Like any marriage, it takes hard work—but can bring amazing results.
‘Going digital’ has been on the agenda for many businesses for a while now. In recent years, we have worked with many global companies—such as DBS and Singapore Airlines—that have taken the all-important first step towards an inside-out transformation, in order to provide the digital experience that customers demand today.
Then COVID-19 came along. With an impending global recession, many businesses around the world slowed down or stopped non-essential expenditure. A study by McKinsey earlier this year found that more than half of Business-to-business (B2B) companies were planning to reduce overall budgets by up to 25 per cent. 1
At the same time, many things we once took for granted—such as business travel or face-to-face meetings—came to a grinding halt. As the pandemic forced companies to reconsider their priorities and re-evaluate what is necessary to the businesses, one thing became certain; digital transformation became more important, as the world was forced into a period of accelerated change.
This mindset is particularly prevalent in Asia-Pacific, where 95 per cent of business leaders said digital transformation has gained in importance over the past 18 months, according to a November 2019 Harvard Business Review Analytic Services study sponsored by Red Hat. 2 In fact, many companies in the region are facing compressed timelines for transformation goals that are more ambitious. While there are many factors that contribute to this, we feel that it is reflective of the hunger and aspiration in the DNA of businesses Asia-Pacific.
‘Digital’ isn’t just about ‘Technology’
Today, the results of having a digital-first mindset are already evident in Asia-Pacific. Forty per cent of executives in the region are quickly developing and delivering new applications to market, compared to only 23 per cent of executives in the rest of the world.
What is this ‘secret sauce’ that exists in the region? It could be the knowledge that true change requires a cultural shift, not just a purchase of new tools or platforms. Buying new technology is a matter of dollars and cents. Understanding exactly what technology you need to serve customers better, implementing it seamlessly across business functions, and most importantly, getting employees’ buy-in to use technology effectively—these are questions to which culture is an indispensable part of the answer.
It appears many leaders here have cracked the code. Eight out of 10 business leaders ranked cultural change and technology modernisation of equal importance for digital transformation. In fact, cultural change stood out as one of the three building blocks of modernisation, along with technology and business processes, therefore creating significant impediments to transformation success. The survey respondents cited that company culture now includes factors such as collaboration (44 per cent), inclusivity (42 per cent), adaptability (41 per cent), and transparency (40 per cent), which are synonymous with the values of open source.
The Technological Key to Transformation
Of course, it would be impossible to complete digital transformation without some technological input. The study also revealed that companies looking to digitally transform successfully will need to support their cultural change initiatives with efforts to modernise their infrastructure and application architecture. By combining the two initiatives, companies in Asia-Pacific can:
- Adopt continuous integration/continuous delivery methods;
- Quickly develop and deliver new applications;
- Respond rapidly to customer demands;
- Update systems efficiently; and
- Control maintenance costs.
Executives in Asia-Pacific also have clear ideas about where to invest over the next 12 to 18 months to maintain their digital transformation momentum. Top of the agenda are investments in artificial intelligence (AI) and machine learning, as well as to increase their spending on cloud-based business applications and business process automation tools.
Creating Synergies with Greater Understanding
The key to creating a ‘multiplier effect’ between culture and technology is understanding that one size does not fit all. This requires intimate knowledge of not just only your customers, but also their customers. We need to understand why they’ve acknowledged the need for digital transformation, where cultural change is required, and what kinds of technology they need.
An example of how this can be done is evident through Red Hat’s Open Innovation Labs programme, an immersive experience that promotes rapid innovation and development. Lasting between one to three months, this programme shows the commitment that digital transformation requires. It has benefitted many organisations, such as The National Stock Exchange of India, which not only modernised its e-IPO application, but also adopted a DevOps strategy that helped it to bring new services to market faster. In the case of Heritage Bank, teams learnt how to use open source principles to integrate cross-functional teams, technology, and processes. By doing so, the bank can now respond to evolving business demands quickly and deliver better customer experiences.
Digital Transformation—a Long and Happy Marriage
Like any marriage, bringing together both culture and technology to drive digital transformation is hard work. More importantly, companies must understand that the ‘wedding’ is only day one, and the need to keep the momentum going in the long-term to reap greater rewards.
Success in the digital age requires enterprises to sustain a constant innovation momentum instead of innovating on an ad-hoc basis. Since digital refinement can help organisations to proactively and continuously innovate, organisations that embrace it will be able to not only avoid being disrupted but also better compete by capturing new opportunities before their competitors.
1 McKinsey B2B Decision Maker Pulse Survey, April 7, 2020. Accessed via: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-b2b-digital-inflection-point-how-sales-have-changed-during-covid-19
2 Harvard Business Review Analytic Services Briefing Paper for Red Hat, July 2020, “Understanding APAC’s Success in Digital Transformation”. Accessed via: https://www.redhat.com/en/resources/APAC-digital-transformation-HBR-analyst-report
Sajeeve Bahl is the Vice President and Head of Asia Pacific Services in Red Hat. Since June 2015, he has led and grown the Red Hat Services (Consulting and Training) teams across Asia Pacific to a powerhouse of over 300 employees that manages projects worth over USD80M.
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