If you were to ask 100 executives, “What is digital transformation?” you would receive at least 99 different responses based on each individual’s understanding of the structure of digital organizations, their vision, and culture. So, first things first – here is the definition from our point of view:
Digital transformation is a continuous journey in which individual code halos are embedded into a firm’s existing products, services, and processes to generate greater value for customers, partners, employees, and for the business itself.
We define a code halo as a field of digital information that surrounds any noun – any person, place, or thing. You can find more information about code halos here.
Digital transformation matters more than any other strategic imperative for firms globally, but its relevance is greater in Asia Pacific (APAC), as the region is home to around 60% of the world’s population. India and China together comprise 40% of the world’s population. The digital story in APAC is all about growth - massive growth - and provided below are some relevant facts:
- With internet penetration at 33.5%, nearly 50% of the world’s internet users live in the APAC. Although India’s internet penetration is the lowest among all countries in this region (17.4%), it will experience the highest growth between now and 2018. Even with the lowest internet penetration, India is expected to overtake the US and emerge as the country with the highest number of Facebook users in 2015. Indonesia is Twitter’s largest base globally, and still growing fast.
- APAC accounts for nearly 55% of global mobile phone ownership (around 2.5 billion users) and that share is expected to reach 60% by 2016. By 2015 as much as 40% of global mobile data traffic will be driven by the Asia-Pacific region.
- The region will contribute 35% (US$ 525.2 billion) of worldwide B2C e-commerce sales in 2015, increasing to 40% (US$ 855.7 billion) by 2016.
Increasing urbanization, easier access to the internet through smartphones, and the growing middle class are all factors contributing to the acceleration of the digitization of economies (especially India and China), generating value much faster than the old world economies. The region is fast becoming a hotbed of innovation for digital transformation as consumers leap at digital technologies and the success of firms is largely dependent on their ability to provide a highly personalized experience to customers. For instance:
- E-commerce players bypass banks. Alipay, China’s third-party online payment company, is the largest online payment processor in the world. The company processed US$519 billion worth of digital payments in 2013.
- New players disrupt the established industries. CarIQ in India is developing an ecosystem of car manufacturers, customers, insurance companies, and dealers by making cars smarter through their connected devices.
- The line between industries is becoming blurred. SingPost, Singapore’s postal company, aims at is aiming to become a pan-Asian e-commerce player. The company has already acquired various transport, warehouse and logistics companies to expand its Asian footprint.
- Established players bank on digital technologies for revenue growth. Singtel, a telecom provider in Singapore, is investing US$ 1.59 billion to fund a new division named Group Digital Life to create new revenue streams in the online and digital world.
It is critical for global decision makers who are considering digital transformation to pay attention to what’s happening in APAC because of the growing size of digital opportunities provided by the region. We are at a crossroads where successful enterprises will invest in building digital transformation capabilities in APAC, and those companies which miss this turning point will soon find themselves being left behind. Either new players will disrupt their industry or the competition will win because of their digital transformation foresight.
Nevertheless, digital transformation is easier said than done; it goes beyond building a cool mobile app or investing in a cloud-based solution. It is all about integrating your products, services and processes with customers’ digital information to create that ‘wow’ experience. The starting point is to leverage an actionable code halo framework to understand and utilize the blankets of code that surround every person, place, and thing to establish relevance in the fast-growing digital economy. Are you on your way to becoming a code halo company?