Connecting the dots in asia pacific how business leaders are preparing for a world where everything is connected

Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where
everything is connected
A report from The Economist Intelligence Unit

Commissioned by


Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

Contents
About the report

2

Introduction

3

1. Preparation is everything
Talent strategies are becoming more aggressive

5
7

2. Barriers to adoption
For more profitable companies, speed and the complexity of data are the next frontiers
A complacent view of cyber security

8

9
9

Conclusion

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© The Economist Intelligence Unit Limited 2014

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Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

About the
report

Connecting the dots in Asia-Pacific is a report from
The Economist Intelligence Unit, commissioned
by Cisco. It assesses corporate attitudes towards
the rise in “connectedness” (see definition,
below) across Asia-Pacific and the level of
business readiness in the region.
The report draws on a survey of 532 executives
across 11 countries in Asia-Pacific, conducted in
May, June and July, 2014.
 About half (49%) of survey respondents are
board members or C-level executives, including
165 CEOs. All respondents are based in AsiaPacific with a majority located in India (15%),

Australia (14%), China (14%), Japan (10%) and
South Korea (10%).
 About one-half of the survey respondents
(49%) work for companies with annual global

revenues exceeding US$500m. There are 19
different industries represented in the survey
sample, led by manufacturing (15%), financial
services (14%), and information technology (IT)
and other technology (11%).
 The primary functional roles of respondents
are general management (46%), strategy and
business development (36%), and marketing and
sales (25%).
The survey findings are supplemented by desk
research. All figures are in US dollars. Kim
Andreasson was the author and Charles Ross was
the editor. The Economist Intelligence Unit bears
sole responsibility for the content of this report
and the findings do not necessarily reflect the
views of the commissioning organisation.

Definition of connectedness
For this report, “connectedness” is defined
as the unprecedented number of people and
devices connected to the internet and to one
another; the growth in data these connections

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© The Economist Intelligence Unit Limited 2014

create, and the ability of organisations to
benefit from the opportunities created through
the confluence of business trends, technologies
and increased insights from connectedness.


Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

Introduction

connectedness may separate successful firms
from failing ones. A similarly large majority of
executives believe their organisation’s ability
to adapt its people, processes and technology
is important to take advantage of this greater
connectedness (Figure 1).

Within the last decade, the number of individuals
using the Internet in Asia-Pacific has almost
quadrupled—from 344m in 2005 to over 1.3bn
users in 2014.1 Meanwhile, the market for big
data in the region is forecast to increase fourfold
in half the time (from $548m in 2012 to $2.38bn
in 2017).2 Thus, companies are increasingly
looking to link this rising Internet connectivity
and technological development with greater
customer insights and internal improvements in

their people and processes.

Nonetheless, perceptions are not always the
same as reality. The results of our survey set
out in this executive summary show that while
many companies in the region are investing in
connectedness, progress is far from uniform. At
the same time, as executives look to exploit new
opportunities, there are signs of complacency
with regard to the risks that come with greater
connectedness.

Such “connectedness” can make a difference in a
competitive landscape. In the survey conducted
for this report, more than 4-in-5 executives in
Asia-Pacific agree that investments aimed at
capitalising on the potential benefits of greater

Figure 1: All change
Importance of an organisation’s ability to adapt its people, processes and technologies to take
advantage of connectedness
(% respondents)

Unimportant
3%

Undecided

11%

86%

Important

Source: ITU World
Telecommunication/ICT
Indicators database; note:
data for 2014 projected

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AP2670103V

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© The Economist Intelligence Unit Limited 2014

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Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

Five things businesses should know about
connectedness in the Asia-Pacific region
Connectedness is the difference between
success and failure: A willingness to invest in
connectedness will separate successful firms
from failing ones, say executives.

Corporate preparations in some countries
will create competition for talent: Firms in
emerging markets, such as Vietnam, are actively
looking to poach staff from competitors.

A significant minority of companies are
disconnected: One-third of executives believe
that Asia-Pacific is not well-prepared for dealing
with a world where everything is connected.

Progress across the region is developing at
two speeds: Some companies worry about
accessing consumer data quickly enough to
inform decision making. For others, a lack
of telecommunications infrastructure is
hampering their ability to even reach consumers
in the first.

C-suite executives are switched-on to the
revenue potential: Board members and C-level
executives see greater opportunity for improved
revenue growth from connectedness than other
less senior executives.

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© The Economist Intelligence Unit Limited 2014

Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

1

Preparation is everything

The perceived importance of connectedness
varies across industries. Respondents in datadriven sectors like IT and technology (51%) and
healthcare, pharma and biotech (50%) are far
more convinced that their organisation’s ability
to adapt its people, processes and technologies
to take advantage of the potential value of
increased connectedness is very important than
those in traditional industries like construction
and real estate (28%) and manufacturing (33%).
The biggest expected benefits of connectedness
cited by survey respondents are greater access
to customer data and better understanding of

customer habits (42%), followed by enhanced
products or services (39%) and improved
internal efficiency (37%). In addition, almost
all (93%) executives agree that an increase in
connectedness is likely to spur a new wave of
innovation in terms of products and services.
Board members and C-level executives see
greater opportunity for improved revenue growth
(37%) than other executives in the survey (22%),
although most executives acknowledge the

difficulties in attempting to value the return on
investment resulting from greater connectedness
(Figure 2).

Figure 2: Broad agreement on benefits from top to bottom
C-suite and below expected benefits of increased connectedness
(% respondents)

Non C-level

C-level

Reduced cost
50%

Improved internal efficiency

40%

Enhanced products or services

30%
20%

Improved revenue growth

10%

Better understanding of customers

0%

Increased innovation

Improved organisational
regulatory compliance

Improved transparency

Decreased rates of fraud and abuse

© The Economist Intelligence Unit Limited 2014

5


Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

So what changes do executives
plan to make in order to
make the most of these
opportunities?
When it comes to technology, the single largest
group of executives cite mobile devices as the most
important trend today. But this is all set to change.
During the next three years, the focus for
technology investment will shift to big data and
analytics (Figure 3). This trend is particularly
strong among data-reliant sectors such as

professional services (53%), IT and technology
(47%), and financial services (43%) compared
with traditional industries like construction and
real estate (35%) and manufacturing (39%).
Overall, fewer organisations cite additional
investment in mobile devices (33%), which
suggests a maturation of connectedness—
moving beyond the initial stages of connecting
with customers to focussing on the secondary
benefits of what such connectivity can bring:
more customer data.

But exploiting greater connectedness goes
beyond technology. Internal organisational
improvements to people and processes must also
be made.
When asked in which of five areas their
organisation will focus to reap the potential
benefits of greater connectedness, the leading
answer—cited by 49%—is enhancing employee
productivity (i.e. achieving the same output
with fewer man hours). Geographically, this is
a particularly strong trend in Singapore (cited
by 69%), Australia (58%), and the Philippines
(58%). But executives do not expect this to be
easy, since raising employee productivity is also
the second most (24%) cited challenge facing
organisations (surpassed only by the customer
experience at 25%).
In terms of business processes, most respondents

believe in improving coordination between
departments (38%); however, among companies
with stronger corporate profitability, there is a
tendency to also focus on improving coordination
up and down the management structure (38%

Figure 3: Investing in information
Technology trends which companies will invest in now and over the next 3 years to prepare for increased
connectedness
(% respondents)

Now

In 3 years

33%
36%

Cloud computing

41%
41%

Big data and analytics

17%
17%

The Internet of Things

Mobile devices

33%

Social networking

20%
17%

Cyber security
Software-defined networking (SDN)

6

8%
7%

© The Economist Intelligence Unit Limited 2014

24%

21%

44%


Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

vs 25%) and centralising decision-making (20%

vs 12%). The presence of such counteracting
forces illustrates the complex challenges facing
companies trying to adapt to a new reality and
shows that there is no silver bullet to adoption.

companies plan to take to plug skills gaps can
vary from market to market.
Most organisations believe in enhancing internal
development of current staff (53%). In Australia,
for instance, two-thirds of executives prefer
internal development, much more so than hiring
people away from competitors (7%). By contrast,
in Vietnam, one-third of executives plan to take
the latter approach (Figure 4). Across the survey
sample, leading organisations tend to take a
more aggressive approach: companies with
stronger corporate profitability are twice-aslikely than their less profitable counterparts to
say they will hire people away from competitors
(21% vs 12%) three years from now.

Talent strategies are becoming
more aggressive
As companies prepare for greater connectedness,
with new technology, working practices and
business processes, executives recognise the
need to develop the requisite knowledge and
skills among their workforce. Three years from
now only 11% say their hiring policies will remain
the same as today, although the route that

Figure 4: Talent strategies vary across Asia-Pacific
People issues organisations will focus on in the next three years to prepare for greater connectedness
(% respondents)
Hiring people from abroad

64%

7%
10%

China

10%

53%

12%
15%

Indonesia
7%

56%

13%
14%

Malaysia

46%

29%
3%

67%

9%
9%

53%

6%
25%

South Korea

Vietnam

39%

24%

Japan

Thailand

45%

22%

India

Singapore

Hiring people away from competitors

12%

Australia

Philippines

Enhancing internal development of current staff

52%

29%
8%

61%

16%
20%
32%

44%

© The Economist Intelligence Unit Limited 2014

7

Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

2

Barriers to adoption

Despite uneven Internet adoption rates across
Asia-Pacific, greater consumer connectivity is
viewed only as the fourth greatest challenge
overall. One reason could be that with a lack of
infrastructure in the first instance, companies
have low expectations for online adoption among
consumers. However, among companies who
consider themselves ready to seize the potential
opportunities of connectedness, about twice as
many cite consumer connectivity as a particular
challenge. This may indicate that companies
ahead of the curve are unable to seize the full
benefits without greater digital inclusion among
consumers.

There are numerous external and internal
challenges for companies seeking to leverage the
advantage of greater connectedness.
Overall, the most commonly cited ‘external’
barriers to organisations are technology
infrastructure and standards (40%) (Figure 5).

Digging deeper, however, this is less of a problem
in developed economies such as Japan (cited by
26%) compared to emerging markets, such as
Thailand (55%), India (49%) and Vietnam (48%).
Although this points to differences in existing
infrastructure, it also suggests many developing
economies have a tremendous opportunity if they
can bridge such gaps.

Figure 5: Poor connection
Barriers to taking advantage of greater connectedness
(% respondents)

People: employee technology skills

Finance: revenue opportunities

People: remote connectivity and mobility

32%
28%
15%

Finance: budgeting

26%

21%

Processes: production of products

or services

21%
37%

Technology: data analytics
40%

Technology: infrastructure and standards

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© The Economist Intelligence Unit Limited 2014

Processes: business process management
(eg internal efficiency)


Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

For more profitable
companies, speed and the
complexity of data are the
next frontiers

This is reinforced by the notion that more
profitable companies are far more likely to view
accessing information in a timely manner as their
biggest challenge (48% compared with 37% for

less profitable companies) while less likely than
average to see extraction of information as a
challenge in making use of data (30% vs 37%) or
in analysing it (32% vs 39%).

The primary ‘internal’ challenge facing
organisations in terms of harnessing greater
connectedness to make better decisions are
complexity of data (37%), cost/funding (34%),
organisational culture (34%), and lack of
employee skills (32%)(Figure 6). However,
companies with stronger corporate profitability
are less likely to say organisation culture is a
primary challenge (cited by 29% compared with
40% for those from less profitable companies).
Instead, more profitable companies are more
likely to cite the volume of data (24% vs 14%)
and complexity of data (40% vs 32%) as their
primary challenges to make better decisions.
This means they have likely ventured beyond the
initial barriers frequently cited by others and are
now facing the next wave of challenges towards
greater connectedness.

A complacent view of cyber
security
Being prepared to reap the benefits of greater
connectedness is only one half of the equation,
however. Failing to address the associated risks
of greater connectedness could ultimately prove

more costly.
Following a spate of high-profile incidents, the
importance of cyber security has risen rapidly
on global corporate and policy agendas in recent
years. In the survey conducted for this report,
three-quarters of executives in the Asia-Pacific
region agree that security concerns limit the full
potential of increased connectedness.

Figure 6: More profitable, different challenges
Challenges faced in leveraging the value of greater connectedness vary by profitability
(% respondents)

Less profitable

More profitable

Organisational culture
40%

Lack of organisational connectivity

29%

Volume of data
24%

Lack of country infrastructure
16%
22%

15%

14%

40%

Complexity of data

32%

18%
14%

Lack of technology standards

30%

13%
15%

23%

24%

23%
25%
26%

Regulation

Risk

35%

Lack of employee skills

25%

Lack of senior management awareness
28%

30%
39%

Lack of processes

Cost/funding

© The Economist Intelligence Unit Limited 2014

9


Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

Even so, only one-fifth rate cyber security as a key
area in which their organisation will invest over
the next three years. Similarly, cyber security is

considered one of the least important technology
trends by organisations in Asia-Pacific (see Figure
3). This widespread complacency could prove
costly.
Although a lot of attention so far has been on
cyber attacks affecting large US companies,
Microsoft predicts the world’s highest enterprise
losses from such incidents will come in the AsiaPacific region in 2014 (estimated at $138bn).3

Microsoft: http://www.
microsoft.com/apac/news/
PlayItSafe.aspx
3

10

© The Economist Intelligence Unit Limited 2014

In part, the complacency surrounding cyber
security concerns in Asia-Pacific may be
attributed to a lack of awareness. For instance,
executives representing data-reliant sectors
such as financial services (49%) and professional
services (40%) are far more concerned about
external data intrusions than those in traditional
industries like construction and real estate (31%)
and manufacturing (29%).
Yet, as companies from all sectors become more
data-reliant the current level of cyber security
complacency in Asia-Pacific is concerning. In a

world where connectedness is the norm, securing
it must be a priority.


Connecting the dots in Asia-Pacific
How business leaders are preparing for a world where everything is connected

Conclusion

Companies in the Asia-Pacific region are aware
of the opportunities of connectedness. The focus
is shifting to data, although there is a gap in
implementation which is particularly evident
between companies that are more profitable and
their counterparts.
A lack of prioritisation appears to be a root cause
of slow adoption, while complacency about
cyber security issues that come with greater

connectedness is a concern moving forward,
particularly among traditional industries
At a broader level, the private sector must
work with the public sector to improve ICT
infrastructure and digital inclusion in order
to reap the full benefits of the information
society. The opportunities to compete in a global
environment are simply too great to be of low
priority.

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© The Economist Intelligence Unit Limited 2014

11

2


While every effort has been taken to verify the accuracy
of this information, The Economist Intelligence Unit
Ltd. cannot accept any responsibility or liability
for reliance by any person on this report or any of
the information, opinions or conclusions set out
in this report.

This report was commissioned by Cisco.
To learn more about the Internet of Everything, click here


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