All departments now championing technology investment as traditional enterprises embrace digital change
According to Adrian De Luca, chief technology officer of Hitachi Data Systems Asia Pacific, enterprises in APAC region will undergo major digital transformation next year as they strive to improve a host of key tech and non-tech functions.
In its latest report on Asia Pacific trends in 2016, he said, “Digital transformation is fast becoming an organizational issue. It is no longer just CIOs who are championing the need for digital change, but leaders across all business functions. For example, CMOs are finding that traditional ways of marketing are not as effective any more, while CFOs are discovering that consumer and supplier transaction models have shifted. There is now an almost universal understanding within businesses that all functions need to look at how they transform their own practices through digitization,” said De Luca.
He cited digital transformation, smart cities, cross modal IT, multicloud, and skills shortages as the five key trends that will continue to shape both the IT and business landscapes in Asia Pacific for 2016.
Traditional enterprises will transform into digital natives
There has been resurgence in confidence among CIOs that they will see more of their revenues flowing through digital channels. According to the Gartner CIO Agenda Insights report, only 16% of CIOs last year expected the revenues in their business to flow through digital channels, but that has more than doubled this year to 37%. This is recognition of the fact that digital initiatives are not just coming from the CIO, but from all functions of the business that are creating their own platforms and hiring digital natives.
Today’s CMOs no longer go to the IT department to build their systems. They go directly to the providers and acquire them as a service. The same is true of businesses as a whole. Rather than waiting for a vendor or a competitor to develop a new platform, organizations are building and actively disrupting their own current systems.
Smart companies will build smart cities
Smart cities have been a topic of interest for a long time in Asia Pacific, with many countries in the region rolling out their own initiatives to tackle everything from public safety to improved transportation. However, it has become apparent that few governments have the experience or the financial means to build and run these initiatives on their own. Instead, they are partnering with major industry players who are investing deeply in the Internet of Things (IoT). By bringing their own intellectual property, assembling ecosystems of technology providers and integrating them together, they can develop the solutions needed to make these cities a reality.
This means that smart companies will act as the catalysts for making smart cities a reality, as governments open the door through initiatives like Digital India, Smart Nation Singapore, and Digital China. The business opportunities for companies in the sector are huge, with the annual smart city investment in technology alone set to quadruple to US$11.3 billion by 2023, according to Navigant Research.
Cross-modal IT will unify business silos
It is now recognized that there are two modes that IT organizations can follow to meet the needs of the digital enterprise.
Mode 1 – Applications that handle traditional systems of record – such as CRM and e-commerce systems. These systems are built around predictability, accuracy and availability, given the sensitive data they hold.
Mode 2 – Systems of insight, that are more exploratory such as big data analytics. They give a perspective of what is going on inside a business – enabling users to test certain hypotheses by layering datasets over each other. These systems emphasize agility and speed, giving organizations the ability to quickly and inexpensively test ideas, throw away anything that doesn’t work and test out new ones.
The need to fuse these two modes together to become cross-modal will intensify. Especially as organizations strive to continually optimize the cost of running their systems and incorporate their systems of insight into new business processes and customer interactions.
The companies that will realize the greatest benefits will be those that are able to use agile methodologies in their workforce and offer quick-to-build application programming interfaces (API) of their business services. Businesses that also successfully build data lakes across their digital assets and standardize their infrastructure will do well, too.
Multicloud will enable transregional business
According to De Luca, the emerging Trans-Pacific Partnership (TPP) promises to bring significant benefits to economic trading conditions within Asia-Pacific. To realize the full potential of this agreement, investment in technology infrastructure to connect these economies will be critical. Several companies are already expanding data center capacity to cater to the growing use of cloud computing. They are also investing in improving cross-border, high-speed connectivity. The creation of direct routes between key areas like South East Asia, Australia and the United States of America is well underway
“This opening up of the market will have an impact on how businesses consume cloud and expand the options that they have today. With as many as 70% of organizations either using or evaluating hybrid clouds nowadays, as well as provisions in the TPP to protect offshore data and avoid electronic duties, creating a multicloud across continental borders to allow businesses to expand becomes viable,” said De Luca.
Skills shortage will spark a talent pursuit
Several factors will impact the technology employment market in 2016, forcing many organizations to look at how they will fill the talent deficit to continue to innovate and remain competitive.
Addressing the IT skills shortage will not just be about pumping out more IT graduates with in-demand skills like data science. Appealing to the interests of the best young talent while investing in increasing the productivity of existing employees will be critical to bridging the gap over the long run.
“The working practices of ‘Gen Z’ workers are vastly different from those before them. With this generation expected to work an average of 17 jobs in their lifetime, they will develop a broader variety of skills as well as be exposed to multiple industries during their careers. Companies will need to figure out how to tap into this. They are driven more by their contribution to society than the logo of the company they work for,” said De Luca.
Governments recognize this economic imperative and generational shift by changing the labor market, introducing new tax incentives and passing laws to allow for easier investment, such as through crowdsourcing. Continual learning is also becoming a focus for governments, with Singapore investing SG$1.2 billion (US$0.9 billion) in technology development to drive improvements within its public sector.
In addition to De Luca’s predictions for Asia Pacific, Hu Yoshida, global chief technology officer of HDS, has revealed on his blog his predictions about the top 10 global IT trends for 2016.