Digital Transformation to Contribute Forty Percent to Philippines GDP by 2021
Digital age has brought lots of disruptions in our daily lives and in a
whole in our economy. With the way
things are and three years from now, it is predicted by a new business study
produced by Microsoft in partnership with IDC Asia/Pacific and released last February 8, 2018, that digital
transformation will add an estimated US$8 billion to the Philippines’ GDP and
increase the growth rate by 0.4% annually.
Based on the research,
“Unlocking the Economic Impact of
Digital Transformation in Asia Pacific”, the study
predicts a dramatic acceleration in the pace of digital transformation across Asia
Pacific economies. At the official release held at the Okada Manila, it is said
that in 2017, about 3% of the Philippines’ GDP was derived from digital
products and services created directly through the use of digital technologies,
such as
mobility, cloud, Internet of Things (IoT), and artificial intelligence (AI).
Mr. Hans Bayaborda, Managing Director of
Microsoft Philippines shared, “The Philippines is clearly on the digital
transformation fast track. Within the next four years, we expect to see
approximately 40% of the Philippines’ GDP to be derived from digital products
and services.” He also said, “At the
same time, organizations in Asia Pacific are increasingly deploying emerging technologies
such as artificial intelligence as part of their digital transformation
initiatives, and that will accelerate growth even further.”
The survey was conducted and participated in
by 1,560 business decision makers in mid and large-sized organizations across
15 economies in the region, the Philippines are included with 100 respondents.
It highlights the rapid impact and widespread disruption that digital
transformation is having on traditional business models. It also identified five key
benefits to their bottom line from digital transformation.
Research findings showed that organizations are seeing significant
and tangible improvements from their digital transformation efforts across
these benefits in the range of 6% to 12% today. Business leaders expect to
see more than 50% improvements in those key areas by 2020, with the biggest
jump expected in profit margin and productivity.
Digital Leaders in Asia Pacific to Gain Lion’s Share of Economic
Opportunities
The study indicates
that while 93% of organizations in the Philippines are in the midst of their
digital transformation journey, only 7% in the entire region can be classified
as Leaders. These are organizations that have full or progressing digital
transformation strategies, with at least a third of their revenue derived from
digital products and services. In addition, these companies are seeing between
20 - 30% improvements in benefits across various business areas from their
initiatives.
The study indicates
that Leaders experience double the benefits of Followers, and these
improvements will be more pronounced by 2020. Almost half of Leaders (48%) have
a full digital transformation strategy in place.
“The
pace of digital transformation is accelerating, and IDC expects that by 2021,
at least 48% of Southeast Asia’s GDP will be derived from digital products and
services, with growth in every industry driven by digitally enhanced offerings,
operations and relationships. The study shows Leaders seeing double the
benefits of Followers, with improvements in productivity, cost reductions, and
customer advocacy. To remain competitive, organizations must establish new
metrics, realign organization structures, and re-architect their technology
platform," said Daniel-Zoe Jimenez, Research Director Digital
Transformation Practice Lead, IDC Asia/Pacific.
The Study identified key
differences between Leaders and Followers in Asia Pacific, which contribute to
the improvements tracked:
Leaders are
more concerned about competitors and emergence of disruptive technologies
The digital economy
has also given rise to new types of competitors, as well as emerging
technologies such as AI that have contributed to the disruption of business
models.
Business
agility and culture of innovation are key goals
When addressing
business concerns, Leaders are focused on creating a culture of agility and
innovation to counter competition. Followers, on the other hand, are more focused
on improving employee productivity and profitability.
Measuring
digital transformation successes
Organizations across
Asia Pacific are starting to adopt new key performance indicators (KPI) to
better measure their digital transformation initiatives, such as effectiveness
of processes, data as a capital, and customer advocacy in the form of Net
Promoter Score (NPS). As organizations realize the potential of data as the new
oil for the digital economy, Leaders are much more focused on leveraging data
to grow revenue and productivity, and to transform business models.
Leaders are
more aware of challenges in their digital transformation journeys
In addition to skills
and cybersecurity threats as key challenges, Leaders have also identified the
need to bolster their data capabilities through the use of advanced analytics
to develop actionable insights in fast-moving markets.
Leaders are
looking to invest in AI and Internet of Things
Emerging technologies
such as AI (including cognitive services and robotics) and IoT are areas where
Leaders are investing in for 2018. Besides these emerging technologies, Leaders
are also more interested in investing in big data analytics to mine data for
actionable insights than others.
What sets Leaders
apart from others are their ability to ride on the digital transformation wave
from an organizational culture perspective. The study found that Leaders have
these traits:
“There is a pressing
need for organizations to adopt a leaders’ mindset to fully build their digital
ecosystem—from employees, to customers, to partners—in order to grow their
value chain,” said Andrea Della Mattea, President of Microsoft Asia Pacific.
“In this regard, Microsoft is uniquely positioned to help organizations across
Asia Pacific succeed in their digital transformation journey. We say this with
confidence because we, as an organization, have also undergone digital
transformation, and we understand what it takes to make these digital
initiatives successful.”
In the study, it is also pointed out that Filipinos have more to gain
with digital transformation since its many benefits includes potential
increments to potential income with freelancing, creation of higher value jobs
and increased educational and training facilities.
For more information
about the study, visit www.microsoft.com/en-ph
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