What is Digital Transformation? A conversation with Microsoft

“In the beginning of 2018, we did a survey with 1,500 companies across 15 countries. We wanted to understand the impact of digital transformation. It was interesting to see that in 2017, digital products and services made up only 6% of the economy across the Asia Pacific region. The research showed this is expected to increase to 60% by 2021,” said Andrea Della Mattea – President, Microsoft APAC. 

As we enter a new decade with the 2020’s, the world doesn’t resemble what it was in 2010. Few quick taps on your phone and you’ll get your lunch. 10 years earlier that meant making a phone call, explaining your order, and giving directions to a lost delivery rider. Technology has reshaped our lives. 

Now with the rise of AI, cloud computing, and a host of other data driven technologies, the stage is set for a deeper digital transformation. But what exactly does that mean? During our time in Singapore, we spoke with Microsoft to find out. 

Digital Transformation 101: The Basics

Over the course of the 2020’s, that digital transformation will bring a wave of opportunities. Collectively, they’re expected to be worth $100 trillion. Flip this trillion dollar coin however, and you’ll find a complex set of risks. Navigating them is no easy task for any organization. 

Microsoft | Digital Transformation | AI
The Fortune 500 companies that survived did so by leveraging technology to survive.

This is evident when one goes through the list of Fortune 500 companies. Since the year 2000, 52% of these companies have disappeared. Those that survived did so leveraged technology and understood it’d reshape their business for the future. Those that have undergone this transformation are now poised to be a part of this $100 trillion opportunity. 

Of course, it goes without saying that such transformations are not easy. Speaking at the Microsoft APAC Press Day, Andrea admitted that it hasn’t been easy for them either. It was only 5 years ago that the very survival of the company was questioned. It’s reputation had taken a beating following a series of costly missteps. 

Microsoft | Satya Nadella | Digital Transformation | AI
Andrea shared that even for Microsoft, digital transformation wasn’t easy. It was only after Satya Nadella took over as CEO the company gained clarity as it formed partnerships and made key investments towards the future. (Image credits: CNBC)

But since then, Microsoft has made a dramatic comeback. After Satya Nadella took over as CEO in 2014, the company underwent a radical shift. It focused on forming partnerships while heavily investing in its cloud computing and AI capabilities. With this approach, Microsoft has since made a comeback to once again be seen as a leader in the global tech industry. 

“To really bring about a transformation in a company, it must take place throughout the organisation,” said Andrea as she reflected on Microsoft’s transformation. She went on to elaborate on this point by sharing a few lessons the company learned along the way. The first being that as products evolve so too must business models. This in turn, means the operations and the processes an organization has in place must evolve in turn. 

Andrea Della Mattea | Microsoft | AI | Digital Transformation
Andrea Della Mattea – President, Microsoft APAC speaking on digital transformation at the Microsoft APAC Press Day

Finally, the most important lesson was the need for a company culture to evolve over time. Explaining this, Andrea shared, “For an organization to change, a crucial ability required is for it to bring people together, help them understand where the company is going, and the role they will play. Everyone needs to get behind the change for the culture to evolve and bring about a transformation. That was arguably our most important lesson.” 

Fostering collaboration in workplaces of the future

The importance of people in the digital transformation journey was also echoed by Vivek Puthcode – Chief Partner Officer, Microsoft Asia Pacifc. Speaking at the Microsoft APAC Press Day, he stated that this transformation will reshape workplaces as we know it. Hence, he emphasized the need for collaboration. 

Microsoft | AI | Digital Transformation | Vivek Puthcode
Vivek Puthcode – Chief Partner Officer, Microsoft Asia Paciific speaking on Digital Transformation at the Microsoft APAC Press Day

“Today, many of our customers, both large and small are looking beyond productivity to see how we can collaborate. In this world of complex challenges and opportunities, it’s no longer about the effort or creativity of a single person. Rather, it’s about fostering collaboration to work alongside others to make ideas a reality.”

To that end, technology permits inclusivity and accessibility to everyone – irrespective of where they come from. In turn, this acts as a powerful catalyst for collaboration. Vivek pointed to Microsoft’s own live translation technology as an example. A demo of it was running during his presentation, translating his talk into different languages in real-time as he spoke. 

Microsoft | Digital Transformation | AI
With the opening of its 1st Experience Center in Asia and new HQ in APAC, Microsoft aims to showcase the possibilities of technology and how they’ll shape the workplace of the future (Image credits: Microsoft)

Vivek added that this was what the company aimed to showcase in Singapore. With the opening of its first experience center in Asia, Microsoft aims to showcase everything that’s possible with modern technology. Similarly, the company has gone out of it’s way to integrate much of that into its new APAC HQ. In doing so, creating a living example of what the workplace of the future looks like. 

AI: The unseen driver of digital transformation

According to the IDC, 40 billion devices will be connected to the internet by 2030. Collectively they’re expected to generate 18 million zettabytes of data. Vivek commented on this data saying, “There’s a massive opportunity to harness data, which is fueling innovation. It’s not just data alone but technology is disrupting entire industries.” 

Microsoft | Digital Transformation | AI | Devices | IoT
It’s expected that we’ll soon have 40 billion devices connected to the internet. All of them generating vast quantities of data on an unseen scale. (Image credits: Infrastructure Investor)

This disruption arises through decisions made by analyzing this data, which in turn, leads to innovation. This is where AI enters the picture of digital transformation. The abundance of data has meant, AI has served as an invisible force behind many technological advancements in recent times. 

During the Microsoft APAC Press Day, Andrea shared that Microsoft conducted a study in partnership with the IDC to explore the opportunities presented by AI for businesses. The study found that 82% of business leaders agreed that AI is instrumental in an organization’s competitiveness over the next 3 years. Yet, it also identified that 54% of organizations in APAC have yet to explore using AI. 

Based on the data, one can argue that there’s a large opportunity in front of tech companies. Yet, that’s not to say the use of AI has been alien to the APAC region. Rather, it’s found widespread use across several industries. In Singapore, the 99-year-old Zuellig Pharma uses it to detect counterfeit pharmaceuticals. Similarly, Sustainable Coastlines, an NGO in New Zealand, was able to pick enough trash from beaches to fill nearly 45 shipping containers by using AI. 

Digital twins: A visible example of transformation

One of the clearest examples of digital transformation is the concept of digital twins. As per the definition on Wikipedia, “A digital twin is a digital replica of a living or non-living physical entity. By bridging the physical and the virtual world, data is transmitted seamlessly allowing the virtual entity to exist simultaneously with the physical entity.” 

To better illustrate the point, we can take the example of Microsoft’s new APAC HQ. 900 sensors are installed throughout the building. Each of these are collecting different types of data at all times. This ranges from greenhouse gas emissions to energy consumption to noise levels to the occupancy of individual meeting rooms. 

The data from these sensors is then uploaded into the cloud. Once in the cloud, all this data is analysed to optimise different aspects of the building. This translates into a smart building that can reduce energy consumption, optimising space based on individual work schedules, and offer other benefits. This is the power of creating digital twins. They’re a culmination of AI, IoT, and other data driven technologies. 

Digital Twins | Microsoft | AI | Digital Transformation | Smart Cities
As digital twins bring together a host of technologies together, they set the stage for us to create truly smart cities. (Image credits: The IOT Magazine)

“The building has a digital heartbeat representing the people inside. It allows the building to become more intelligent as it maps changes over time. With older buildings, such sensors can give them a new lease on life,” said Damien Dhellemmes – Country President, Singapore at Schneider Electric describing the concept. He went onto explain that as more smart buildings talk to each other, it’s possible to create a smart city. 

The potential of smart cities was expanded upon by Kaushik Chakraborty – Vice President, Southeast Asia and India at Bentley Systems. He highlighted that one of the biggest problems plaguing cities today is for its citizens to efficiently move from Point A to Point B. To solve this issue, cities in South East Asia have turned to machine learning and digital visualizing technologies. 

Microsoft | Digital Transformation | AI | Machine Learning
One of the biggest challenges facing cities today is moving people from Point A to Point B. Colombo is no stranger to this. But now cities across Asia are turning to technology to tackle this issue (Image credits: Salt in our Hair)

Ultimately, the goal Kaushik argued was to make these technologies more pervasive and the data they generate more readily available. In doing so, it would be possible for policy makers to make informed decisions to develop smart infrastructure. Describing the power of data he said, “For years we made decisions based on our gut feeling. There’s no excuse now to make decisions without information.” 

The complex challenges of a world in transformation

The power of AI and other data driven technologies is clear. They empower individuals to do more. An effect, which is multiplied exponentially by allowing collaboration with others. Of course, that’s not to say there aren’t any challenges. A crucial one being security because as technology evolves, so too does malware and other cybersecurity threats. 

Cybersecurity | AI | Microsoft | Digital Transformation
While digital transformation has clear benefits, there are complex challenges we must tackle such as cybersecurity. (Image credits: CyberTraining 365 Blog)

Another fundamental issue is that of bias in AI systems. This is where, depending on the dataset used to train an AI system, they could exacerbate existing bias’. The most notable example being when US courtrooms adopted AI systems to decide if defendants could receive bail. Due to existing bias by Police Departments against minorities, the system ended up unfairly denying minority defendants bail. We’ve touched on this before to know that it’s not an issue with a simple answer. 

Of course, the elephant in the room is job security. Artificial Intelligence, Robotic Process Automation, and other similar technologies allow organizations to automate several tasks. Many of which used to be done manually by humans. In other words, it can potentially eliminate jobs. In 2017, this scenario became a reality after a Japanese insurance firm replaced 34 people with IBM Watson. 

AI | Microsoft | Digital Transformation | Job Security
As AI becomes plays a more active role in workplaces, jobs are expected to change in nature. This presents another challenge as it requires retraining people at scale. (Image credits: Web Design Tools)

Yet, if you were to speak to those actually building these systems, they’ll tell you that this won’t be the case for most of us. Rather, the prevailing argument is that for most of us, these technologies will not eliminate our jobs. Rather, they will simply change the nature of our work. Still, that doesn’t necessarily mean everything will be rosy. As Vivek aptly described, “With AI becoming pervasive, it means people will find new ways of doing things. Jobs won’t disappear but they’ll simply change in nature. So how do you train people at scale? This is a key concern of our customers.” 

So what will the future look like? 

“Nevertheless, the benefits of this transformation are $100 trillion dollars of economic and social opportunities. It’s our job as part of the industry to bring different stakeholders together,” continued Vivek. At the end of the day, the power of the technologies behind this digital transformation is clear. They hold great promise to bring about solutions to long standing problems. 

Microsoft | Digital Transformation | AI
Digital transformation offers vast economic and social opportunities to bring about positive change. But it’s not without its complex set of challenges, which require collaboration to be solved (Image credits: The Digital Transformation People)

In doing so, they can transform organizations, cities, and entire communities. Of course, that’s not to say there aren’t any challenges. We have complex questions to answer with regards to security, fairness, and even job security. None of which seem to have simple answers. Nevertheless, the march of progress continues towards a $100 trillion opportunity. 

Particularly, in the APAC region, where 54% of organizations have yet to explore using AI. Yet, nobody can seize this massive opportunity on their own. Digital transformation requires strong collaboration between all stakeholders. So what does that mean for companies like Microsoft? 

In her own words, Andrea answered the question, “As an organization, we aim to democratize technology. So that it can be available to everyone to take advantage of it. But we can’t do it alone. This is why we work so closely with our customers and partners to bring solutions to life. We see 7 billion people on this planet or quite simply, 7 billion opportunities to make a real difference.”

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