Asia Pacific looks within to address challenges and embrace opportunities

In 2022, Asia mostly avoided the rising inflation and recession threats that major economies in Europe and North America faced. Next year will be very different, as fallout from the global economic slowdown spreads. Consequently, we will see the emergence of an APAC that is even more regionally focused in terms of trade and tech strategies.

Organizations will accelerate adoption of technology-led solutions to improve the lives of customers and citizens but struggle to stay ahead of the continued rise in customer expectations. While we will see the rise of purpose-built solutions that solve specific regional challenges or reduce dependence on global solutions, APAC firms will struggle to address environmental, social, and governance (ESG)-related issues and opportunities effectively. In 2023:

RCEP and regional payment networks will boost cross-border commerce by 20%. In 2023, the global economic downturn will dampen trade, but APAC cross-border commerce will grow rapidly. The Regional Comprehensive Economic Partnership (RCEP) agreement removes tariffs, promotes e-commerce, and eases barriers and restrictions to regional trade for small and medium-sized businesses.

Modern cross-border payment networks are poised to replace the 50-year-old SWIFT system, which the region still uses as its payment infrastructure. QR code-based systems, multi-central bank digital currency pilots across Southeast Asia, China’s Cross-Border Interbank Payment System, and India’s Unified Payments Interface use modern technology like blockchain and APIs for interoperability.

Businesses and consumers will benefit from faster, cheaper, more transparent cross-border payments and commerce. To meet customers’ growing e-commerce demands, retailers and banks must invest in developing modularized and API-based solutions that can easily integrate with APAC’s new payment networks.

Eight in 10 new omnichannel programs will fail to deliver customer or business value. After over-pivoting to virtual engagement during pandemic lockdowns, firms are reprioritizing in-person customer experiences to improve quality. While there is a legitimate need to better serve customers seeking in-person engagement, most APAC firms still take a siloed approach that is more multichannel than omnichannel, focusing on disjointed tactical improvements to store and branch operations like overhauling branch layouts or recruiting and training branch staff.

These disconnected initiatives will neither meet customer demand for real-time, connected, and personalized services across channels nor deliver the expected RoI. Less than 20% of APAC firms will implement a customer-obsessed approach via an experience architecture enabled by customer-centric business practices, good data, adaptable platforms, and connected employees and partners. The rest will be left playing whack-a-mole across physical and digital channels.

At least 50 firms in APAC will be penalized for performative ESG efforts. Most such firms will lose brand equity or revenue; five will face severe regulatory fines. Values-based consumers are forcing firms to publicly commit to ESG efforts, but pressure to act quickly will lead some to misrepresent or overstate their actions.

Offenders could face penalties of US$10 million or more as APAC regulators follow in the footsteps of their US and European counterparts and clamp down on misleading ESG claims. The Australian Securities and Investments Commission is already investigating firms for greenwashing. Firms also face brand damage from bad press and negative word of mouth: In 2022, companies celebrating International Women’s Day on social media had their own gender pay gaps publicly exposed.

Avoid performative action and build trust in your ESG messaging by acting with authenticity, openness, and transparency at all times and acknowledging your mistakes with empathy and courage.

Process intelligence will revive 20% of failing RPA programs. Robotic process automation (RPA) is the first step on most enterprises’ automation journey, both, to drive efficiency and productivity and as a stepping stone toward creating a broader automation fabric to turbocharge digitization. While most large firms in APAC have adopted RPA over the past five years, only 7% of these programs are of advanced maturity; 40% are still beginners.

Most firms struggle to identify high-value processes to automate. Modern task- and process-mining tools help aggregate data from application event logs, patterns from employees’ desktop interactions, and context from work communications and apply machine learning and visualizations to blend data and surface insights. Firms use these to optimize work, improve processes, and identify automation opportunities. As APAC has 11% of the global market for process intelligence, we believe that as many as one in five firms in the region will adopt process intelligence solutions to reinvigorate stalled or flatlining RPA programs.

Adoption of in-region digital industrial platforms will rise by 30%. Among business and tech pros in APAC who said that using platforms is a high priority at their firm, 43% use industry-specific cloud solutions. Geopolitical friction and post-pandemic challenges are driving APAC firms to prioritize digital transformation and regional collaboration for business resilience and technology self-reliance.

Accounting for 45% of global industry value added, APAC’s manufacturing, construction, utilities, and other industrial firms will lead industry cloud adoption via digital industrial platforms (DIPs) that enable firms to connect and analyze industrial data, bridging the physical and digital worlds to deliver sustainable customer value. They also help firms improve product lifecycles by connecting industrial applications to e-commerce and social platforms.

With government encouragement like Japan’s “connected industries” and South Korea’s “manufacturing renaissance” visions, firms in China, Japan, South Korea, and Australia will accelerate DIP adoption in 2023, forcing others to follow suit or be left behind.

Summary
In 2023, firms in Asia Pacific (APAC) will look to accelerate away from the slow, inflation-damped, post-pandemic recovery of the past 12 months. The war in Europe and resulting global economic slowdown are forcing APAC firms to find new growth drivers and lead with purpose as uncertainty rises. However, most will struggle to find a balance between investing in transformation and growth, and simultaneously embracing environmental sustainability, resilience, and employee empowerment.

-- Forrester Research Inc.