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AI to nearly double the rate of innovation in Asia Pacific by 2021

AI to nearly double the rate of innovation in Asia Pacific by 2021

By 2021, Artificial Intelligence (AI) will allow the rate of innovation and employee productivity improvements in Asia Pacific to nearly double (1.9 times), according to business leaders in Asia Pacific. The study from Microsoft and IDC Asia/Pacific, Future Ready Business: Assessing Asia’s Growth Potential Through AI1 surveyed over 1,600 business leaders and over 1,580 workers across 15 markets in Asia Pacific.

While 80% of business leaders polled agreed that AI is instrumental for their organization’s competitiveness, only 41% of organizations in the region, and only 59% of organisations in Singapore, have embarked on their AI journeys. Those organizations that have adopted AI expect it to increase their competitiveness 100% by 2021. In Singapore, those organisations that have adopted AI expect it to increase their competitiveness 1.7 times by 2021.

“Today, every company is a software company, and increasingly, every interaction is digital. To be successful in this new world, organizations need to be a fast adopter of best-in-class technology; and secondly, they need to build their own unique digital capabilities,” said Ralph Haupter, President, Microsoft Asia. “AI is the defining technology of our time that significantly accelerates business transformation, enables innovation, boosts employee productivity, and ensures further growth. Economies and businesses that have yet to embark on their AI journey run a real risk of missing out on the competitive benefits that are enjoyed by leaders.”

Why adopt AI?

For the APAC organizations that have implemented AI initiatives, the top five business drivers to adopt the technology were (in priority order): Better customer engagement (26% of respondents named it as the number one driver); higher competitiveness (19%); higher margins (18%); accelerated innovation (15%) and more productive employees (9%).

In Singapore, for the organisations that have implemented AI initiatives, the top five business drivers to adopt the technology were (in priority order): Better customer engagement (32% of respondents named it as the number one driver); higher competitiveness (19%); accelerated innovation (16%); higher margins (15%); and more productive employees (6%).

Victor Lim, Vice President, Consulting Operations, IDC Asia/Pacific said: “Last year, organizations that have adopted AI saw tangible improvements in those areas in the range of 18% to 26%. They forecast further improvements of at least 1.8 times in the three-year horizon, with the biggest jump expected in accelerated innovation and competitiveness.”

Asia Pacific needs to build on AI strategy, capabilities and infrastructure

The study evaluated six dimensions critical to ensuring the success of a nation’s AI journey. It uncovered that Asia Pacific needs to build upon its strategy, capabilities and infrastructure in order to accelerate its AI journey.   It uncovered that Singapore needs to build upon its infrastructure in order to accelerate its AI journey.

“Asia Pacific is not ready yet for AI. To succeed in AI race, markets in the region need to substantially improve their readiness. Organizations’ leadership should make AI a core part of their strategy and develop a learning agility culture. They have to continuously invest in this transformative technology for the long-term success, sometimes without immediate returns,” Lim said. “There is an urgent need for talents and tools to develop, deploy and monitor AI models, along with the availability of a robust data estate with the adequate governance.”

Business leaders who are adopting AI face three top challenges: a lack of thought leadership and leadership commitment to invest in AI; a lack of tools and infrastructure to develop actionable insights; and a lack of skills, resources and continuous learning programs.

The study showed that to move ahead on their AI journeys businesses have to create the right organizational culture. More than half of the business leaders and workers surveyed believe that cultural traits that support AI journeys, such as risk-taking, proactive innovation, as well as cross-function partnerships among teams, are not pervasive today.

Business leaders must now embrace a new culture, where innovation and continuous learning are core components of the organizational culture. It sets the stage for agility, adaptability and growth,” said Haupter.

Organizations need to address skills challenge for an AI-enabled workforce

The study found that Asia Pacific’s business leaders and workers hold positive viewpoints about the AI’s impact on the future of jobs. Majority (62% of business leaders and 66% of workers) believe that AI will either help to do their existing jobs better or reduce repetitive tasks.  In Singapore, the majority (62% of business leaders and 71% of workers) believe that AI will either help to do their existing jobs better or reduce repetitive tasks.

“When it comes to creating or replacing jobs, 18% of business leaders believe that AI will produce new jobs, whereas 15% feel that the technology will replace jobs. Interestingly, workers are more optimistic, with only 5% expecting AI to replace jobs, while 13% anticipate AI to create new ones,” said Lim.

The study also found that workers are more willing to reskill than business leaders believe they are. 20% of business leaders say it may be too difficult for workers to develop new skills, whereas only 14% of workers felt that it was a challenge.

“Microsoft’s vision for AI is first and foremost about people. AI technology cannot progress without them. This means that millions will need to transform themselves into skilled workers as well as learners that an AI future needs,” said Haupter. “It is heartening to see that 84% of businesses prioritize skilling and reskilling of workers in the future. They plan to invest as much, or even more, in human capital than in new technology. Even so, 64% of business leaders have yet to implement plans to help their employees’ to acquire the right skills, which is worrying in today’s context. They must have the urgency to support the fundamental shift in training workers for the future.”

“The jobs of today will not be the jobs of tomorrow, and we have already seen demand for software engineering roles expand rapidly beyond just the tech sector. However, building an AI-ready workforce does not necessarily mean an acute need for technological skills,” added Haupter.

The top three future skills required by business leaders in Asia Pacific include quantitative and analytical skills, digital skills, as well as adaptability and a continuous learning mindset. The demand for all three is higher than the existing supply.

The top three future skills required by business leaders in Singapore include creativity, digital skills and critical thinking. The demand for all three is higher than the existing supply.

The study also uncovered that business leaders value soft skills more than workers expect. The biggest skills gaps identified were in:  adaptability and continuous learning (7-pt difference); leadership and managing others (7-pt difference); and entrepreneurship and initiative taking (7-pt difference).

In Singapore, the biggest skills gaps identified were in: adaptability and continuous learning (26-pt difference); creativity (14-pt difference); and digital skills (14-pt difference).