The most critical overarching trend for the Asia Pacific technology market in 2014 will be the strengthening of the “age of the customer,” according to a new Asia Pacific technology predictions 2014 report by Forrester Research, Inc.
“Keeping up with disruptive technology innovation powered by social, mobile, analytics, and cloud enablement is critical, but success in the age of the customer is about more than technology,” writes Dane Anderson, Vice President, Research Director, Region Manager for Asia Pacific, Forrester Research. “It hinges on organizations shifting their cultures, organizational structures, and mindsets to win in this new era.”
The “age of the customer” is defined as:
A 20-year business cycle in which the most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful customers.
Forrester predicts that the age of the customer will manifest itself in Asia Pacific through 10 major trends that will fundamentally alter or disrupt regional tech markets in 2014:
1. The Number Of Online Buyers In China Will Surpass The Total US Population
As the age of the customer develops in Asia Pacific, global businesses will have new opportunities to bypass traditional physical channels — which are underdeveloped in most of Asia’s emerging markets — and reach massive new markets digitally. To understand the scale of the online markets opening up in Asia Pacific, consider that the number of online buyers in China alone will reach 356 million in 2014 — surpassing the entire US population. And China’s online buyers will spend $356 billion in 2014, an amount larger than the nominal GDP of Malaysia or Singapore.
2. Technology spending growth in Asia Pacific will remain flat
Economic challenges will remain in 2014 as the global economy continues its unsteady rebound, but the regional tech market will demonstrate some resilience. Forrester expects IT spending growth in Asia Pacific to be flat in 2014 compared to the prior year, with region-wide growth of 4%; the regional growth rate reaches 6% if we exclude Japan. Key market growth highlights include:
– China – Forrester estimates China’s IT purchases will grow by 6% in 2013 and 8% in 2014. The growth in 2014 will mostly benefit local vendors as they have strengthened capabilities in the hardware space, while foreign vendors are challenged by security concerns issued by government agencies
– Australia and New Zealand – Forrester does not expect the IT spending in ANZ to move north of 3% in 2014 due to the shift from systems of record to systems of engagement
– ASEAN – market growth will continue to underperform from a currency perspective, growth to stay around 7%, below its 2011-2012 levels
– India – India’s IT spending growth will recover somewhat after the general elections and Forrester expects the IT market to grow at about 8% in 2014 over 2013. Large transformation projects in the banking and manufacturing sectors will also constitute major opportunities for tech vendors in India in 2014
3. CIOs’ IT Spending Will Decline As The Clout Of The Business Grows
Recent Forrester Forrsights survey data shows that the trend has accelerated in 2013: Asian CIOs now exclusively control just 51% of enterprise IT procurement decisions, down from 58% just 12 months ago. In dollar terms, Forrester predicts that IT purchases made by the CIO will decrease through 2016. As business leaders increasingly flex their technology management muscles, Forrester expects that business-controlled IT budget growth will accelerate in 2014. In turn, businesses will call upon CIOs and their teams to support these changes and broaden their scope beyond IT (infrastructure) to include business technology (BT) — technology, systems, and processes to win, serve, and retain customers.
4. Organizations Will Look To Source Business Capabilities, Not Technology
As business decision-makers look to build capabilities that will help improve business outcomes, Forrester believes that they will move away from procuring technology to sourcing a new breed of managed services that complement their strategic capabilities. This new breed of services will combine:
– Strong business process expertise to help businesses be disruptors
– Analytics to monitor and optimize business process performance
– Software assets that automate business processes
– Flexible engagement models that align with business value
5. Lack Of Objectives Will Hinder Data Center Transformation And Hybrid Cloud Adoption
The perception of cloud computing among mainstream organizations will continue to shift in 2014, from a focus on increased IT efficiency and responsiveness via private clouds to a drive toward a more fundamental disruption of existing processes and a full embrace of hybrid cloud scenarios, including a far greater reliance on public cloud-based services for core transactions.
6. Customer Experience Will Surge As A CIO Priority
In 2013, we have seen the topic of customer experience come out of nowhere. At first, it wasn’t even on CIOs’ agendas; now it’s one of their top priorities. In 2014, we expect CIO focus on customer experience to drive very rapid spending growth in this area, driven by firms seeking to differentiate themselves from their competitors by offering a superior customer experience.
7. Few IT Organizations Will Meet Business Demands For Improved Analytics
Business intelligence (BI) continues to expand beyond traditional reporting as real-time analytics and business-led, self-service access to visualization tools grows. But big data remains a problematic term; it’s technology-centric and doesn’t appeal to or excite business decision-makers. At the same time, IT still focuses on retaining “control” of corporate data, despite the clear business demand for analytics in areas like new product development, personalization for financial services, and customer segmentation for retail. The take-up of big data systems, solutions, and consulting services will therefore remain sporadic across the region in 2014.
8. The Internet of Things will get Personal
Growth in the Internet of Things (IoT) has primarily been driven by enterprise and government organizations in the form of smart meters, smart roads, and sensor networks in buildings, on trains, in hospitals, and in factories. In 2014, the IoT will get personal. Sensors will help people get fitter, control their car, find their keys, unlock their house, monitor the ambient temperature, turn lights on and off, control a toy, monitor electricity usage, control their air conditioner, and monitor their solar energy generation, among many others. Smart fitness monitoring and motivation devices such as the Fitbit, Jawbone, and Nike Fuelband and associated smart body scales, blood pressure monitors, and heart rate meters are beginning to appear on wrists and in houses across Asia Pacific.
9. Smartphones Will Become Life Hubs
A few years ago, the smartphone was a “third screen;” as the device became more capable, organizations promoted it to the preferred screen. Calling a device a “screen” assumes that it’s primarily for connection and consumption — something people to look at things. But in 2014, for many consumers in Asia, the smartphone will begin to resemble a “life hub” — not just a device for consuming content, but a tool for managing their life.
10. Mobile Payments Mature, But Not Mainstream Yet
The mobile payment landscape in Asia Pacific is entering an exciting phase of development, but will remain riddled by fragmentation in 2014. In countries like Japan and South Korea, people can use near field communication (NFC)-enabled mobile devices to pay for purchases at retail outlets. Firms in other countries, such as Singapore and Australia, are experimenting with a variety of mobile payment options, including NFC, QR codes, and digital coupons. Companies betting on mainstream adoption of mobile payments that leverage a consistent, stable standard will be disappointed.