September 23, 2017, 6:33 am
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Only 25 percent of Southeast Asian businesses ready for digital

The world is focused on Asia as the next hub of digital growth but only a quarter of Southeast Asian businesses are have shown their readiness for truly leading by digitalization. This is according to the “Leaders 2020 Study” a collaboration between digital transformation champion SAP and Oxford Economics.

Though higher than the global average of 16 percent, this 25 percent of Asian businesses are also part of the new class of high-performing companies, reporting stronger profit growth, higher employee engagement, and cultures that are more inclusive.

Digitalization plus the presence of young, connected executives who communicate a company-wide digital strategy, keep management and worker skills up to date, and streamline organizational structure have created these high-functioning and highly effective organizations.

By SAP’s definition organizations with executives who use data to be transparent, enable the distribution of decision-making throughout the organization, the ability to make quick and deliberate decisions that are data-driven are Digital Leaders. The company takes ownership of the phrase digital leaders by capitalizing the words to emphasize how technology must go hand in hand with management skills to create a successful organization in the digital age.

 Analysis of Southeast Asian firms in the Leaders 2020 study also affirms the business benefits of diversity, showing a correlation between those who are leading in digital transformation and those who have a heightened understanding of the importance of diversity. 

“A diverse workforce encourages bold, innovative ideas to flourish and in turn, presents insights which are only made possible through that diversity. It is of little coincidence that these two capabilities – leveraging data for decisions and maintaining a diverse workforce – both occur for high-performing organizations,” said Scott Russell, president and managing director, SAP Southeast Asia.

The Leaders 2020 research findings for Southeast Asia revealed at SuccessConnect 2016 in Singapore, being a Digital Leader had the following benefits.

    Stronger financial performance: 7 percent of executives characterized as Digital Leaders report strong revenue and profit growth, compared to 60 percent of all other Southeast Asian executives.

    Satisfied and engaged employees: Effective digital leadership drives more than financial performance—it also creates healthier cultures. 87 percent of Digital Leaders have employees who are more satisfied, compared with just 51 percent for respondents in Southeast Asia. 75 percent of Digital Leaders also have employees who are more likely to stay in their jobs if given the chance to leave, as compared to 45 percent in the region.

    More mature talent strategies: Digital Leaders are more likely to invest in talent and have much more advanced strategies for talent recruitment, development and retention. For example, 56 percent of Digital Leaders mainly fill roles from within the company, as compared to just 33 percent for the rest of the region.

    The study also discovered how millennials are now quickly occupying corporate leadership positions, as 22 percent of the executives in the Leaders 2020 study from Southeast Asia are classified as millennials, compared with 17 percent worldwide. 

    Despite the higher percentage of young executives in the region, only 45 percent of Southeast Asian executives say leadership works with employees to develop their careers—an important step in cultivating millennial talent. Young executives are more focused on diversity and its benefits, and they tend to come from companies that value diversity and take steps to build it.

Digital Leaders around the world and Southeast Asian respondents are both more likely to recognize diversity’s positive impact on culture (66 percent and 62 percent, respectively), but only Digital Leaders are more likely to see the benefits in financial performance (37 percent vs. 25 percent).

 Companies have become more diverse in Southeast Asia than in other regions over the past three years. Three-quarters of Southeast Asian respondents saw diversity improvements in the general workforce of their organization, and 42 percent saw an increase in board and senior leadership, compared with 67 percent and 34 percent globally. However, less than 40 percent in Southeast Asia state that their company has effective diversity programs in place, signaling more could be done, especially at the senior executive and corporate board levels.

 The Leaders 2020 study also found that only 61 percent of Southeast Asian executives (vs. 55 percent globally) are making data-driven decisions, a key factor that makes a Digital Leader. It is of little wonder that only 62 percent of Southeast Asian executives (vs. 59 percent globally) feel that employees are equipped with the skills necessary to keep up with digital technology.

“The pace of change in today’s digital economy shows no sign of slowing down, and organizations that do not continually update their approach to digital leadership risk falling behind. Technology continues to remain the key enabler to drive growth, promote innovation, enable transformation and level the playing field for companies of all sizes,” concluded Russell.
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