Asia-Pacific business leaders must become “digital evangelists”

Surveys undertaken by global research firms often reveal a “disconnect” between what respondents say they’ll do and how they actually behave. A recent example of this was revealed when Gartner researchers asked Asia-Pacific CEOs about technology investment. While most executives maintained that technology was a chief priority, their investment in new systems did not mirror that contention.

“Asia-Pacific CEOs want to increase profit margins while maintaining sales growth, and they expect IT to play a strong role in this,” says Partha Iyengar, vice president and Gartner Fellow. “The problem is that Asia-Pacific firms aren’t moving fast enough to capitalize on this potential. Their focus on conventional technologies will likely have less of a transformative effect than more innovative technologies.”

According to the Gartner study, Asia-Pacific leaders expect productivity in their organizations to increase by 24% by the end of 2018, with revenue (cited by 26% of respondents) and profitability (15%) as the top two metrics of success. However, the survey uncovers a gap between what they want to achieve and where technology investments are being made.

To achieve such aggressive productivity gains, Asia-Pacific CEOs believe that conventional technologies—Cloud, ERP, analytics and CRM—will help them, rather than technologies that support digital transformation—digital environments, blockchain, the Internet of Things, robotics, artificial intelligence and 3D printing. This is despite their awareness and understanding of the major impact that these key digital business technologies will have on their industry.

Other analysts believe that while these statistics may apply in aggregate, they doubt they’re completely accurate country by country. Rosemary Coates, president of Blue Silk Consulting and author of “42 Rules for Sourcing and Manufacturing in China,” notes that in China, President Xi has initiated “Made in China 2025,” a program focused on advanced manufacturing through investment in automation.

“China’s intention is to improve productivity and sophistication in manufacturing; and, as usual, they’re achieving this goal with lightning speed,” says Coates.

Other nations such as Vietnam and Indonesia are at the early stages of industrialization and are taking only small steps toward technology, adds Coates. Investment in these countries is far less than China. “Making sweeping generalizations about the entire region doesn’t reflect the diversity and development stages of different countries,” she says.

Gartner analysts, though, insist that CEOs expect IT to play a strong role in fueling this profitable growth in the region. In fact, “IT-related” appears as the second business priority after growth, reflecting the importance CEOs put on technology. This continues a trend that first appeared in Gartner’s 2015 survey, when IT reached the top five business priorities of Asia-Pacific CEOs. This year’s ranking of No. 2 is the highest ranking IT has achieved in the last three years.

According to Gartner, companies in Asia-Pacific benefit from being located in the region with the fastest-growing economy, so they may be less concerned about sales growth than companies in other regions. Instead, these companies are more focused on increasing profit than revenue growth.

Indeed, digital business offers a way for Asia-Pacific firms to lower their cost structure drastically and thereby increase margins, but Gartner contends that these organizations are not pursuing digital business as aggressively as they could.

The survey also indicates that Asia-Pacific enterprises are slightly behind global counterparts in terms of digital business maturity, with 20% of the region’s CEOs describing their enterprise as “digital to the core,” compared with 22% globally.

Further complicating the findings, researchers discovered that “digital” means different things to different people, and Asia-Pacific CEOs hold less transformative views of digital business than their global counterparts. Indeed, the Gartner survey found that 45% of the CEOs in the region think of digital transformation as a way to optimize their current business versus 42% globally.

The obvious remedy, say Gartner analysts, is for logistics managers and chief information officers working in the region to take on an “evangelizing role” with the CEO and other business leaders about the transformative possibilities of digital business using real supply chain examples.

“Many business leaders still cannot describe digital business well and need education,” concludes Gartner’s Iyengar.