Moderated by Anthony John Arundell, Director – Sustainability, Smart City, CUP and Estate Management at Frasers Property Holdings (Thailand) Co., Ltd., the afternoon panel discussion session on digital transformation journey for smart living was joined by Dr. Suphithat Songsiri, General Manager at Shinasub Co., Ltd., Kitipong Tarasirisakul, Chief Technology Officer, Enterprise Business Group at Huawei Technologies (Thailand) Co., Ltd., Van Tang, Head of Urban Solutions, APAC – Social Innovation at Hitachi Consulting, and Robert Jessing, Senior Principal at Accenture Strategy.
Anthony introduced the main topics of discussion in the panel session, from challenges faced by companies in the wake of digital transformation to the benefits of digital transformation. Anthony then gave a brief overview of the current trends in digital transformation, as these trends will be the implications of how businesses will be disrupted in the future. In the last 10 years, there has been many changes, yet the same key business drivers are still in place from many years ago such as market share, profitability, and revenue growth. The fundamental of business still has not changed, although they are now much more complex.
Take running a conventional bank as an example. Although they have strong business fundamentals in place, they could still be disrupted by FinTech companies or Tech Startups like amazon, Alibaba, entering into their market. These are the implications that technology has the potential to change markets very quickly, as well as business models. The retail sector has also dramatically changed in the last 10 years, from bricks and mortar to clicks to bricks, and now only clicks. Digital transformation is one of the key drivers for new business models and how we adjust to new business positions.
Looking at the digital landscape, we can see that there are many changes in technologies from Cloud Computing, to Blockchain, SaaS, AI, RPA, Machine Learning, IoT, robotics, etc. Additionally, we are now also facing regulatory changes, where ethical and social issues come into play. There has been a lot of changes in the digital world, which needs to be incorporated into digital transformation strategies of businesses and organizations in all levels. Through digital transformation, many businesses are seeking to enhance human experiences or to solve challenges to achieve better quality of lives, or to achieve a more competitive business model.
Anthony stresses on the fact that digitalization needs to be agile, where we should be able to meet customers needs and desires more effectively. Whether we use AI to augment or automate a process revolves around the question of how we can achieve a better and more sustainable business model that could better meet the needs of customers.
Introducing the first panel speaker, Robert Jessing, and his take on Digital Transformation
Robert Jessing, Senior Principal at Accenture Strategy began by stating the fact that we are now living in the digital era. “More than half of the companies in the world have gone through the first phase of digital transformation.”
According to Robert, digital is becoming more common, where work processes are becoming more digital and services are becoming more digital, with cloud, AI, robotics and automations. These technologies are becoming more and more common. We are also starting to see more of these technologies integrated to create more innovative solutions and capabilities. We also see a lot of changes in technologies like artificial intelligence, which is becoming more and more relevant in our lives, with a lot of new applications.
Digital Transformation also enables us to know ourselves better through data analytics; personalization of products and services are becoming more common. Digital transformation also enhances human workers. On the security front, digital transformation has a more prominent role.
What are the Changes that are Driving Businesses to Adopt Digital Transformation
Van Tang, Head of Urban Solutions, APAC – Social Innovation at Hitachi Consulting introduced a brief history of himself, starting off in the IT industry in 1997, where he was working with SAP. One of the first customers he worked with was a global print imaging company based out of the US, who were faced with digital disruption and failed to react fast when digital imaging became mainstream worldwide. The company eventually went out of business.
Van also worked in Scandinavia with a global toy manufacturer, who collected and studied data about their customers, particularly kids. They learned to link their sales (customer demand) to key events like new blockbuster movie was releases. the Company would create new products to satisfy their customers’ excitement at the launch of a new movie. The Company also realized that they needed to have an agile supply chain in order to satisfy this new type of event-driven market demand based on events such as a blockbuster movie release. This is all based on the data the toy manufacturer collected.
In the Middle East, Van was involved with a customer who was trying to build a whole new city implementing digital transformation with the approach to digitize the whole city from the very beginning to the end. Essentially, the key changes that drives a business to adopt digital transformation is to better serve their customers and improving their journey.
Kitipong Tarasirisakul, Chief Technology Officer, Enterprise Business Group at Huawei Technologies (Thailand) Co., Ltd. gave a brief overview of Huawei Technologies. Although Huawei is well known for their mobile phones, Huawei is actually one of the leading ICT infrastructure and device in the world. Huawei’s vision is to deploy digital solutions, making it inclusively accessible to everybody in the world. Digital transformation is Huawei’s main focus at this point, particularly in developing smart cities, smart transportation and smart campuses.
Kitipong confirmed Van’s perspective that the key change driving businesses to adopt digital transformation is the change in customers’ behavior. With technology empowering customers with the tools and information to compare different products and services, customers can now set their own terms. Customers’ expectations have also dramatically changed with technologies. Today, customers are expecting speedy service with high transparency and personalized services. Existing businesses thus need to embrace this change and prepare themselves and adopt digital transformation.
Dr. Suphithat Songsiri, General Manager at Shinasub Co., Ltd. added, “Why do we need digital transformation? Every company has a gap in terms of technology they want to improve on. This is where digital transformation becomes relevant.” Dr. Suphithat demonstrated an example of how, if you are to submit your tax documents to the revenue department, you may need to submit 15 different documents, and this is only for one person. On the scale of a big company, there would be an immense amount of paper work, not to mention the human errors and time consumption entailed. Digital transformation could help us perform tedious works in a much more productive manner.
How does Companies Start Adopting Digital Transformation?
Kitipong was the first to respond, stating that there is no one single solution for businesses. He then shared Huawei’s digital transformation journey with the audience, starting from 2014, where they realized they needed to start adopting digital transformation. Huawei began embarking on their digital transformation journey in three areas, in business strategy, process, and technology. Strategy is very important as without a clear strategy, there is no way a business can know what to do. Huawei’s strategies were focused around three areas, improving customers’ satisfaction, empowering employees for better productivity, and moving everything on to Cloud. This was how Huawei commenced their digital transformation journey. On to process, with Huawei being a large organization with thousands of employees and working processes, Huawei’s system is huge. Therefore, it was impossible for Huawei to enforce change in every single processes in the organization. Thus, a common ground was established so that every party in the organization can follow through. Huawei defined 5 common grounds in which they called ROADS:
- Real-Time
- On Demand
- All Online
- Do it Yourself
- Social – the ability to share knowledge and experience
On technology, Kitipong stressed the importance of knowing your technologies, and knowing the purpose of using those technologies, whether it is AI, Blockchain, or Data Analytics.
Huawei focused around 5 key projects. The first project is focused on Huawei’s R&D activities. In the past, Huawei’s R&D activities are conducted in silos, from that Huawei identified 7 key technology areas and developed an agile organization model, where researchers were assigned into each of the 7 specific technology areas. A Cloud R&D platform was created so that employees can provision their own resources real-time on demand. As a result, Huawei’s speed-to-market from the development process was increased by 50%, with resources being reused by more than 2.5 times.
The second project regarding digital transformation is the Global Manufacturing Project. Because Huawei has many manufacturing activities on going in the world, and each manufacturing plant has their own data and information, a platform was created to consolidate all the information shared among all manufacturing plants around the world. This allows Huawei to be able to see a holistic view of each factory, and to be able to monitor each factory’s productivity and defect rates on real-time, and thus, can respond and react to any incidents real-time.
The third project is focused around logistics, where technologies like IoT and RFID were applied throughout Huawei’s supply chain. This allows Huawei to be able to track their products starting from the warehouse into retail stores.
The fourth project is called “Connected Huawei”, in which a mobile application was developed to become an everyday application for Huawei. The application serves as a platform for carrying out business activities and communication. An e-learning module is also included in the application, in addition to an e-wallet platform.
The fifth project revolves around the construction of a new campus called “Huawei Park”. Huawei is now operating in over 170 countries around the world, thus there are over 170 offices around the world. Thus, it is important for Huawei to be able to see a holistic view of those offices. As such, a standard platform was created connecting several subsystems together to provide an overall view of all campuses and offices. On this platform, safety and security modules were also integrated such as the fire alarm module, communication module, etc.
Following Kitipong’s comment, Dr. Suphithat added, “For me, the key drivers for digitization would be how to make your company sustainable.” Dr. Suphithat emphasized on the importance of developing your customers, your internal processes, and your employees. Each organization may have different priorities, but the underlying fundamental value is to achieve sustainability.
Take a hospital for example, currently, each hospital information system is not easily accessible by external parties, yet imagine if we all carry around our Electronic Medical Record (EMR), our expectation would be that this would provide the convenience for us to be able to receive service at any available hospitals in Thailand. This is the kind of transformation that could greatly help improve our public healthcare system.
Van added, “I think that how to start digitization also depends on what type of business you are.” In all the digital transformation projects or IT projects should be business-led. Yet, in addition to the business vision, you would also need the right management, in which Van commented that ‘leadership’ is also very important. Van shared his experience on one of the first digital transformation project in the US for a steel smith implementing their first ERP system. Without the support of a strong leadership team, that project would have failed. Therefore, the success of any digital transformation project would be the people, the leadership, and the team that would help drive the initiatives.
Robert added his view on how you should start the digital transformation journey, “It’s really about finding the values.” According to Robert, starting on the digitization journey requires a clear business vision several years into the future. Looking at Netflix a couple of years back, their business model was currently VDOs and DVD rentals. Yet, looking into the future, their vision was to be providing home-streamed entertainment. If you are a car manufacturer, then you would have to consider whether you are selling cars or selling mobility. This is where autonomous vehicles and connected infrastructure associated with moving people around comes into the picture.
In the real estate world, for example, Robert shared that they used to be selling office spaces by square-meters. But now, with players like JustCo, they are selling office experiences. Therefore, to embark yourself upon the journey of digital transformation, you need to work out the picture in your mind of how you envision your future business model.
What Are the Future Technologies That Will Drive Digital Transformation?
Van was the first to give his view on this issue. Van shared that there are several examples of how technologies can drive digital transformation. With Hitachi for example, many people may be familiar of Hitachi’s electrical appliances. But what a lot of people do not know is that Hitachi is also building high speed trains, nuclear powerplants, and proton beam technology for curing cancer. An example is where Hitachi Consulting is collaborating in digital twin projects. In the UK, Hitachi is working to create a digital twin of the UK’s high-speed train system with the input of thousands of sensors to monitor the performance, location, and vibrations, etc. of the trains. Those data are then placed onto the Cloud and analyzed on the Lumada platform. The purpose of this project is to keep the train functioning safely on the track and in the most efficient manner. The platform also assists maintenance work by monitoring the working conditions of the railway and train systems. This is an example of how having a digital twin of a train could vastly improve efficiency and security. This also applies to buildings and other infrastructures or even manufacturing.
Robert added that all companies will begin to adopt various technologies such as social platforms, mobile, analytics and clouds. Distributed ledger or blockchain has also been growing in relevance. In Asia, we are starting to see blockchain being used in trading, where the number of shipments and freights documents for shipping or trading cross countries could be reduced via blockchain. Several work processes can also be automated with digital solutions. AI on the other hand is also growing at a great speed in applications. A couple of years we were still exploring robotic automation and extracting knowledge and information, but today, we are living in the world where hundreds of jobs will be impacted by AI. Realities, such as VR or AR, are now being applied in hospital trainings and other dangerous scenarios such as offshore drill rigs and mines. Quantum Computing and Edge Computing, while still very new, are also improving in a very fast pace. This will allow us to be able to process immense amount of data in the future.
Kitipong then gave his view on how today, we are looking for ways to integrate various technologies such as AI to various use cases. Huawei’s focus is to connect various technologies together, particularly 5G. 5G is not just about the speed of transmitting data, but rather, it is a technology that would enable various technologies to become mobile. 5G has the capability to support a very high density of data transmission, which will unlock a lot of potential for other technologies such as AI or Blockchain.
Kitipong gave an example of connecting autonomous cars, say if we want our cars to be able to talk to each other, this cannot yet be achieved by the current technology, as this would require IoT, Cloud, and AI to be integrated. This is the limitation of the current 4G technology. But with 5G, this could actually be achieved.
Dr. Suphithat gave another example on the case of the One Bangkok project, where optical fibers were implanted throughout the whole infrastructure, which will become the key enabler of the innovation running throughout the whole building. The question is, how could we manage the building to achieve the highest efficiency and smart environment. Dr. Suphithat explained that One Bangkok thus aims to focus mainly on providing a higher bandwidth through optical fibers to enable future innovative systems to work better on the premise.
What Are the Three Key Success Factors for Companies Deploying Digital Transformation?
Dr. Suphithat believed that the three success factors in deploying digital transformation are strategy, people, and partner, “Assuming that you have already defined your strategy, I would say that your people are the main factor of success. Even if you are able to adopt a good technology, but if you are not able to encourage your people to adopt it, then your transformation plan would not work out.”
Kitipong then shared that when Huawei started on their digital transformation projects, they identified four key success factors. First is leadership, because transformation has to be driven by the management level of the organization. This is because for any sort of transformation to succeed, you need a very clear strategy and vision. Second is a strong execution team. This team, who will be implementing the transformation will have to embrace the change. The execution team will be the pioneer driving the transformation and the people inside the organization to embrace the change. Third is a strong equal pilot. This is because nobody can undergo transformation on their own. As such, you would need to identify a strong technology partner or consulting partner, who can provide the missing piece of your own capabilities. The fourth factor is a solid investment. Digital transformation projects may not be giving monetary returns right away, and therefore you should not be expecting a monetary return on investment, but rather, you should be looking for other values out of these projects such as improving productivity and empowering your employees in the long run.
To which Van added that in order to successfully implement new technologies, one of the critical success factors is to consider the effect or the impact these technologies will have on your organization or on your customers. For example, the autonomous cars, imagine the immense amount of data generated from the use of autonomous cars where government could access information of your location. As a result, people could be taxed based on where they go based on pre-defined zones for congestion charges as seen in other major metropolises such as London and Milan. Another case would be smart buildings, where we might be able to monitor the behavior of the people inside the building to design a new incentive model to influence their energy consumption behaviors. Defining these kind of social responsibilities / success factors are important to consider upfront in any digital transformation.
What Could You Potentially Do to the Society with Digital Transformation?
Robert was the first to respond, “Another angle of your business model is to understand your digital transformation strategy, how will they work, what are the critical factors of success, which all ties back to understanding the ecosystem around you and the technologies that may be disruptive.” Robert then described how execution also plays an important role, where you need to understand where you are going to be while also being agile. Companies need to move fast, fail fast, yet control your failure so as not to affect the ecosystem too drastically. We also need to have one engine on the company which is focused on driving the existing business while also having other engines focusing on executing other business models driving innovation.
What Are the Challenges You See with Implementing Digital Transformation in Businesses?
Robert stated that there are a lot of innovation programs in companies, but these programs are not given a business task. Instead, their purpose is so that the CEO could show them off to other clients. Thus, it is important that innovation projects are focused around the business model rather just for show. Today, we see a lot of companies moving into the first couple digital spaces, but without a clear goal, these initiatives stopped. Robert stressed the importance of moving forward in agile steps, create solutions viable products and then enhance those products in small steps. And lastly, on values, we should always be asking ourselves what the values are of implementing digital initiatives and find ways to measure these values as we go along.
Robert gave an example of a multibillion-dollar company where the leadership is considering and weighing the values of their digital transformation initiative. The key here is to be able to launch the minimum viable product as quickly as possible. Yet without such a strong leadership, the initiative would not have been possible.
Van added that the companies that are struggling are only adopting the technologies they see their competitors are adopting or that the media is showing before delegating the tasks to their IT department. The IT department then ends up buying these technologies and have the challenge to integrate the many disparate technologies in order to make them work together. Thus, designing the metrics of how you want to achieve success and then developing a global architecture and assessing the supporting technologies available at any given point in time would help guide a successful digital transformation roadmap.
Kitipong stressed that the thing we need to avoid in order to mitigate risks is to ignore the aforementioned key success factors. We need strong leadership, especially when dealing with those inside the organization resisting change. Therefore, transformation projects would focus on having a good strategy and getting all the inside mechanics and people to work together. We also need to be ready with investment, while at the same time, understand that the returns may not come out as monetary values. Technology changes very quickly, so embrace these changes and be prepared to move on if something does not work out. Other challenges are cyber security and data privacy issues. Digital transformation involves a lot of sensors generating numerous amounts of data. A data-driven organization is also involved with a large amount of data. As such, data privacy issues are becoming more prominent, where we are starting to see more regulations in the world concerning cyber security and data privacy.
Anthony added that when talking about digitization, we are talking about data. If we have bad data, then we would be making bad decisions. The trouble now is that with more sensors around our businesses, we are getting a lot more data on real-time. And with the current computing power, we are now able to analyze these data much more quickly. Now, we could either be making good decisions faster or making bad decisions faster.
Dr. Suphithat added that you should first gauged the readiness of your organization, secondly, you would have to promote this transformation among your internal corporations, and lastly, you should identify a technology partner who could enable that transformation.
How many Companies in the Thai or Southeast Asia Market Has Adopted Digital Transformation and What Are Their Current Status?
Kitipong was the first to share his past experiences with three of the industries with the highest digital transformation adoption rate – media, banking, and telco. For the Media Industry, there has been a lot of changes, and thus, the Media Industry are forced to go into digital transformation. Many media company shutdown their paper-based media business before moving on to digital channels. This is one obvious way of how many media companies are adopting digital transformation. Some companies even undertake digitization projects, where they are digitizing their contents, which makes it easier for them to manage those contents. Moving their databases onto Cloud also provides them with higher flexibility. Now, we are starting to see media company investing in IT products.
For the Banking Industry, the topic of digital banking is one of the most prominent topics today. Several banks are already adopting digital transformation through their digital platforms. Banks are also exploring other technologies like AI to detect unsecured channels. Blockchains are also being used to run the process of issuing Letters of Guarantee. On the Regulator’s side, the Bank of Thailand is also undertaking several projects to drive digital transformation, such as the Cashless Society Project. The Bank of Thailand is also allowing the use of biometric technologies to enable the e-KYC system.
Telco companies are also adopting several digital solutions to deliver their applications and services, as well as to increase their speed-to-market development process. Digital solutions are also being applied to reduce Telco companies’ operation costs by integrating various operation systems together.
Van agreed that currently, everybody is talking about digital transformation. In the US, Hitachi Consulting observed massive declines in new ERP projects. However, they did see an increase in IoT-driven digital transformation projects. In the APAC region, we have both high levels of ERP adoptions as well as new IoT digital transformation projects. It also depends on the industry and the maturity levels of companies. Banking is one of the leading industries. However, there are still a lot of companies in Thailand that are not yet adopting digital transformation, for example in the agriculture Industry. This also means that there are a lot of potential opportunities in this region compared to the rest of the world.
Robert added that while everyone is doing digital transformation on some level, the leading sectors in Thailand and Southeast Asia is evidently the banking industry. However, we are also observing certain sectors like real estate moving into the digital space. One of the things we are looking at is the development of the trade channel in the Indochina region, where there is a lot of potential to adopt digital transformation for increased efficiency.
Dr. Suphithat gave an example of the application of digital transformation in the healthcare sector. One of the hospital chain in Thailand is adopting digital platform to connect five hospitals to provide the management with a holistic view of their hospitals. The platform also provides an open API module, where they are able to engage with their developers in order to use data and information collected to generate better solutions. The hospital chain is also trying to predict health incidents through monitoring location-specific social media activities, which would allow them to deploy medicines to those locations.
Anthony added that while digital solutions may be more relevant in various industries such as the real-estate industry, we also need to make sure that the tenants are gaining the advantages of these solutions.
How Do We Make Sure That the End-Users are Getting Better Services from Digital Transformation?
When we measure the success of digital transformation, we are not talking about profitability, but rather, we are measuring the social changes that has occurred around digital practices. With the world more focused on how data privacy or cyber security is being managed, the question is how we can ensure the security of those data. To which, Van responded that you have to establish the right governance on your data, and you have to take your customers data very seriously. More importantly, you have to make sure that you are enforcing this through all stakeholders, especially your business partners.
Robert shared the case in Europe where there was a sudden concern for location data extracted by a certain vendor. As a result, the vendor had to stop selling location data within a couple of hours.
Anthony summarizes the session by stressing on the importance of recognizing that digital transformation is not just about profitability, but rather, on the potential impact on the ecosystem and related stakeholders.
A question was raised from the audience on the level of artificial intelligence that are actually being utilized in businesses, to which Robert responded by explaining that there are several levels of AI, from Chatbot to analytics and other applications. Although it is still generally used on the more basic level, the technology is coming and will become more relevant in the future.
Van added that AI at this stage may appear to be a marketing buzz word in many cases, but the technology is already quite advanced and there are many value-add use cases being deployed all over the world across several industries. This is the same with Machine Learning.
Anthony added that when you look at a lot of the organizations in China and the US adopting AI, it is very real, and they are spending so much money on AI.
The second question raised was on how we could harmonize the old power and new power of businesses together for the full benefit of digital transformation. Anthony gave an example of One Bangkok, where there are several technology drivers. We can look at the technologies we have today, and from that we need to recognize that society as a whole will have to be regulating the balance of power of the influences of these technologies. There is always going to be some regulatory framework.
Kitipong added that no matter what we do, we need to be conscious about the impact of our actions. So, for Huawei for example, we first need to understand the potential impact of our application, we need to know the implications of how our application data are going to be used, and we need to understand the regulatory limitations that we need to overcome. Eventually, we need to be able to explain to the public the risks associated with using the application. The point here is, we cannot fight against regulators, but we need to be very conscious.
Van commented that while on the one hand we have the regulatory requirements, yet on the other hand, we have the enforcement of those regulations. There is often a gray area between those two areas. Yet in the middle of these two areas, there are the social media, where the society has the power to help control and self-regulate the application of digital solutions. The power of consumers on social media on its own is a market force that companies need to take seriously. For example, some companies take consumer feedback on products sold on Amazon very seriously, answering questions and concerns promptly. This in turn shows the general public that the company cares about their customer feedback in order to make their products customer-driven.
Robert added that you need to be very explicit to your users on what do you plan to do with their data. You need to be responsible to your customers on this front.
Source : TMA_ Digital Transformation Forum 2019