In a dynamic business environment, it doesn’t matter whether the disruption is a global health epidemic, new competition, bushfires or Brexit. Agile, adaptable businesses with advanced digital capabilities are best positioned to weather any storm – and to create long term value.
In these current uncertain global times, it’s important that senior executives are doing what their people both expect and need from them – and that is the ability to lead in both the good times and those of challenge.
This is the hidden message in EY’s latest study, Tech Horizon: Leadership perspectives on technology and transformation. Our study finds digital transformation leaders are making more money and are better equipped to operate in fast-moving, unpredictable conditions.
While Asia-Pacific currently trails on digital transformation compared to Europe, within just two years our region will lead the world, with a massive 87% of business leaders expecting to be advanced on their digital transformation journeys.
This statistic should serve as a wake-up call to businesses dragging their heels on digital transformation. Disruption won’t slow digital transformation. Instead, leaders understand they must redouble their efforts to better adapt to disruption.
As part of our Tech Horizon study, EY surveyed 570 senior business leaders – a third from Asia-Pacific – to better understand the DNA of a digital leader. We’ve found that four key characteristics separate a digital leader from a laggard – and these characteristics form a ‘to do’ list for those companies falling behind.
1. Obsess about customers
Digital leaders are committed to their customers – and this is at the core of their digital transformation agendas. In fact, survey respondents said meeting the evolving needs of customers was their top priority, ahead of profitability goals, growing market share, keeping up with competitors and increasing revenue.
How are leaders obsessing about their customers? Our work with one large bank is instructive. To create a better experience for existing customers, we consolidated multiple data sources, uncovered new insights with the help of EY’s data scientists and built digital platforms that responded to customer needs. The result? Annualised revenue has increased by $35 million as customers access the right offers at the right time. The added benefit was an annualised saving of $30 million on operating expenses by moving customers to digital platforms, eliminating paper and reducing delivery costs.
2. Invest in AI and cloud computing
Corporates in Asia-Pacific have placed big bets on artificial intelligence and cloud computing, with these technologies receiving the most investment over the last two years.
EY’s work in the mining sector has seen the uptake of AI and cloud to predict and prioritise problems in large logistical operations. Machine learning can analyse major risks to safety, productivity and business performance by using innovative direct-to-cloud systems that capture and display disparate data sources on user-friendly platforms. Within three months one client utilised machine learning increased output delivering a $50 million annualised benefit. Further savings are ahead as AI models continually learn and improve their predictions.
3. Focus on innovation
Our survey found innovation is the top priority for tech teams, ahead of other considerations like improving security. But the biggest obstacles to innovation are ingrained: lack of collaboration across departments and a traditional corporate culture.
A leading provider of health care in Australia has solved the culture challenge by investing $20 million to separate out a dedicated innovation team reporting directly to a senior business executive. With a focused capability, the provider has uncovered patient and doctor solutions faster than its competitors. For example, where once health professionals would use primarily their own medical experience to determine the best course of treatment, now predictive analytics and machine learning capabilities assist in the creation of treatment plans with data-driven precision. With EY’s help, the health care provider has narrowed more than 3,000 possible plans down to 30 core plans supporting doctors to operate within quality and safety guidelines. In addition, the innovation team has worked with patients to develop an app to track their treatments, schedule bookings and provide real-time reactions to close the feedback loop.
4. Plug the skills gaps
According to Tech Horizon, 60% of Asia-Pacific corporates acknowledge that accelerating their digital transformation means addressing the skills gap. Leaders are looking at a host of solutions, from training and incentives to innovation ecosystems, like EY’s wavespace. Whether it’s in a temporary ‘pop up’ space for clients or in one of our 23 wavespace centres around the globe, this approach helps companies to curate talent and technology, build skills and look at problems through a different lens.
Tech Horizon examined three financial metrics – revenue, gross profit and earnings before interest, tax, depreciation and amortisation (EBITDA) – to see how these four characteristics play out. We found digital leaders are 50% more likely to see EBITDA increase by more than 15%.
Increasingly, the most profitable companies in Asia-Pacific are digital, which means they are also agile and adaptable. The laggards, meanwhile, are now realising the role that digital transformation plays in preparing business for the unpredictable.
To find out more about the Tech Horizon survey and the 6 habits of digital transformation leaders click here.
Written by Steve Bingham, EY Asia-Pacific Technology Consulting Leader