The Start of Thailand’s DX Era in 2016: IDC Thailand Predicts Digital Transformation and Massive Adoption of the 3rd Platform
Bangkok, November 25, 2015 – IDC Thailand announced today its top predictions for Thailand’s ICT market, highlighting how digital transformation (DX) will enable Thai enterprises to succeed on the 3rd platform and the need for Thai companies to change its current leadership models as they transform.
IDC Thailand predicts that by the end of 2017, over 50% of Thailand 100 (T100) enterprises will have digital transformation (DX) at the center of their corporate strategy, with a majority hiring an executive to oversee the implementation of the DX strategy.
“In 2016, Thailand’s Digital Economy master plan can now be credibly supported by the country’s ICT industry. We are now witnessing the transition in the DX era where enterprises will intensify their efforts in DX. At the same time, they will invest heavily in 3rd Platform technologies in order to remain competitive”, says Michael Araneta, Country Manager, IDC Thailand. According to IDC, 3rd platform technologies include the 4 pillars of cloud, mobility, Big data analytics and social as well as the 6 innovation accelerators of IoT, cognitive computing, robotics, 3D printing, virtual/augmented reality and next-gen security.
This year, IDC’s top predictions are re-branded as IDC FutureScapes for both tech buyers/CxOs and ICT suppliers.
Araneta continues, “A crisis of leadership will happen if CIOs in Thai enterprises cannot change quickly enough. The CIO must transform the IT organization into a true business transformation engine.” IDC developed a new DX leadership framework, “Leading in 3D” in conjunction with the IDC FutureScapes 2016 release.
3D represents the three dimensions of “Innovate, Integrate and Incorporate” that leaders in the IT organization need to fulfill:
- Innovate: as a partner to the business in fostering IT-enabled agility and innovation.
- Integrate: as the owner of the processes that transition new platforms to become stable business services.
- Incorporate: as a reliable and secure service provider for the established suite of IT-based products and services.
In today’s annual briefing, IDC Thailand enumerated ten trends that will define Thailand’s move towards the DX era.
#1: Digital transformation. By the end of 2017, over 50% of Thai enterprises will have begun their Digital Transformation journey.
Digital transformation (DX) will be the primary driver for enterprises’ IT investments in 2016 and beyond. DX can be thought of as enterprises’ use of the 3rd Platform technologies to redefine customers’ experience and achieve new levels of productivity. IDC believes that transformation strategies will focus on three areas of digital mastery: relationships, operations, and information-based products and services.
One example is how retail, hospitality, and other services’ use of mobile, big data, and cloud technology mashups to automate “next best action” decisions and double productivity. Over the next two years, a number of enterprises will increase their DX initiatives. This major scale-up of DX business strategies and initiatives will have a profound impact on business leaders in 2016.
#2: Cloud core. By 2018, at least a fourth of IT spending will be cloud based, reaching 30% of all IT Infrastructure, and 30–35% of all software, services, and technology spending by 2020.
In 2016, the cloud services model is something enterprises need to develop competency in. The 3rd Platform technologies or major DX business initiatives is impossible without cloud as the foundation. This means that over the next several years, enterprises will dramatically scale up cloud services adoption. IDC stated that the strong build-up of data centers is indicative of the new model of delivery of IT to Thai companies.
By 2020, organizations’ spending on cloud services, the hardware and software to support cloud services, and services for implementing and managing cloud services will exceed $350 million — over two times what it is today. A majority of hardware and software that IT vendors make and sell will be “cloud first.” This shift of cloud services — from an “emerging” IT architecture to the preferred foundation — has important implications for IT and business leaders.
#3: The next 25 million of mobile-first users. By 2018, Thailand will boast 50 million mobile-first internet users, representing 73% of Thai population.
As these 50 million users come online, there will be significant business and technology strategy impact to Thai enterprises. We expect to see changes in business processes for the organizations internally, such as mobility engagement and mobile application development. Also, they must perform new ways of delivering products and services by fostering a mobile-first mindset, and supporting localization and social network integration as new dimensions of customer engagement. This will also drive the explosion in cognitive ecosystems, the need for offline access, and big data efficiencies as existing information and newly generated information will get digitized and made available, to engage the next 50 million users effectively.
#4: Disruptive business models succeed. By 2017, 20% of large enterprises will be significantly disrupted by new players and will thus be forced to make significant operational changes.
Unlike the past where businesses were disrupted by the innovation of products and services, the Internet and other 3rd platform components have enabled enterprises to create new and unique business models to deliver products and services. Traditional businesses will soon be disrupted by a new wave of fast-growth business model innovation instead. The disruptive business model of banding resources together will create a new controllable marketplace.
Uber and Airbnb are the clear early examples of how the new business models are expanding the customer base and responding faster to consumer behavior changes and in a more individualized manner, thus disrupting the traditional business model. Expect to see local Thai start-ups that will also disrupt local business incumbencies.
#5: New forms of payments. By 2017, top 10 Thailand retailers will have enabled multifactor authentication to make payment in-store, with Near Field Communication (NFC), finger prints, and contactless payments playing major roles
By October 2018, the “liability shift” policy will go into effect in Thailand and make the stores nationwide liable for in-store fraud. Recent incidents abroad suggest that security breaches can impact millions of customers and be very expensive, and Thai retailers, regardless of size, are understandably concerned.
With majority of retail transactions processed in-store, retailers have an obligation to prevent fraud, but they will also have to secure Internet-based transactions. One common vulnerability is authentication, specifically payments authentication and approval processes. Multifactor authentication can help avoid fraud regardless of touch point.
By 2017, major retailers will adopt proximity payments, especially those using NFC as an alternative payment method.
#6: Smart multifunction printers. By 2018, smart multifunction printers (MFPs) will serve as the foundation for a majority of enterprise office printing solutions in use.
Organizations have recently begun to integrate some form of intelligence into its MFP fleet by leveraging the solutions architecture of the equipment. This has started with basic scanning and/or general document management capabilities, but IDC expects this to expand considerably. The transition of the MFP from a copy/print output device to a comprehensive intelligent business processing unit will take shape over the next couple of years as organizations begin to realize the broader scope of available capabilities.
Security, mobility, and cloud support will become the norm. These features promote a more efficient infrastructure that will save costs while driving more organizational productivity. Organizations that leverage the smart MFP ecosystem stand to maximize the business processing benefits available from their use.
#7: Realignment of suppliers and partners. By 2020, more than 30% of the IT vendors will not exist as we know them today.
The new trends and players in the emerging DX economy are putting tremendous pressure on traditional IT suppliers and accelerating new players to market leadership. Over the next several years, the industry will see constant shifts in vendors, with almost one-third of today’s leading suppliers acquired, merged, downsized, or significantly repositioned. For example, IDC predicts that
- Fewer cloud vendors controlling 75-80% of the market
- One or more IoT segments will consolidate
- Start-up companies will have much greater importance
As the 3rd Platform and DX scale dramatically over the next several years, Thailand’s ICT market will realize that for many suppliers, “scale wins” — and for some suppliers, “scale kills.”
#8: Customer intimacy at scale. By 2017, Thai companies will leverage Big Data to achieve customer intimacy at scale.
With the recent adoption of mobility, omni-channel and social media, Thai enterprises have been scaling customer acquisition through digital engagement successfully. These channels have huge stores of data ready for analysis, thanks to infrastructures and tools available at costs lower than ever. However, these data sets are rarely leveraged to their full potential due to a lack of vision and scarcity of data science talents. On the latter, organizations and educational institutions have recognized the shortfall and started to produce necessary talent, while only a handful just recently executed the strategy. IDC believes that by 2017, companies can adopt this “Customer Intimacy at Scale” trend in a more significant way.
#9: Next-gen security and risk management. By 2017, 30% of IT organizations will shift their focus to advanced ‘contain and control’ security and away from a perimeter mentality.
As Thai organizations start their digital transformation journey, the 3rd platform technologies are being increasingly adopted. While the benefits of these technologies are immense, they also represent higher risks as the “attack surface” expands and cyber threat landscape evolves.
This means setting up “perimeters” will not help prevent systems and data from cyber-attacks anymore. Instead of trying to build a fortress, IDC sees Thai organizations limit the potential damage of a breach by strictly containing what a connection can access and improving visibility so that when an event occurs, it can be counteracted effectively. Eventually, they will change their mindset from “protect and defend” to “contain and control.”
#10: Insurance leads in IoT. Up to 2017, the insurance sector will overtake the banking industry in IT budget growth and rate of innovation, as IoT projects in insurance get fast-tracked.
IoT will see its first use cases in car insurance. The connected car solutions is expected to grow substantially in the next five years facilitating launch of telematics-based insurance products. Successful pilot implementation by regional insurers will result in the turnaround on a mass scale. Other use cases include the use of personal IoT devices associated with health premiums, and the use of sensors for fire and cargo insurance.
There are other areas where technology is also gaining traction in insurance. The adoption of cloud for office productivity and move towards managed services bring some parts of the insurance industry to the 3rd Platform. Three core insurance system upgrades are expected in 2016, pushing the industry’s IT spending growth to be at 10%, while the banking will only grow at 6%.
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