Exclusive: Telstra on North Asia’s digital transformation prospects

Paul Abfalter, Head of North Asia for Telstra, tells the story of the region’s ever-improving digital transformation prospects

“The continent has a strong global standing in innovation. The digital revolution is enabling local businesses to thrive, while governments are leaving no stone unturned in the pursuit of creating environments that enable rapid technology-led change in business and society.”

Paul Abfalter is referring to the rise of digital transformation in Asia and, more specifically, the region’s northern markets.

“Why telecommunications?” he responds when asked what led him to becoming Telstra’s Head of North Asia. “Ultimately, I was attracted to the pace of innovation and change, both within the industry itself and as a catalyst for the rest of the economy.

“It’s probably no surprise that I started working on Asian projects 20 years ago and have been permanently based in Hong Kong for over a decade – the region has become synonymous with excitement and promise.”

Abfalter proceeds to cite research from the latest Asian Digital Transformation Index, created in by The Economist Intelligence Unit and commissioned by Telstra, that really brings this claim to life.

The report, which ranks Asian economies in their development of digital infrastructure, skills and technology ecosystems, names Singapore, Japan, Hong Kong, South Korea and Taiwan as the five most digitally ready states, the latter four of these all being northern markets.

“There are a couple of reasons behind this,” Abfalter reveals. “Firstly, there has been significant investment and long-term planning in digital infrastructure, with particular focus on reliable, fast and affordable digital connectivity – critical to nurturing positive environments for digital transformation.

“Secondly, North Asian economies are differentiated by their talent. While Asia, much like the rest of the world, faces significant challenges in finding the right people to drive transformation forward, Hong Kong, Taiwan and South Korea boast sizeable pools of technology professionals relative to their overall workforce.”

Considering the facts

A secondary whitepaper from Telstra, its Disruptive Decision-Making report, showcases a number of major global industries that are already embodying the merits of digital transformation.

Within this, the mining industry leads the way, followed by professional services, transport and logistics, construction and financial services.

“A number of mining companies have seized the opportunity to increase productivity, reduce costs and improve production and safety through increased digitisation and smart use of big data,” states Abfalter. “Similarly, transport and logistics companies have been highly successful in using new technology to solve old problems.

“Those most successful in transport, for instance, are cutting costs and building efficiencies by using IoT technologies to track the movement of vehicles for real-time fleet management and increase customer visibility.”

At the same time, however, the survey of 3,810 decision makers from 12 industries across 14 markets equally reveals that North Asia, much like the rest of the world, is still getting to grips with the challenges of digital transformation.

“If we look at North Asia through a Hong Kong lens, we can see varying levels of digital uptake from local organisations,” Abfalter reveals. “Despite the hype, many organisations are still just starting their transformation journeys. In fact, more than a quarter of Hong Kong businesses haven’t even begun a digital transformation journey, and only 14 percent described their business as highly digitally mature, below the global benchmark of 21 percent.”

The research does provide some cause for optimism, forecasting that more than a third of Hong Kong-based organisations will up their total spend on digital transformation by more than 10 percent in the next three years, also highlighting that roughly one in four businesses invested more than $1 million into digital transformation products and services over the past year.

However, the key takeaways point to slow progress and gradual transitions for many companies, organisations and governments.

“What we’re seeing,” Abfalter adds, “is that digital transformation is being placed increasingly high on boardroom agendas, but equally it is also a major challenge for this generation of business leaders.”

Striving for solutions

In order to help enterprises accelerate their digitisation efforts and better prepare for the incorporation of new, game-changing technologies, Telstra has been seeking to understand the pivotal factors behind successful transformations.

These factors have manifested themselves in four key pillars – people, processes, technologies and partnerships. And what Telstra has found is that organisations are leaning too heavily on technology at the expense of the other pillars, falling into the common misconception that technology is the silver bullet for success.

“When rating business capabilities across the four key variables, our results found that an understanding of technology is rated highest by a significant margin and there is a much lower focus on people and partnerships,” Abfalter states. “On the flip side, our findings also show that the most digitally advanced organisations have a much greater focus on their people than technology as an enabler.

“While digital transformations are technology-enabled, they are people-led. They rely on having the right culture, the right individuals and the right processes to support them, and this must be a company-wide approach that involves upskilling employees, adapting structures and ways of working, and empowering people to seize the potential of new technologies.”

In realising this, Hong Kong, North Asia and indeed global companies stand to benefit from a mirage of revolutionary changes, from optimised efficiencies to increased customer experiences to improved customer loyalty.

Abfalter concludes: “Globally, digitally mature companies are three times more likely to achieve successful revenue growth compared to businesses that haven’t started their transformation journey. This trend is consistent across all business outcomes, including increasing profit margins.

“Granted, undertaking any transformation is no easy task, but making the right digital decisions sooner rather than later will undoubtedly produce significant rewards.”