APJ Firms Feel Pressure Of A Digital World, But Still Cautious

Zarina Lam Stanford

Part 7 of the series “The Road to Digital Transformation

The digital story of every Asia Pacific and Japanese (APJ) small and midsize business starts with the demands of a digital-first society. Approximately 50% of the region’s population are expected to actively purchase online by 2020, up from one-third today. India’s households are more likely to have a mobile phone than an in-home toilet or running tap water. And with the introduction of fast-changing technologies such as mobile Internet, the Internet of Things, cloud, 3D printing, and advanced robotics, gross domestic product (GDP) growth is expected to climb 30% by 2025.

Any company that doesn’t follow along with this wave will likely be left behind, or worse, forgotten. Despite the risk, the IDC Infobrief, “The Next Steps in Digital Transformation: How Small and Midsize Companies Are Applying Technology to Meet Key Business Goals with Insights for Asia/Pacific,” revealed that approximately 70% of APJ firms have yet to reach a level of digital competence to take advantage of this new digital economy.

This finding is quite shocking for an environment primarily powered by family-run businesses that persist for multiple generations. In theory, family companies can invest in technology with an eye on long-term gain while allowing good ideas to prove themselves over time. Such a patient capital approach allows firms to focus on traditional differentiators – customer service excellence and aggressive growth – to engage customers on their terms and compete in international markets.

 

digital transformation self-assessment

Source: “The Next Steps in Digital Transformation: How Small and Midsize Companies Are Applying Technology to Meet Key Business Goals with Insights for Asia/Pacific,” IDC InfoBrief, sponsored by SAP, 2017.  

Digital social interactions extend the APJ tradition of service excellence

The APJ culture values high attention to customer service. In fact, a two-year study conducted by my team found that most consumers are willing to pay more if it means that a brand provides a level of service that caters to their specific needs and surpasses experiences found anywhere else in the marketplace.

In response, many small and midsize businesses are leveraging social media, according to the IDC study. In fact, more than 1.5 billion people across APJ use social media with 95% accessing platforms through mobile devices. Consumer tools such as WhatsApp and Facebook which helped individuals to stay in touch with family and friends have become essential business tools for the overall customer experience.

Cloud-based strategies open the door to global expansion

Known for being highly efficient and lean, APJ companies have applied techniques – such as just-in-time production and lean methodologies such as kaizen – to the point that running highly efficient operations is a fundamental part of running a business. But small and midsize firms are taking this attribute a step further by moving to the cloud.

IDC reports that Asia Pacific firms are more likely to adopt cloud solutions than those in other regions. India (54%) and China (56%) appear to have the strongest affinity. Also, a number of executives indicated a willingness to consider cloud solutions in the near-term future.

Over the past year, I have noticed that small and midsize customers have been investigating the reality of a cloud-only arrangement, especially in Australia and Japan. Firms are beginning to realize that this path to digital transformation is the fastest and most agile. Plus, they can quickly convert capital investments into operational costs. As a result, we see high double-digit growth in this area of our business.

Going digital elevates the promise and importance of APJ firms

The promise and importance of APJ small and midsize firms lie in the conviction that they will soon become the large enterprises of tomorrow. Throughout the Asia-Pacific Economic Cooperation, these companies have become the growth engine of the entire region’s economy. They account for over 97% of all businesses, employ over 50% of the workforce, and contribute upwards of 50% to the annual GDP.

And every second, every hour, and every day, I am personally seeing how digital technology is influencing this level of performance. Small and midsize businesses are steadily becoming more bold and aggressive. But more notably, they are allowing the entire APJ economy to continue growing and emerge as an economic force.

To learn how small and midsize businesses across the APJ region are digitally transforming themselves to advance their future success, check out the IDC InfoBrief “The Next Steps in Digital Transformation: How Small and Midsize Companies Are Applying Technology to Meet Key Business Goals with Insights for Asia/Pacific,” sponsored by SAP. For more region-specific perspectives on digital transformation, be sure to check every Tuesday for new installments to our blog series “The Road to Digital Transformation.”

 


Zarina Lam Stanford

About Zarina Lam Stanford

Zarina Lam Stanford is Head of Marketing for the Asia-Pacific Japan region at SAP.