The recent IDC report, Investing for Growth Amidst Uncertainties with Digital Business Transformation, reveals that digital transformation (DX) is now a top corporate agenda with 72% of Asia/Pacific including Japan (APJ) CEOs acknowledging that digital initiatives are long-term business transformation commitments going beyond the current financial year.
In exiting the pandemic, CEOs anticipate continued uncertain macroeconomic conditions in 2023 and beyond. CEOs' technology focus has shifted from efficiency to using tech for sustained growth while positioning their organizations against external macroeconomic shocks. Digital business transformation is seen as the solution to achieve both business resilience and enable growth in today’s digital-first market.
"Against continued macroeconomic uncertainties, CEOs are adopting scenario-based budgeting and using dynamic monthly budget cycles to be more responsive while continuing to invest in digital business–enabling capabilities," says Lawrence Cheok, associate research director on digital business strategies, IDC Asia/Pacific.
A digital business creates and captures value through digital products, services, and experiences. The ongoing shift toward digital business models marks the next digital transformation era, where organizations use technology to compete, grow digital revenue, and disrupt the marketplace with new digital innovations.
Technology investment strategy post-pandemic
Cheok says technology's role has been elevated from a back-office function to a source of competitive advantage. "Unlike past recessions, CEOs are increasing technology budgets despite belt-tightening pressures driven by ongoing recessionary risks," he continues.
"CEOs are embracing technology as the enabler for business resilience and growth to counter persistent external risks driving volatility, uncertainty, complexity, and ambiguity."Lawrence Cheok
CEOs are investing in enabling digital business models and using technology to grow their digital share of revenue from 21% in 2023 to 41% by 2028. According to IDC's FutureScape: Worldwide Digital Business Strategies Predictions – Asia/Pacific (excluding Japan) Implications, by 2027, 80% of APJ organizations will accurately quantify the value of their digital capabilities and assets and significantly improve their market valuation.
About half of the CEOs are adopting scenario-based budgeting and dynamic monthly budget cycles to respond more effectively to unfolding macroeconomic uncertainties while ensuring that technology investments deliver incremental business outcomes along their multi-year transformation journeys.
At the same time, CEOs are challenged by the C-suite's lack of digital know-how, the workforce's lack of digital skills, line-of-business (LOB) leaders' lack of trust in technology, and ineffective enterprise-wide change management. These organizational hurdles top the challenges in realizing digital value creation.
"Beyond technology solutions, technology vendors must help CEOs accelerate time to value, achieve measurable business outcomes, enable commercial flexibility, and catalyse innovation to be perceived as strategic partners in their business transformation journeys," concludes Cheok.