Despite recent economic headwinds, including a fall in venture capital (VC) investments compared to 2021 and 2022, Digital Native Businesses (DNBs) in the Asia/Pacific including Japan (APJ) region are set to defy the trend by increasing their technology spending up to 20% in the next 12 months, according to a recent IDC report.
The report suggests DNBs are focusing on cutting-edge technologies such as generative AI and cloud platforms to maintain a competitive edge and innovate. At the same time, strategic alliances with leading cloud vendors are becoming increasingly important, particularly for growing businesses in the region.
Collaborating with cloud vendors provides DNBs with access to state-of-the-art cloud solutions, allowing them to develop inventive technology solutions by leveraging the expertise of established vendors. Guided by IDC data, DNBs in the APJ region heavily favour AWS, Alibaba Cloud, and Microsoft as their top choices for cloud platforms.
However, it's not one-size-fits-all in the region, with spending trends varying across different countries. This is largely dependent on the maturity of each market.
Regardless, IDC projects a 36% year-on-year growth in cloud adoption, encompassing Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).
The report also pinpoints security, risk, and compliance as paramount concerns for DNBs at all maturity stages. Even though tech budgets may face cuts due to decreased VC investments, DNBs are expected to continue investing in security solutions to protect their digital assets and safeguard customer data.
Consequently, technology providers need to deliver unique value propositions, customisation options, and foster collaboration with regional suppliers and service providers.
In essence, decision-makers are looking for vendors who can provide solid support, demonstrate extensive knowledge, and ensure rapid, successful integration of their platforms.
As noted by Supriya Deka, Senior Market Analyst, IDC Asia/Pacific Small and Medium-sized and Digital Native Business Program, "In the digital era, the synergy between digital native businesses and technology vendors is not only about collaboration; its about forming strategic alliances that foster innovation."
"Establishing solid partnerships with technology vendors who can offer them the necessary expertise and support to enhance their core competencies and spur innovation is essential for businesses navigating the constantly evolving technology landscape."
Besides providing a snapshot of APJ DNBs' technology spending trends, vendor preferences, and key decision makers, the IDC report also offers advice to vendors on how to differentiate themselves by adopting a tailored sales approach, establishing feedback mechanisms, and positioning themselves as partners rather than just providers.