Study Identifies Four Drivers of Change in APAC and Cloud Computing as a Means of Adapting

Posted by Lee Thompson, Senior Vice President and General Manager, Asia Pacific and Japan, NetSuite

The forces of change seem to be moving at an ever-increasing rate, spurred on by drivers ranging from globalisation to new digital technology to transformative business trends. Of course, which drivers of change have the biggest impact vary greatly by region and by industry.

Recent research by analyst group Frost & Sullivan and sponsored by NetSuite identifies some of the biggest drivers of change across the globe and by region. For example, Australians consider digitalisation the biggest driver, while the majority of Japanese respondents to the survey cited disruptive competitors. In the study titled ‘Disrupt, Collapse, Transform,’ Frost & Sullivan surveyed 1,500 senior executives across industry sectors in seven countries - Australia, Hong Kong, Japan, the Philippines, Singapore, the U.K. and the U.S.

The research highlighted four key drivers of disruptive change:

Using digital channels to sell to customers and transact with suppliers is becoming increasingly popular across all industries, but companies will struggle if they attempt to kick start online operations with rigid, aging on-premise software.

New disruptive competitors
Many companies are building out a more global footprint introducing competitors from a neighbouring company or halfway across the other side of the world. These new entrants to the market are often using cloud computing to quickly establish and scale up nascent international operations.

New business models
Packaging up products or services in fresh innovative ways such as making them available by subscription is already transforming industries. Think of the shakeup to existing business models in sectors such as hospitality, transportation and media and entertainment caused by market entrants like Airbnb, Lyft, Netflix, Pandora, Shazam, Uber and Zipcar.

Companies are expanding the scope of their core business to broaden their relationships with customers and to boost revenue. Product companies are adding services to their business offering while professional services businesses may extend operations into supporting one or more homegrown products.

These four disruptive forces are making their marks in very different ways across APAC, according to the Frost & Sullivan findings.

Australia singles out digitalisation
Australians identified digitalisation as the top trend driving change locally, particularly in the media, entertainment and retail sectors. However, on average, only 30 percent of those businesses surveyed are supporting online customer transactions. There’s a great difference across industries, with the information and communications technology (ICT) sector leading the online customer engagement at 52 percent compared to financial services at only 20 percent.

Japan most concerned about new disruptive competitors
The number-one threat businesses in Japan call out is the entrance of new international or domestic competitors into their market space. One example is low-cost air carrier Peach Aviation, which uses cloud ERP (enterprise resource planning) to rapidly scale its business. A second significant disruptive threat is new business models such as mass customisation – where manufacturers, such as Japanese manufacturer the National Bicycle Industrial Company (NBIC), customise goods and services to meet the needs of individual customers in highly efficient ways that ensure the manufacturer can still make a profit.

Singapore, already a strong adopter of ecommerce, sees digitalisation as a threat
Although Singapore, like Australia, ranks digitalisation as a key disruptor driving change, it’s more a factor of how to differentiate businesses online with 69 percent of those companies using ecommerce. Like Japan, Singapore also points to new disruptive competitors as a sizeable threat to existing industries. Many of those recent market entrants also bring new business models with them around the use of low-cost models or online-only distribution channels which are forcing older companies to change the way they engage with customers.

Countries united in the benefits of the cloud to drive responsiveness, competitive advantage
Increasingly, businesses are relying on cloud computing to help cope with the constant rate of change. Across the board, those companies using cloud applications report they feel empowered to react more effectively to change by quickly launching new offerings and entering new markets. Businesses also describe cloud applications as providing them with a significant source of competitive advantage (72 percent in Australia, 79 percent in Japan and 83 percent in Singapore). In fact, Singapore leads Asia Pacific in adopting cloud applications with 62 percent of organisations surveyed using cloud software for at least one main business application - typically CRM, ecommerce or finance and accounting. Then comes Australia with 40 percent, while Japan counts 38 percent.

According to Frost & Sullivan, cloud computing across Asia Pacific has already made significant contributions in enabling industry transformation – whether it’s by helping startups scale rapidly or by enabling existing businesses to quickly adapt and respond to those new competitors and their new business models as well as the disruptions caused by digitalisation, productisation and servitisation.

As Mark Dougan, Managing Director of Australia and New Zealand at Frost & Sullivan, so eloquently put it when commenting on the research: “Cloud computing has become a necessary response to the rapid pace of transformation.” I wholeheartedly agree with him.

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