Gartner Survey on Asia Pacific Supply Chains Reveals IT Investment Gap

Surveys undertaken by global research firms often reveal a “disconnect” between what respondents say they’ll do and how they actually behave. A recent example of this was revealed when Gartner researchers asked Asia/Pacific CEOs about their spend on technology.

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Surveys undertaken by global research firms often reveal a “disconnect” between what respondents say they’ll do and how they actually behave. A recent example of this was revealed when Gartner researchers asked Asia/Pacific CEOs about their spend on technology. While most executives maintained that technology was a chief priority, their investment in new systems did not mirror that contention.

"Asia/Pacific CEOs want to increase profit margins while maintaining sales growth, and they expect IT to play a strong role in this," says Partha Iyengar, vice president and Gartner Fellow. "The problem is that Asia/Pacific firms aren't moving fast enough to capitalize on this potential. Their focus on conventional technologies will likely have less of a transformative effect than more innovative technologies."

Asia/Pacific CEOs expect productivity in their organizations to increase by 24 percent by the end of 2018, with revenue (cited by 26 percent of respondents) and profitability (15 percent) as the top two metrics of success, according to Gartner, Inc.'s 2017 CEO survey. 

However, the survey uncovers a gap between what they want to achieve and where technology investments are being made.

To achieve such aggressive productivity gains, Asia/Pacific CEOs believe that conventional technologies (cloud, ERP, analytics and CRM) will help them, rather than technologies that support digital transformation (digital environments, blockchain, the Internet of Things [IoT], robotics, artificial intelligence [AI] and 3D printing). This is despite their awareness and understanding of the major impact that these key digital business technologies will have on their industry.

Other analysts feel that while these statistics may apply across the entire Asia-Pacific Region, they doubt they are completely accurate country by country.

Rosemary Coates, the President ofBlue Silk Consulting, a Global Supply Chain consulting firm and author of 42 Rules for Sourcing and Manufacturing in China, notes that in China President Xi has initiated “Made in China 2025” – a program that is focused on advanced manufacturing through investment in automation. 

“China’s intention is to improve productivity and sophistication in manufacturing and as usual, they are achieving this goal with lightning speed,” says Coates. 
 
Other nations such as Vietnam and Indonesia are at the early stages of industrialization and are taking only small steps toward technology, adds Coates. Investment in these countries is far less than China.
 
“Making sweeping generalizations about the entire region doesn’t reflect the diversity and development stages of different countries,” she says. 

Gartner analysts, though, insist that CEOs expect IT to play a strong role in fueling this profitable growth in the region. 

"IT-related" appears as the second business priority after growth, reflecting the importance CEOs give IT. This continues a trend that first appeared in our 2015 survey, when IT reached the top five business priorities of CEOs. This year's ranking of No. 2 is the highest ranking IT has achieved in the last three years.

According to Gartner, Asia/Pacific companies benefit from being located in the region with the fastest-growing economy, so they worry less about sales growth than companies in other regions. Instead, Asia/Pacific companies are more focused on increasing profit than revenue growth. Digital business offers a way for Asia/Pacific firms to lower their cost structure drastically and thereby increase margins, but these firms are not pursuing digital business as aggressively as they could.

The survey also indicates that Asia/Pacific enterprises are slightly behind global counterparts in terms of digital business maturity, with 20 percent of Asia/Pacific CEOs describing their enterprise as "digital to the core," compared with 22 percent globally. Asia/Pacific firms are also slightly behind global counterparts in the phase of digital business they are in.

"Digital" means different things to different people, and Asia/Pacific CEOs hold less transformative views of digital business than their global counterparts, according to the Gartner survey. It found that 45 percent of Asia/Pacific CEOs think of digital transformation as a way to optimize their current business versus 42 percent globally.

"CIOs need to take on an evangelizing role with the CEO and other business leaders about the transformative possibilities of digital business using real examples," says Iyengar. "Many business leaders still cannot describe digital business well, and need education."

Check out this infographic on the results of the Gartner survey.

 


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [ protected]

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