Three Reasons Why You Should Accelerate Digital

Welcome to the Prophet PowerPoint templateThree Reasons Why You Should Accelerate Digital Transformation in Southeast Asia in 2021
CHARLENE LI Senior Fellow
Altimeter, a Prophet company
Prophet
It’s about transformation and maturity
Prophet Proprietary and confidential. Do not distribute. 4
Defining Digital Transformation
The strategic adoption of digital technologies and practices that increases the digital maturity of the organization and improves its ability to execute business transformation for growth.
• Transformation drivers in Southeast Asia and COVID-19
• Digital maturity and priorities
Transformation drivers in Southeast Asia and COVID-19
48%
36%
33%
31%
26%
22%
20%
17%
16%
13%
10%
8%
32%
30%
24%
36%
29%
18%
24%
23%
24%
17%
16%
15%
Ensure that technology and data better support operations
Work in a more agile, flexible way to take advantage of opportunities
Reach and engage customers on multiple digital channels
Increase productivity or streamline operations
Response to COVID-19
Develop better employee collaboration and innovation
Increase profitable growth from existing customers
Understand the customer journey with better data and insights
Increase resilience to disruptions
Create a culture capable of handling disruption
SEA Rest of World
Transformation drivers in SEA are more growth- oriented, through operational efficiency and digital innovation, indicating a positive market outlook.
Ensure that technology and data better support operations
Work in a more agile, flexible way to take advantage of opportunities
Reach and engage customers on multiple digital channels
Increase productivity or streamline operations
Response to COVID-19
Develop better employee collaboration and innovation
Increase profitable growth from existing customers
Understand the customer journey with better data and insights
Increase resilience to disruptions
Create a culture capable of handling disruption
Top Drivers of Digital Transformation “What are the key drivers of digital transformation within your organization?”
8
14%
55%
18%
11%
2%
16%
48%
18%
14%
4%
Seen significant loss of revenue
Seen some drop off in revenue or anticipate it dropping off through
the end of the year
Seen no impact on revenue and don't anticipate any future impact
Seen a slight increase in revenue or anticipate it will rise through
the end of 2020
Seen a significant increase in revenue or anticipate it will rise
through the end of 2020
Similar to the rest of world, SEA companies have seen or are anticipating drop-off of revenue as a result of COVID-19
The Impact of COVID-19 on Financial Performance “What impact has COVID-19 had on your financial performance?”
99
1010
15%
14%
31%
27%
13%
11%
17%
27%
31%
14%
in the marketplace
business needs
Continuing our digital transformation initiatives as planned but will revise the
strategy within the next three months
Our digital transformation initiatives are continuing as planned
Put our current digital transformation initiatives on hold because of pressing business disruptions or loss of budget
Despite the financial impact of COVID-19, SEA companies, especially those in Vietnam, are still accelerating digital transformation to capture growth opportunities
Rest of the World SEA Vietnam Singapore Indonesia
Investment in digital transformation (More Often)
48% 59% 80% 53% 48%
60%
Digital Transformation Initiatives Shifted Amidst COVID-19 “How have your digital transformation initiatives shifted because of the spread of COVID-19”
The Organizational Impact of COVID-19 “What impact has COVID-19 had on how much your organization is doing each of the following, compared to what you did before the crisis”
11
Twice as many companies in SEA accelerated digital transformation in marketing operations than rest of world
Digital Marketing Transformations Continued (or Accelerated) Amidst COVID-19 “What impact has the COVID-19 crisis had on your plans to improve or transform your marketing operations”
Were running an improvement/ transformation plan, but it has been stopped due to the crisis
Continuing our improvement/ transformation plan, but have decreased its investment
Continuing our improvement/ transformation plan, and the crisis has not affected it
Continuing our improvement/ transformation plan, and it has been accelerated due to the crisis
19%
39%
31%
21%
27%
24%
12
While fewer SEA companies are suffering from budget cuts, they see bigger challenges in infrastructure, data and talent in digital transformation initiatives.
Budget cut due to COVID-19 becomes top challenge of digital transformation in 2020 but the impact to SEA is less
Companies in SEA have experienced more setbacks from legacy tech infrastructure, accessibility to quality data, ROI articulation and talents than the rest of world
The Top Challenges of Digital Transformation “Please indicate the most difficult challenges you or your organization come up against in digital transformation efforts”
COVID-19 created other priorities or cut the budget 39% 43%
SEA Rest of World
Rigid technology infrastructure 30% 23% SEA Rest of World
Inability to articulate the ROI of digital transformation initiatives 26% 20% Lack of clean, labelled, accessible data 25% 14% Low digital literacy or expertise among colleagues and leadership 22% 17% Lack of clear vision and leadership 4% 12%
1313
47%
36%
31%
31%
30%
21%
20%
20%
15%
13%
12%
46%
29%
38%
20%
27%
22%
21%
23%
16%
20%
19%
Organizing customer data, insights, and analytics across the organization
Improving operational agility and updating policies and processes to more rapidly adapt to change
Training and/or hiring employees with digital skill sets
Accelerating innovation through formal programs, internal and external
Conducting research to understand customer needs and the customer journey
Improving the employee experience (EX) including remote work options
Integrating all customer touchpoints to create a better customer experience
Training executives and other leaders
Reinventing the workplace to support distributed employees
Support and security for remote employees
SEA Rest of World
Data and talent acquisition initiatives have higher importance in SEA, while innovation is regarded as critical to business growth
Digital Transformation Initiative Priorities “Which initiatives are most important to your digital transformation efforts”
Digital Transformation Initiatives Accelerated by COVID-19 “Which digital transformation initiatives have you accelerated the most because of COVID-19”
SEA Rest of World
41% 21%
40% 25%
Organizing customer data, insights, and analytics across the organization
Improving operational agility and updating policies and processes to more rapidly adapt to change
Training and/or hiring employees with digital skill sets
Accelerating innovation through formal programs, internal and external
Improving the employee experience (EX) including remote work options
Training executives and other leaders
Reinventing the workplace to support distributed employees
Support and security for remote employees
14
Innovation is also regarded as a key indicator of Digital Transformation success, often fuelled by clear and long-term strategy, process and KPIs
The Top Metrics Used to Measure Digital Transformation “What metrics does your organization actually measure today related to digital transformation”
40%
32%
31%
28%
27%
22%
21%
21%
20%
16%
10%
7%
24%
30%
30%
32%
32%
27%
20%
17%
24%
18%
8%
8%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Business Innovation (e.g. ideas generated, proofs of concept in pipeline, new products created)
Business Performance (e.g. revenue, profit)
Operational Efficiencies (e.g. productivity, cash flow, gross margin)
Growth (e.g. lead generation, conversions, sales)
Customer Metrics (e.g. NPS, CSAT, CLTV)
Active Customer Engagement (e.g. comments, "likes", shares)
Passive Customer Engagement (e.g. downloads, clicks, time on site or in app)
Digital Literacy (e.g. educated workforce, capabilities assessment)
Employee Engagement and Satisfaction
Shareholder Return
SEA Rest of World
Business Innovation (e.g. ideas generated, proofs of concept in pipeline, new products created)
Business Performance (e.g. revenue, profit)
Operational Efficiencies (e.g. productivity, cash flow, gross margin)
Growth (e.g. lead generation, conversions, sales)
Customer Metrics (e.g. NPS, CSAT, CLTV)
Active Customer Engagement (e.g. comments, "likes", shares)
Passive Customer Engagement (e.g. downloads, clicks, time on site or in app)
Digital Literacy (e.g. educated workforce, capabilities assessment)
Employee Engagement and Satisfaction
Shareholder Return
1515
Growing internet economy in SEA shifted the focus on connectivity, social & consumer platforms.
E-commerce in SEA is leading global in delivering enriched experience using innovative technologies.
Adoption of AI is relatively extensive, catalysed by e-government initiatives and fintech ecosystem advancement.
Reliance on data intelligence has increased, with more focused on building a scalable data strategy.
Implications for Southeast Asia:
16
RCEP will stimulate SEA’s e-commerce and digital trade, as it will likely include rules for supporting cross-border data flows and prevent the imposition of digital duties
What are the digital maturities and priorities?
Digital transformation priorities differ by digital maturity
Base: 628 respondents
Ensure that technology and data better support operations. 37% 28%
Work in a more agile, flexible way to take advantage of opportunities 31% 22%
Increase productivity or streamline operations 18% 47%
The Five Stages of Digital Transformation Maturity
Stage 1: Making the Case
In this stage, companies are dipping their toes into digital transformation. They engage in early customer- facing experiments to help make the case for greater investment in digital platforms.
Stage 2: Developing Foundations
Companies lay the foundation for more comprehensive digital transformation by seeking to understand customer journeys and improving the digital skills of employees. Early experiments start to map digital processes and successes gain traction and funding.
Stage 3: Building Operations
Companies start digitizing their operations at scale. The block and tackle of modernizing platforms and processes happens at a departmental stage.
Stage 4: Integrating Platforms
Having digitized operations, the focus turns to integrating them so that data can be used more strategically across the organization.
Stage 5: Optimizing for Growth
Having laid a strong digital foundation, the focus turns to leveraging data and AI to create great customer experiences.
Digital Maturity Scores
12%
19%
44%
17%
8%
Developing Foundations Stage 3:
Building Operations Stage 4:
Integrating Platforms Stage 5:
Average Digital Maturity Score* 2.17 2.77 3.5 4.24 4.83
*1 (lowest level of maturity) to 5 (highest level of maturity)Base: 628 respondents
Digital maturity varies by geography, org size, type, and industry
Digital Maturity Determined by Five Elements
3.33
3.60
3.44
3.55
3.27
Digital Maturity Comparisons
Marketing and Sales
Technology and Innovation
Data and AILeadership
Marketing and Sales
Technology and Innovation
Data and AILeadership
Digital Transformation Initiative Priorities Reflect Net Effect of COVID-19 & Strategic Motivations, Current State Capabilities, and Budget Limitations “Which initiatives are most important to your digital transformation efforst? Select up to three.”
46%
37%
30%
27%
23%
22%
22%
21%
19%
18%
16%
Improving operational agility and updating policies and processes to more rapidly adapt to change.
Organizing customer data, insights and analytics across the organization.
Accelerating innovation through formal programs, internal and external.
Integrating all customer touchpoints to create a better customer experience.
Training and/or hiring employees with digital skill sets.
Conducting research to understand customer needs and the customer journey.
Improving the employee experience (EX) including remote work options.
Reinventing the workplace to support distributed employees.
Support and security for remote employees.
Training executives and other leaders.
Digital maturity impacts tech priorities too
The Top Five Digital Transformation Initiatives by Digital Maturity Stage
Cybersecurity
Cloud
Internet of Things (IoT)
Blockchain
Wearables
Drones
Tech investment shifts with innovation but also to meet growing security needs
44% 42%
36% 31%
27% 25%
Prioritized Technology Investments, 2020 versus 2019 “What are your top priorities for technology investments in 2020? Select up to five.”
Top Technology Investment Priorities for 2020 by Maturity Stage
Who are leading digital transformation?
Transformation requires leaders who build movements
CDO, Chief Innovation Officer, and Board of Directors represent 30% of leadership
CIO/CTO leadership grew from 28% in 2019 to 34% in 2020
Figure 17.1: CIO/CTO Most Likely Overall to Own the Digital Transformation Journey Which executive officially owns or sponsors the digital transformation initiative?
CXO (Chief Experience Officer)
• Digital maturity matters. Don’t lose sight of the need to invest in digital transformation, even when budgets tighten.
• Prioritize customer-facing initiatives. Organizations without mature digital capabilities in a world that has shifted more digital than ever will lack revenue engines.
• Engage the most senior levels of leadership. Top CEOs and CIO/CTOs think business when they think digital and drive digital transformation personally.
Action Implications
How We Can Help
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Stay in Touch
[email protected] @jacquialexis
Digital Maturity Scores
Digital maturity varies by geography, org size, type, and industry
Digital Maturity Determined by Five Elements
Digital Maturity Comparisons
Tech investment shifts with innovation but also to meet growing security needs
Slide Number 28
Transformation requires leaders who build movements
CIO/CTO leadership grew from 28% in 2019 to 34% in 2020
Slide Number 31

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Three Reasons Why You Should Accelerate Digital