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Leading a successful digital transformation

By 2021, digital transformation will add an estimated USD1.16 trillion to Asia Pacific's GDP, and increase the growth rate by 0.8 percent annually, according to a new business study released recently.

The research, entitled, "Unlocking the Economic Impact of Digital Transformation in Asia Pacific[1]", was produced by Microsoft in partnership with IDC Asia/Pacific.

The study with IDC identified China, Japan, and India, as the biggest potential contributors to the windfall, followed by South Korea, Australia, and Indonesia. According to the results of the study, different economies in the region are likely to keep moving at greatly different speeds. For example, fast-growing India and China are expected to enjoy a comparatively high Compound Annual Growth Rate (CAGR) of 1.0 percent, followed by New Zealand at 0.7 percent - while Singapore and Malaysia sit at 0.6 percent.

Also predicted in the study was a dramatic acceleration in the pace of digital transformation across Asia's economies. In 2017, about six percent of the region's 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). This is expected to surge to around 60 percent of Asia's GDP by 2021.

The survey was conducted with 1,560 business decision makers in mid and large-sized organizations, across 15 economies in the region and it highlights the rapid impact and widespread disruption that digital transformation is having on traditional business models.

At Microsoft, we believe digital transformation has a positive and measurable impact on Asia Pacific's economy, and it is widely regarded that every organization needs to be a digital one. In fact, organizations are seeing tangible improvements from their digital transformation initiatives between the ranges of 15 to 17 percent, which shows that digital transformation is no longer an idea, but a reality. Digital Transformation brings increased profit margins, productivity, customer advocacy, revenue from new products and services, and more cost reductions.

These benefits will also improve by approximately 50% in three years. We see AI as a primary catalyst for further growth. Our customers across Asia are already demonstrating a strong sense of urgency to integrate AI into their businesses as part of their digital transformation initiatives. Backed up by the study with IDC, it shows that AI is top of mind when it comes to investing in emerging technologies right now, today.

While 85 percent of the organizations surveyed by the study have embarked on digital transformation journeys, only seven percent can be classified as true 'Digital Transformation Leaders'.

Leaders will have a full digital strategy in place and earn more than 30 percent of their income from digital products and services - experiencing double the benefits generated from their digital transformation initiatives vs. others.

Leaders realize that the path to winning is not just about plug-and-play change. As well as transforming internally, focusing on changing the organization's culture, an organization must learn how best to realign its entire ecosystem - including, supply chains, partners, and employees.

To become a digital transformation leader, an organization needs to take an ecosystem-first approach in the way it creates and delivers products and services to customers. Also, an organization must encourage data sharing and collaboration, both internally and externally, and in an open and trusted manner.

We believe in keeping with the times and leaders in Digital Transformation need to take a fresh look and review their key performance indicators (KPIs). On top of traditional metrics like profit margins; like sales volumes and market share, many are now looking at new ways to measure success and better gauge the performance of Digital Transformation initiatives.

A new-look KPI like Data Capitalization could, for example, reflect how well data is used to predict customer behavior. In the study, we found that 51 percent of those surveyed are starting to use data as capital asset KPIs.

Today's leaders are more focused on leveraging data to grow revenue and productivity and measuring these as KPIs, than before.

Broadly, this is a three-step process: data collection helps to improve decision-making. The insight from the first step feeds the development of better products and services. Ultimately, this can lead to new business models that will help to monetize sets of data directly or develop new commercial digital services.

Are you putting digital first in your business? Find out how to here.