DIGITAL TRANSFORMATION TO ADD US$10B TO GDP

Report predicts that digital transformation will increase the nation’s growth by 0.6pc annually

DIGITAL transformation is expected to contribute US$10 billion (RM39.1 billion) to Malaysia’s gross domestic product (GDP) by 2021, and increase growth by 0.6 per cent annually, according to a new joint business study by Microsoft and IDC Asia/Pacific.

The study predicts a dramatic acceleration in the pace of digital transformation across Asia’s economies.

Last year, about seven per cent of Malaysia’s GDP was derived from digital products and services created through the use of digital technologies, such as mobility, cloud, Internet-of-Things (IoT) and artificial intelligence (AI).

Microsoft Malaysia managing director K. Raman said within the next four years, 45 per cent of Malaysia’s GDP was expected to be derived from digital products and services.

“Malaysia is clearly on the digital transformation fast-track.

“At the same time, organisations in the Asia-Pacific region are increasingly deploying emerging technologies, such as AI, as part of their own digital transformation initiatives. This will accelerate growth even further,” he said at a briefing here yesterday.

The study also indicates that while 85 per cent of organisations in Malaysia are in midst of their digital transformation journey, only seven per cent of companies in the region can be classified as leaders.

These organisations have full or progressing digital transformation strategies, with at least a third of their revenue derived from digital products and services.

In addition, these companies enjoy between 20 and 30 per cent improvement in benefits across various business areas from their initiatives.

The study indicates that leaders experience double the benefits of followers, and these improvements will be more pronounced by 2020.

IDC Asia/Pacific digital transformation practice lead research director Daniel-Zoe Jimenez said IDC expected that by 2021, at least 48 per cent of Southeast Asia’s GDP would come from digital products and services, with growth driven by digitally enhanced offerings, operations and relationships.

“The study shows that leaders see double the benefits of followers, with improvements in productivity, cost reduction and customer advocacy.

“To remain competitive, organisations must establish new metrics, realign organisation structures and re-architect their technology platform,” he said.

The survey, based upon answers from 1,560 decision-makers in mid- and large-sized organisations in 15 economies in the Asia-Pacific region, highlights the rapid impact and widespread disruption that digital transformation is having on traditional business models.