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Special Feature
Part of a ZDNet Special Feature: Digital Transformation: A CXO's Guide

Culture remains biggest barrier in APAC digital transformation

Corporate mindsets must first be transformed for any digital transformation initiative to be successful in Asia-Pacific, where companies are fixated on technology rather than on the need to establish new business models.

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Tzido, Getty Images/iStockphoto

Digital transformation has become a priority for most organisations in Asia-Pacific, but businesses still are glazing over the need to first transform their corporate culture and create new operating models.

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Digital Transformation: A CXO's Guide

Reimagining business for the digital age is the number-one priority for many of today's top executives. We offer practical advice and examples of how to do it right.

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The impetus for digital transformation has been widely accepted across all industries in the region, with few believing their business do not need to transform. However, those that had begun their transformation journey years before were finding their progress had stalled after having picked the easiest, low-hanging fruits, said Dane Anderson, Forrester's Asia-Pacific vice president, research director, and region manager.

Customer expectations also were rising faster than organisations were able to change, causing customer experience scores to plateau in most industries, the analyst noted.

"A primary culprit is the 'frozen middle' within large organisations resisting change and moving too slowly," Anderson said, adding that companies leading the way were starting to invest in "employee experience" as a tool to "unfreeze the stubborn middle" in order to unlock more returns from their digital transformation.

Manjunath Bhat, Gartner's research director, also pointed to corporate culture as a major challenge hindering CIOs in scaling their digital efforts.

"Asia-Pacific CIOs' cultural challenges are mostly about business push-back to use technology as an enterprise asset and the fear that agile practices may not fit with existing ways of doing business," Bhat said, adding that the lack of resources and talent also are common barriers.

CIOs who were effective had taken the initiative to work with their CEOs, who must champion the company's transformation, and other C-suite colleagues to design and execute digital transformation roadmaps as well as commit to change, he said.

Proof-of-concepts can convince employees of digital transformation

The nature and size of an organisation's business, though, can result in greater resistance to adoption, said Nicco JL Tan, vice president of relationship marketing and social media at Genting Malaysia, whose role is to champion the company's digital transformation, including evaluating any strategy that involved its digital channels.

Genting Malaysia operates casinos, resorts, and hotels offering 40,000 guest rooms. It serves 22 million visitors a year on average and is aiming to boost this number to 30 million over the next five years.

Tan acknowledged the importance of instilling the right mindset within the organisation to truly embrace digital transformation, but noted that this has not always been smooth going for a company with a 52-year history in the industry.

"We need to think about how digital affects and disrupts our day-to-day operations, and start thinking about how we can enable ourselves to be more efficient. It's about having a digital-first mindset, using data and thinking mobile-first before making any business decision," he said. "We have processes that are quite traditional and not easy to change because it affects a lot of systems, so it's not going to happen overnight."

He added that transforming certain processes involving sensitive information such as finance are more challenging, as these had been established over time and it's tougher to convince employees carrying out these tasks to move to a new process.

Furthermore, due to the sensitivities of operating a gaming business in Malaysia, Genting had to comply with the country's strict regulatory rules governing its casino operations. This meant taking extra precaution to ensure that any changes it made to existing processes would remain in compliance with local regulations.

Tan said his team was constantly running tests and trialling proof-of-concepts within a small user base to make sure everything was in place before they were rolled out across the organisation.

More importantly, doing so would demonstrate the effectiveness of a digital transformation initiative and convince employees to embrace a new way of doing things, he said, stressing the role of proof-of-concepts in securing user buy-in.

Martin Mackay, president and general manager at CA Technologies Asia-Pacific Japan, stressed the need for companies to develop a sense of "digital intuition" that would enable them to make informed decisions and take calculated risks.

Mackay said: "This means being data-savvy, cultivating a deep understanding of where the data is coming from, what it means, and how to use it responsibly. Those who can analyse and transform data -- generated by customers, employees, and partners -- into insights and understanding of the market and new trends will be champions in the digital economy."

Tan, though, urged tech vendors to improve the way unstructured data is analysed so they can provide more accurate interpretation of the information collected. He noted that several market players are attempting to tap native language processing to better assess online social conversations, so these can be properly attributed to returns on investment in a marketing campaign.

Interpreting this data currently requires significant manual intervention, as such tools remain inaccurate in their interpretation of the available information, he said.

He also pointed to the need for tighter integration across the different online and offline channels, so a single unified view of the customers could be established. This is still highly disparate, he noted.

SEE: Digital transformation: A CXO's guide (ZDNet special report) | Download the report as a PDF (TechRepublic)

Transformation requires looking beyond the tech

According to Mackay, most companies in the region still look at digital transformation in terms of using technology and software primarily to complete tasks faster and more efficiently. This, he said, is undermining their efforts.

Pointing to the vendor's digital transformation impact and readiness study for the region, the CA executive said the top three priorities for businesses are optimising operational efficiencies, improving workforce collaboration, and reducing operational costs.

This indicated that they are not investing enough time and effort on more impactful and transformative objectives, such as creating new services, business models, and revenue streams, as well as improving customer experience, he said.

Elaborating on what Asia-Pacific businesses are doing wrong with regards to digital transformation, Forrester's Anderson said: "Allowing inside-out mindsets and cultures to survive or changing them too slowly. Another common mistake is obsessing over technology as a silver bullet when it is a tool that must be exploited by customer-focused teams. Finally, too many organisations fail to understand the depth and breadth of the changes they must make before declaring success."

"There is no way around transforming cultures and mindsets first in order to reboot company operating models," Anderson added. Organisations that had successfully transformed had exploited technology as a tool to systematically understand and serve their customers as quickly as possible.

Radisson Hotel Group has mapped out a five-year business roadmap with the goal to improve its interactions with customers. This includes significant investment in a building out a global IT platform, according to its executive vice president and global CIO, Kevin Carl.

Noting that digital transformation is revolutionising the hospitality industry and is crucial to Radisson's future success, Carl said the group is focused on making its hotels and service offerings available to customers across various digital channels. This also means digitising parts of the guest experience as well as operator experience that previously had been offline.

He added that part of the five-year plan includes a new unified technology platform, which encompasses all core aspects of the hotel business, including reservations, property management, point of sales, and catering. This is scheduled for rollout in the second half of 2019.

Also in the works are a revamped online site and the introduction of mobile apps to offer customers new ways to engage with Radisson, as well as grow its customer base. In addition, to lower costs and improve speed-to-market, the group plans to reduce its dependence on data centres and move its delivery platform to the cloud.

Ultimately, Carl said, digital transformation is the means to an outcome, and not the destination itself. For Radisson, this means delivering an experience that matters to its guests and that bolsters customer engagement with its various brands.

It also means that the technology supporting this vision should not be apparent to the guest and must facilitate the group's physical business in "an easy, intuitive, frictionless way".

Carl said: "If a guest or team member has to think hard about how to use digital, then digital won't be relevant. It is that simple."

He further noted that while consumer technology is fuelling user expectation and can introduce innovative new offerings, these might result in little business value. These conflicting returns sometimes can prove challenging for the hotel group with regards to its digital transformation efforts, he said.

The CIO added that it also has been tough to build up capabilities that enabled the hotel to innovate quickly and, at the time, be globally scalable and locally relevant.

According to Fujitsu's Future Insights Global Digital Transformation Survey 2018, the finance industry is the furthest advanced, with an estimated 90 percent of respondents in this sector already engaged in digital transformation. In addition, 30 percent of companies in finance as well as retail already have delivered successful outcomes from their digital transformation deployments.

The study also identified six key success factors of digital transformation initiatives: leadership, people, agility, business integration, ecosystem, and extracting value from data.

In comparison to non-online companies, online companies demonstrated higher capability across the six areas, said Noriaki Tanaka, Fujitsu's manager portfolio strategy division.

In particular, the biggest gap was found to be ecosystem, as online companies placed more value on partnerships with startups as well as organisations in other industries, government agencies, academia and research institutions, and consortiums.

Tanaka noted: "Building partnerships with those players can be a key for non-online companies to accelerate their digital transformation."

Gartner's Bhat also suggested that deep neural networks and machine learning enable organisations to not only scale their digital business initiatives, but stronger analytics capabilities also translate to better business decisions, which in turn yield better results.

He added that investments in data and analytics lower costs, empower companies to rethink business models, and achieve higher operational efficiencies.

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