Thursday, 11 May 2017 20:51

APAC CEOs ‘aggressive’ on productivity gain expectations: Gartner

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APAC CEOs ‘aggressive’ on productivity gain expectations: Gartner Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Asia Pacific chief executives are expecting substantial productivity gains in their businesses by the end of 2018, but despite the forecast productivity gains there’s a gap between what they want to achieve and where technology investments are being made.

A new report from Gartner reveals that APAC CEOs expect productivity in their organisations to increase by 24% by the end of 2018, with revenue (cited by 26% of respondents) and profitability (15%) as the top two metrics of success.

According to Gartner, the survey uncovers a gap between what CEOs want to achieve and where technology investments are being made.

Gartner says to achieve such aggressive productivity gains, Asia Pacific CEOs believe that conventional technologies — cloud, ERP, analytics and CRM — will help them, rather than technologies that support digital transformation (digital environments, blockchain, the Internet of Things, robotics, artificial intelligence and 3D printing).

This is despite their awareness and understanding of the major impact that these key digital business technologies will have on their industry.

"Asia Pacific CEOs want to increase profit margins while maintaining sales growth, and they expect IT to play a strong role in this," said Partha Iyengar, vice-president and Gartner Fellow.

"The problem is that Asia Pacific firms aren't moving fast enough to capitalise on this potential. Their focus on conventional technologies will likely have less of a transformative effect than more innovative technologies."

Gartner says the survey reveals that CEOs expect IT to play a strong role in fuelling profitable growth.

"IT-related" appears as the second business priority after growth, reflecting the importance CEOs give IT, the research firm says.

“This continues a trend that first appeared in our 2015 survey, when IT reached the top five business priorities of CEOs. This year's ranking of No. 2 is the highest ranking IT has achieved in the last three years.”

According to Gartner, Asia Pacific companies benefit from being located in the region with the fastest-growing economy, so they worry less about sales growth than companies in other regions.

Instead, Gartner says Asia Pacific companies are more focused on increasing profit than revenue growth and digital business offers a way for Asia Pacific firms to lower their cost structure drastically and increase margins. “But these firms are not pursuing digital business as aggressively as they could,” Gartner notes.

According to the survey, Asia Pacific enterprises are slightly behind global counterparts in terms of digital business maturity, with 20% of Asia Pacific CEOs describing their enterprise as "digital to the core," compared with 22% globally. Asia Pacific firms are also slightly behind global counterparts in the phase of digital business they are in.

"Digital" means different things to different people, and Asia Pacific CEOs hold less transformative views of digital business than their global counterparts, according to the survey – and it found that 45% of Asia Pacific CEOs think of digital transformation as a way to optimise their current business versus 42% globally.

"CIOs need to take on an evangelising role with the CEO and other business leaders about the transformative possibilities of digital business using real examples," Iyengar said. "Many business leaders still cannot describe digital business well, and need education."

But in terms of investing to gain new digital business capabilities, the survey indicates that Asia Pacific organisations are not as aggressive as their global counterparts.

According to the survey 18% of Asia Pacific organisations have taken an equity stake in a technology or digital business entity, compared with 24% globally.  But despite this, Asia Pacific respondents say that equity stakes pay the biggest dividends.

"This disparity may be due to more Asia Pacific CEOs identifying access to capital as a constraint on growth than global peers," said Iyengar said.

"There are also regulatory grey areas in parts of Asia that constrain companies from making technology investments or acquisitions outside of their industry."

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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