We’re two-thirds of the way through 2023 and while the global economic outlook has been uncertain, CEOs in Asia-Pacific still see good growth potential in the region.
According to PwC’s latest Global CEO survey, Asia-Pacific CEOs are optimistic about their own territory’s growth and relatively less pessimistic about prospects of global growth when compared to peers around the globe.
We only need to look at the trajectory of markets such as India to understand what is inspiring such optimism. The sense of momentum has been very noticeable in my recent visits, and in conversations with customers.
It’s clear that, compared to other parts of the world, our region is still focused on technology investment to drive innovation and fuel growth. However, as the PwC survey notes, Asia-Pacific CEOs recognise that they face dual imperatives, needing to balance the execution of short-term profitability against the transformation that builds success long term.
The good news is that many Asia-Pacific organisations have already taken important first steps towards addressing both these short- and long-term imperatives by building out their cloud capability.
In fact, 70% of APJ organisations are already using multiple public clouds. And those that have reached a high level of multi-cloud maturity - regarded as ‘cloud-smart’ organisations - understand that control and optimisation don’t have to come at the cost of continued transformation and are innovating now to strengthen their business over the long term.
So how can your organisation tap into opportunities in your local market, and stay ahead of the competition? And how can you do this while also being prepared for macroeconomic shifts, either globally or in our own region?
Build on the Things you can Control
When situations are unpredictable, smart leaders look at what they can do to prepare and respond. They use the decisions and strategies that are still in their hands to mitigate the factors that are outside their control. In short, they focus on what they can do to strengthen the business, rather than expending effort trying to predict how uncertainty will play out.
IDC’s 2023 CEO Agenda found that, faced with economic uncertainty, CEOs are doubling-down focus on factors still within the organisation’s control. One of the most important being their digital business strategy, with “digital business execution gaps” ranking behind only “economic pressures" among the risks identified by CEOs in IDC’s survey.
They know those digital strategies are critical in building the agility to respond to short term challenges and the platforms for long term growth. It’s also the reason that many CIOs now have a seat at the executive table and report directly to the CEO.
Interestingly, IDC reports businesses seem to be tackling this “dual imperative” through different roles, with CEOs prioritising growth and CIOs focused on efficiency. An approach to what our CEO, Raghu, describes as: “playing offence and defence”.
This can sometimes mean that CEOs and CIOs will need to negotiate priorities, and I’ve spoken before on how CIOs can achieve enterprise digitalisation goals by implementing a sound multi-cloud strategy.
Gain Visibility and Reduce Cost
Cost discipline is always important in business, but it’s even more important when facing uncertainty.
Ten years ago, funds to invest in technology came more easily – money was more freely available, so organisations were not as focused on costs. However, in the current economic climate, there is a stronger focus on optimisation as enterprises look to tame costs.
Being cloud smart is a crucial part of cost management, both in terms of keeping costs visible and keeping spending efficient. According to Flexera, a third of cloud computing spend goes to waste. In our Multi-Cloud Maturity Index, 80% of businesses in Asia-Pacific and Japan cited the need to improve control over their operating expenses.
Effective cloud management can help you track, understand, and navigate costs – well before they spin out of control. Multi-cloud organisations also should view costs in aggregate and as part of the application lifecycle — not in isolation.
Smarter cost management can also benefit our customers’ customers. For example, India-headquartered global technology solutions company, Motherson Sumi Tech Ltd (MTSL), gained cost efficiency and improved resilience by moving to the cloud, which in turn enabled their customers to optimise their own costs.
NEC in Japan recently migrated to VMware Cloud on AWS in just over two months, reducing operating costs by 19% (compared to on-prem). Like MTSL, NEC also gained valuable insights and lessons to build out solutions for their own customers, setting it up for more long-term growth.
Modern, adaptable multi-cloud IT infrastructure can also reduce energy consumption and costs. At VMware we’re committed to helping customers and partners understand the environmental impact of their operations and software – and where to improve. VMware Aria provides sustainability dashboards to optimise an organisation’s carbon footprint by identifying idle workloads, and offers insight into carbon emissions saved by compute virtualisation.
The Generative AI Wave
Sometimes the best way to respond to uncertainty is to innovate.
The growing popularity of generative AI tools like ChatGPT has prompted many organisations to ask how similar tools can help them optimise, improve efficiency, and innovate in their customer experience, all while ensuring data security and compliance. Any organisation that wants to keep pace with the latest AI developments should be asking itself: “Is our infrastructure ready for the AI revolution?”
McKinsey’s report into the economic potential of generative AI underlines the incredible impact it will have on our economy, industry and pace of workforce transformation. The report estimates that half of today’s work activities could be automated between 2030 and 2060.
There are many potential use cases for AI, from improving automation, accelerating modern application innovation, or delivering insights for better informed decision-making.
We need to make sure our infrastructure is ready with the scale, support, and security that a shift to AI will require. At VMware, we’re working with our global ecosystem of partners, including NVIDIA, to enable customers to build and run next-generation AI applications securely and at scale.
Unlock the value of data
We know that data is an incredibly powerful asset and a cornerstone of digital business transformation. It gives businesses the insights on their own operations, and on customers, that they need to be resilient and grow.
According to research conducted for VMware, 67% of Asia-Pacific organisations expect data to be a significant source of revenue by 2027, compared to just 30% in 2022. But unlocking its value is not always easy – as well as managing and analysing data, organisations need to ensure data is stored appropriately and securely.
For example, in our region, data sovereignty and security concerns are growing in importance in many countries, rating as a significant concern for half of APJ respondents in the same study. But companies operating in more than one market need to deal with multiple sets of national regulations because there is no harmonisation of rules like there is in Europe.
Sovereign Cloud providers can help enterprises with their local knowledge and expertise to meet data sovereignty and residency requirements – ensuring compliance and security of critical data. By including sovereign cloud in your multi-cloud strategy, you can turn your focus to leveraging and unlocking insights from the data to better inform business decisions.
Optimising multi-cloud infrastructure is also key to realising the value of data within an organisation. But again, it is not always easy. Even among APJ organisations that are operating multi-cloud environments, siloed access to data is still a challenge for close to a third (29%), our research found.
Solutions like VMware Cross-Cloud services can help reduce complexity by enabling a consistent experience across enterprise infrastructure, from on-prem and public clouds right down to the enterprise edge. This can enable building, running, managing, and securing apps across multiple clouds with enterprise control.
Building Resilient Business Outcomes
With the ability to navigate multiple clouds, you can then more effectively utilise data to drive the right business outcomes. As Dale Aultman, VP & GM of Infrastructure Solutions Group Services at Lenovo, said in our CIO Exchange series, this flexibility gives businesses the “resiliency of being able to plan for the future, not just today”.
In managing their multi-cloud infrastructure, ‘cloud-smart’ organisations are simultaneously engaging in ‘playing offence’ (building agile go-to-market strategies for apps and services, adopting digital workspaces, and investing in innovation and growth) and ‘playing defence’ (optimising operations, controlling risk and costs).
In our region, 96% of organisations now see multi-cloud as critical to business success. In the face of uncertain conditions and changing markets, we are proud to be providing solutions to build resilience and agility now, and into the future.
In Asia-Pacific and Japan we are leading the world in cloud adoption. The time to capitalise on this head start is now.