ITEM: Asia-Pacific enterprises may feel they’re definitely moving faster with their digital transformation strategies thanks to the COVID-19, but most say they’re nowhere near as far ahead as they need to be to stay competitive.
That’s according to a new survey released Thursday from law firm Backer McKenzie, which found that enterprises in nine markets across the region reported a major acceleration in business digitalization, yet believe they’re either barely keeping pace with their industry from a digital perspective, or in many cases actively falling behind.
According to the survey – which covers six industry sectors (Technology Media and Telecoms, Healthcare and Life Sciences, Consumer Goods and Retail, Industrial, Manufacturing and Transport, Financial Institutions and Energy, Mining and Infrastructure) – 72% of executives agreed that the impact of COVID-19 has been a major accelerant, while a third described it as a “transformative” event.
However, 79% see themselves facing significant competitive headwinds, describing themselves as digitally disrupted within their industry, compared to just 21% that see themselves as proactively disrupting their sector.
Moreover, that’s actually four percentage point higher than the previous survey in 2019.
By market, Singaporean executives feel the most confident in their digital leadership, with 30% saying that they’re the ones doing the disrupting, with Hong Kong (28%) and mainland China (27%) not far behind. But for the most part, enterprises feel like they’re running to stand still.
As for what they think might be holding them back, much of it comes down to risk aversion. Common responses include financing concerns (particularly because of the economic impact of the pandemic), as well as cost and integration as companies manage the effects of the pandemic and pivot in response to macro risks whilst addressing trade disputes, increasing protectionism and supply chain disruptions.
When asked about the greatest technology-related risks facing their businesses, regulatory investigations topped the list, followed by theft of sensitive information and major systems failure. This focus on regulatory pressures was also highlighted by the fact two thirds of respondents predicted tech and data related regulatory and compliance enforcement would become significantly more rigorous in the year ahead.
There’s also anxiety about either adopting the “wrong” technology or adopting the right one but spending far more capex or opex than they expected, the report says. This has also had an impact on innovation, which has dropped down the priority list for many companies.
On the bright side, one area where enterprises have improved their operations significantly is around the managing and protecting of data. Almost two thirds of enterprises now describe their business as somewhat or highly adept at data protection, with only 8% believing their data and tech risk profile was getting worse.