followers Base: Leaders (n=103), Followers (n=1457). Respondent counts vary across all options as this is a top 3 question so not all priorities are chosen by all respondents. A3. To address these concerns, which of the following will be your organization's top 3 priorities for 2018?

20 Data Strategy Leaders place a greater emphasis on data and leveraging it to improve business decision-making, enhance product & services and create new business models. Leaders Followers Business KPI Data as a capital asset for growing revenues, business model and productivity Technology Investments Big Data Analytics will form the foundation for AI/Cognitive/Robotics implementation 51 % 43 % 18.6 % 15.8 % 11.7 % 9.9 % Base: All respondents (n=1560) B11. When measuring overall DT journey success, which of the following key performance indicators/metrics (KPIs) are you using? Please select all that apply. B6. Relating to the use of technology for your DT initiatives, which of the following digital technologies are your organization going to heavily invest on in 2018?

21 Five Organizational Traits CULTURE & CHANGE ORGANIZATIONAL BEHAVIOR DIGITAL TRANSFORMATION APPROACHES LEADERSHIP & STRUCTURE BUDGETS 41 % 31 % 78 % 61 % 80 % 65 % 84 % 68 % 70 % 50 % are less risk-adverse and characterized by having transient organizations that adapt to changing needs, often automatically and without management intervention. They embrace fail/ learn-fast approaches. display higher maturity in collaboration and agility in change cycle. Instead of focusing on individual efforts, teams self-organize across groups to achieve organizational success. display higher organization-wide alignment in their DT efforts. Their strategies and metrics are interlinked to deliver digital products, services and experiences to customers. has a key person leading their digital transformation efforts with an independent standalone digital business unit or with digital leads assigned to each LOB and functional groups to drive efforts have allocated budget for digital transformation as a permanent part of the P&L to maximize resources, ensure organisation-wide alignment and better governance Leaders Followers % indicate respondents in group who agreed with statements

22 Unlocking the Economic Impact of Digital in Australia Digital economic impact on GDP Digital economic impact on organization s business What sets Digital Leaders Apart? Digital Impact on society

23 Benefits to Society The creation of higher value jobs, smarter, safer and more efficient cities, and enhance healthcare through better prediction and management of individual health were seen as top 3 benefits #1 Create more higher value jobs in the future for individuals #2 Smarter, safer and more efficient cities #3 Enhance healthcare through better prediction and management of individual health Base: All respondents (n=100) C2. in your opinion, which of the following areas do you think DT initiatives by companies and government has benefited citizens? Rank top 3.

24 Jobs Retrained and upskilled 30% New roles created due to digital transformation investments 24% 83 % of jobs in the next 3 years will be transformed Outsourced, automated or made redundant 29% Unchanged 17% 66% are confident that young professionals already have future ready skills that will help them to transition to new roles. Base: All respondents (n=100) C3. To address the lack of skillsets in your organization, what percentage of your organization s jobs in 3 years will be: a) Outsourced, automated or made redundant, b) New roles created given digital transformation investments, c) Retrained and upskilled #C3a:- Do you think young professionals within your organization (aged 25 year-old and below) have future ready digital skills to meet the demands of digital transformation.?

25 Unlocking the Economic Impact of Digital in Asia Pacific Recommendations

26 Why do Organizations in Asia Pacific Need to Accelerate their Digital Journeys? IMPROVEMENTS IN BUSINESS PERFORMANCE Leaders who have a full digital transformation strategy enjoy double the benefits compared to Followers. Embracing a full digital transformation strategy enables organizations to see improvements of up to 30% in: Productivity Profit Margins Customer Loyalty Revenue Growth INVISIBLE REVOLUTION 2018 will mark the year of mass adoption of Artificial Intelligence. Leaders are focused on building the foundation for this emerging technology today by investing in big data analytics. Companies need to focus on: Capitalizing on own data Data-sharing in an open and secure manner This will grow to close to 50% in a 3-year horizon

27 How to Become a Digital Leader? CREATE A DIGITAL CULTURE Address organizational structure shifts required for digital transformation success Encourage the use of data across all work processes and operations within the enterprise; Create a digital ecosystem mindset with data-sharing with partners and third parties. BUILD AN INFORMATION ECOSYSTEM Begin with the end in mind and include a plan with clear outcomes. Facilitate Data Capitalization across the Enterprise and with Ecosystem partners. EMBRACE MICRO-REVOLUTIONS Focus on small, quick projects that deliver positive business outcomes and accrue to a bigger and bolder digital transformation strategy Enabling quick investments and trials in emerging technologies, especially AI Create a balance scorecard that combines standard and new metrics for DT success. LEVERAGE AI TO ACCELERATE DIGITAL TRANSFORMATION OF THE ENTERPRISE AND ECOSYSTEM

28 ENGAGE YOUR CUSTOMERS in a personal and relevant way EMPOWER YOUR EMPLOYEES To deliver differentiated service ECOSYSTEM SECURITY OPTIMIZE YOUR OPERATIONS To evolve forecasting and react faster TRANSFORM YOUR PRODUCTS And deliver new value to customers

29 Addressing Skills Needed for Digital INDIVIDUAL Future skillsets Complex problem solving Critical thinking, system analytics Creativity, active learning People & communication skills, cultural agility ABCs of Digital Skills* Artificial Intelligence Big Data Cloud computing Focus on rebalancing the workforce to attain key digital talent. Place higher emphasis on attracting and retaining the best talent, and retraining and outsourcing others in the workforce. Focus on creating a flexible work source model ORGANIZATION *Source: LinkedIn, The Digital Workforce of the Future. Data as of August 2017.

30 Australia 100 ( employees) (>1000 employees) 67 % C and C-1 levels (C level i.e. CIO, COO, CEO C-1 level i.e. VP/Director) MANUFACTURING RETAIL FSI 33 % C-2 level (i.e. senior managers) GOVERNMENT EDUCATION HEALTH

31 Microsoft Asia Digital Study 2018 In partnership with IDC Asia/Pacific