From a data center construction boom to data privacy laws being increasingly codified across the region, not to mention various industries adopting cloud computing, artificial intelligence (AI), internet of things (IoT), and 5G, signs are rife that Southeast Asia is on the verge of a data revolution.
It’s simple: data is now such a valuable business asset, and the power to analyse it can boost your competitive advantage. And with IoT and 5G, the internet is now in everything, seamlessly weaving data and analytics into everyday life.
For businesses in Southeast Asia that want to remain competitive in this evolving landscape, digital transformation is no longer optional.
Here are a few developments that are already reshaping the region’s dynamic business landscape.
Manufacturing companies will increasingly deploy technologies such as AI, IoT, 5G, and the cloud—a trend that is also known as “smart manufacturing” or “Industry 4.0.” Between 2021 and 2026, Asia Pacific’s smart manufacturing market is expected to grow at a compound annual growth rate of 7.57%.
With this industry being such a large component of Asia’s economy, it has the potential to drive massive productivity gains. Globally, Industry 4.0 could deliver between US$1.2 trillion to US$3.7 trillion in productivity gains, according to research by McKinsey. Of this, Southeast Asia could capture gains worth between US$216 billion to US$627 billion.
As in other parts of the world, Southeast Asia experienced an e-commerce boom in 2020, triggered by mobility restrictions implemented during the pandemic . Indonesia led this surge, followed by the Philippines and Malaysia. Indonesia also posted the highest e-commerce adoption globally, with 87% of internet users buying something online, outperforming the UK, Thailand, and Malaysia. E-commerce adoption in Vietnam, Singapore, and the Philippines also outpaced China’s.
In the same year, about 40 million people in the region came online for the first time. This upped the total number of internet users to 400 million in 2020 from just 250 million in 2015.
In Asia Pacific, spending on public cloud services grew by over 38%, reaching US$36.4 billion in 2020. Asia-Pacific companies are even adopting cloud technologies at a faster rate than companies in the US or Western Europe, according to a study by Boston Consulting Group and Amazon Web Services (AWS).
Many businesses in Asia are also migrating mission-critical functions to the cloud. Even retailers are expected to keep leveraging this technology, given their positive experience with them in 2020: respondents to Google and IDC’s Digital Pulse of Asia Pacific Retail report say that, in 2020, digital technologies, such as the cloud, helped protect their revenues by increasing or sustaining earnings, as well as by mitigating revenue declines.
Another disruptive technology that’s on the rise is 5G, which ushers in a new era in digitalisation, enabling the deployment of technologies such as IoT, big data analytics, and AI at scale. Compared to 4G, 5G is significantly faster, can connect more devices, and can handle higher bandwidths.
But as 5G initiatives roll out, data centres will need to rethink their infrastructure. Data centres are expected to be “...at the heart of enabling 5G in all applications for the foreseeable future,” says Chris Sharp of Digital Realty. To accommodate 5G, companies could move their IT systems to the edge of the network and closer to users, or make use of agile, secure, and flexible cloud data centres.
As businesses continue to digitalise, the evolving threat landscape in Southeast Asia could hamper their growth. In fact, the top 1,000 companies in the region could lose US$750 billion in market capitalisation due to cyber threats.
Cybersecurity concerns will only escalate over time as the uptake of new technologies—including encryption, multi-cloud operations, and IoT—can make cyber environments more complex and threat monitoring and response more difficult. Cloud shadow IT and employees’ home WiFi networks also continue to expose companies to cyber risks.
As such, there has been a growing movement towards boosting the region’s cyber-resilience. T-Systems established a cyber defense center in Singapore in 2019, anticipating later cybersecurity efforts by other MNCs and transnational organisations.