Pandemic helps accelerate digital transformation across South East Asia

Digital transformation in the South East Asia region (ASEAN) has seen dramatic acceleration due to COVID-19, as the pandemic highlighted enterprises' reliance on traditional IT infrastructure.

COVID-19 has been a wake-up call for ASEAN organisations who've put off their digital transformation plans for too long. Their reliance on legacy infrastructure, including captive data centres and traditional network services, made it all the more challenging to adapt to the changes necessitated by the virus, such as remote working and the growth of digital customer channels.

"COVID-19 shines a spotlight on nearly-broken processes and modes of business operations," points out Forrester principal analyst Achim Granzen.

When the pandemic hit and countries began locking down, the majority of organisations in South East Asia sat on two ends of a spectrum. Many multinational corporations already had extensive business continuity plans in place, while other businesses were caught off-guard.

 

The rush to enable remote working

"Some felt they were ready for this all their lives and ported quickly to a virtual working environment, while there was a large group - predominantly SMEs - that were unable to shift their business quickly," says Sudev Bangah, managing director for IDC ASEAN. "In most countries, the lockdown notice was barely two days, which was not enough time for businesses to pivot, and the lack of business continuity planning within these organisations were quickly exposed."

Most applications were still hosted in-house, designed to be accessed by users within the corporate network. This caused many issues when movement restrictions were put into place, and the need to enable remote working changed ICT priorities.

"Several large FSI organisations had to accelerate their deployment plans on end-user computing to enable remote working, this led to several other implementations, such as unified communications (UC) tools, agile network services and cloud," says Alfie Amir, senior analyst at GlobalData.

"They also had to change IT security polices and deploy additional managed security services to address the increasing threats from remote working. While the focus was mainly on enabling remote working, organisations had to implement various new technologies that transform other operational areas as well, such as business processes and customer engagement."

 

Common areas of concern

During recent discussions with CIOs from a diverse range of sectors, Andrew Yeong, head of APAC at Tata Communications, found common areas of concern - even though each industry and country has been impacted by the pandemic differently.

He says that costs (ensuring cash flow), consolidation (maximising assets and resources, removing redundancies), and collaboration (seamless communication) have emerged as critical parameters in most plans to ensure business continuity.

In response, the main technologies ASEAN businesses have turned to include UC tools, enterprise mobility and security, with some also migrating their workload from on-premise to third party cloud facilities and considering agile network services.

"In most cases the majority of spending has been around connectivity tools, web conferencing and increasing bandwidth/connectivity," says Bangah. "We expect an increase in spending of up to 10% on cloud, AI/analytics and IoT solutions, and a 10-20% increase in spending around security solutions.

These are the focus right now, but long-term there will be a fundamental shift on how IT enables business continuity, says Granzen. He believes we'll see a move away from the traditional disaster recovery (DR) approach, which focuses on mitigating the risks of one singular, short-term catastrophic event.

"The new normal is about ongoing, continuous business resilience: enabling an organisation to respond to disruptions and forced changes of how it works with agility and speed over a period of weeks, months or more."

Going forward, Bangah also anticipates more spending around tools that will enable supporting business units such as legal, administrative and procurements. "ASEAN enterprises are largely not set up to support virtual administrative functions - the need for a ‘wet signature' is still largely demanded by legal departments. We expect this to change, and investments into procurement and other supporting systems/applications are anticipated to increase."

 

From evolution to revolution

The approach to IT projects seems to be shifting from evolution to revolution says Tuomas Peltoniemi, R/GA's EVP Managing Director, APAC (Asia Pacific), who points out that there's no better motivation for accelerating change than existential threats to business.

Rather than improving on current ways of working, he says that CIOs are shifting to completely new ways of bringing products, services and customer service to market.

"With increased pressures on budgets, CIOs are looking to new, innovative and lean solutions much more than they would have in the past. With speed to market and lower investments key in today's landscape, solutions that solve a particular problem effectively and quickly are being considered over traditional enterprise solutions that require heavy investments and lengthy implementation times."

  

The need for autonomy

Before the COVID-19 outbreak, in a survey by Ernst & Young, more than 80 per cent of middle market firms from across the region said they planned to increase investment in transformative technologies over the next three years. "The change they were seeking is now one they are having to make at speed," says Amit Anand, co-founder and managing partner of Singapore-based venture capital firm Jungle Ventures.

However, one of the challenges for ASEAN organisations is that the majority of IT departments/CIOs currently don't work autonomously. Bangah says that there's a large dependency on getting the go ahead for IT initiatives from CEOs, but prior to the pandemic, IDC found that while more than 65% of ASEAN CEOs were supporting of digital transformation initiatives, it never really translated well to actual spending.

"If anything, the onset of the pandemic has shown the importance of CIOs being able to make autonomous decisions to ensure organisations are prepared for such scenarios," he notes.

Perhaps the balance of boardroom power in ASEAN enterprises is set to change, but one thing is for sure; digital transformation is featuring high on business agendas.

The region is also positive about the future, and its ability to bounce back.

"ASEAN businesses have witnessed many upheavals including health crises like SARS and Avian Flu, which has made the people much more resilient," says Anand. "With learnings from these still fresh in their minds, ASEAN enterprises know how to adapt to a challenge and still come out strong," he concludes.