APAC digital transformation moves faster in COVID-19 era

With the recent shift in consumer needs sparked by the pandemic and global events, more businesses in Asia Pacific are accelerating their digital transformation efforts. A November 2019 study sponsored by Red Hat* found that 95% of APAC executives surveyed said digital transformation has gained importance and perceived it as a strategy for both survival and growth.

COVID-19 has merely accelerated this trend. The APAC finance industry, for instance, was moderately impacted by COVID-19, with customers switching to digital transactions, said Arvind Swami, Director, financial services at Red Hat APAC. He said the digital element is here to stay, and named innovation, efficiency, automation, regulatory complpiance, security and resiliency as the main considerations for the industry.

Organisations focused immediately on helping customers feel secure, reducing the risk in their investment portfolios, and also implemented remote working measures, and have now changed their priorities, he said. "They are preparing for scale and volume on the digital side in the medium term, and looking at new areas of innovation," he shared. "They have started looking at how they can be more effective instead of just efficient."

Modern architecture for Asia Pacific banks will include containers and microservices, said Swami.

New implementations might involve more automation to reduce manual processing, supporting contactless transactions, as well as increasing financial inclusion. "You'll see a higher level of digital happening," he said, explaining that the industry is realising that IT can make life easier, and that Red Hat is seeing more enquiries on automation solutions such as Ansible, as well as technology to make systems more robust, scalable and reliable like Openshift.

"You'll see that a lot of financial institutions will be diverting investments to make their digital experience a bit more robust."

In the wider ecosystem, there is a lot of collaboration as e-commerce entities are stepping up their work with banks, bringing open APIs and to the fore.

"How do you prepare for an eventuality that you never thought would happen? That's where technology, going ahead, will play a part. It's not just hybrid cloud but more a hybrid IT," he observed, highlighting microservices as something to watch. He also expects more financial institutions to leverage open source in the coming months to achieve secure and stable environments.

ANZ, which won Red Hat APAC Innovation Awards in 2020 for Digital Transformation and Cloud-native Development, chose a container platform-as-a-service model instead of upgrading its legacy systems when they saw that they would need a second upgrade soon after completing the initial upgrade. Leigh Gibson, Tech Area Lead, responsible lending, ANZ, said that some banks develop their own Kubernetes platforms from scratch, whereas ANZ has decided to benefit from using something out of the box and relying on Red Hat's expertise.

A proof-of-concept (PoC) project based on Red Hat's Openshift was completed in early 2020, and demonstrated that unplanned outages could be reduced by 90% in the first year, Gibson said. The technology was able to process some A$9 billion in payments and 45,000 customer transactions in the first 30 minutes, giving the bank the confidence that the new model is the way to go.

"There is a lot of acceptance now at the bank of the reliability and the ease of use that a lot of these platforms can (deliver)," Gibson said. She added that there is been an "excellent uplift" in performance since migrating to Red Hat. "There're just not any problems with your platform," she said.

"Everyone is really energised and excited by the change," she added. "There's a lot more opportunity for people to engage and be curious and build further tools."

Phil Andrews, VP, Enterprise Sales, Red Hat APAC, spoke about enterprises prioritising a better customer experience, with 36% of enterprises polled in research by Red Hat agreeing that customer experience is extrmely important when considering a new app. He shared that 13% said their transformation strategies have been effective while 63% named culture as their biggest impediment to transformation efforts. Other barriers to transformation included the capability to change processes (51%) and technology (41%).

Five elements are involved in making digital transformation a success, he said:

- Leadership: leaders have to create an environment where the company is prepared to change.

- Product: enterprises have to build the right product, to know what they want to do as opposed to making something for the sake of building something.

- Development: everything has to be delivered quickly.

- Architecture: this needs to facilitate everything else.

- Operations: have to run 24x7 so the business can be taken anywhere, anytime.

"As you get on that journey everything becomes clearer with every step you take," he said. "Digital transformation is about new business models. The difficult part is what that business model is."

Red Hat can address culture, process and technology challenges in parallel to bring digital transformation forward, Andrews said. The company offers with the Open Practice Library, a free set of best practices of tools and techniques; Open Innovation Labs, which are designed to transfer knowledge such that people can build their first minimum viable product (MVP), and then bring it further; as well as the Open Hybrid Cloud, a container-based architecture that eliminates lock-in to any technology.

Some of the predictions reflecting the state of digital transformation that he shared include:

- By 2025, 75% of all new apps in Asia Pacific excluding Japan (APeJ) developed using a programming language will be deployed in containers

- By 2024, 40% of APeJ organisations will release code to production daily for select apps, up from 3% in 2019

- By 2024, 50% of A2000 organisations (the top 2,000 organisations in the region) will master "future of culture" traits such as empathy, empowerment and innovation to achieve leadership at scale

Malaysian government agency Perkeso, which provides social services, is supporting its operations with Red Hat technology, and enabling new systems to be developed in an open source platform. "It was more of not building everything from scratch but of leveraging on Red Hat technologies," said Edmund Cheong, Perkeso's Chief Strategy Officer.

"Leaders should sometimes be risk-takers even though sometimes the odds are not with you," he advised with respect to digital transformation. "The moment you have the opportunity to touch transformation you should go for it. If you are able to deliver it, you should celebrate it."

Cheong also said that it will take time to complete a successful digital transformation implementation. "You need to be very patient," he said. "It is more of a marathon rather than a sprint."

He added that culture is important, as Andrews had mentioned. "It's not about technology totally. You need to prepare the culture, the mindset of the people as well as to also tell the people around you, your team, that they do not need to be afraid of making mistakes," he said.

"Set expectations. People should feel secure that the leadership is always supporting them. They should have the room for making minor mistakes."

Andrews commented that customers are more open about changing the culture as part of embracing new technologies than in previous years. "If people can transfer knowledge and facilitate that journey then you can move further faster," he said.

Next steps for organisations thinking about digital transformation include meeting with peers who have already started their journeys, joining a discovery workshop run by Red Hat, and leveraging vendors to facilitate discussions with, and learn from, their other customers, Andrews said. "Nothing is patented. Everybody can learn from everybody else," he said.

Hashtag: #RedHatForum

*Understanding APAC’s Success in Digital Transformation, July 2020