Businesses are on the cusp of major digital transformation, as all departments invest in technology and even traditional enterprises embrace digital change, according to the Hitachi Data Systems (HDS) Business and Technology Predictions for Asia Pacific in 2016.

According to Adrian De Luca, HDS Asia Pacific chief technology officer, enterprises will experience major digital transformation next year as they strive to improve a host of key tech and non-tech functions.

He says, “Digital transformation is fast becoming an organisational issue. It is no longer just CIOs who are championing the need for digital change, but leaders across all business functions.

“For example, CMOs are finding that traditional ways of marketing are not as effective any more, while CFOs are discovering that consumer and supplier transaction models have shifted."

“There is now an almost universal understanding within businesses that all functions need to look at how they transform their own practices through digitisation," he says.

De Luca cited digital transformation, smart cities, cross modal IT, multi-cloud, and skills shortages as the five key trends that will continue to shape both the IT and business landscapes in Asia Pacific for 2016.

Traditional enterprises will transform into digital natives

There has been a resurgence in confidence among CIOs that they will see more of their revenues flowing through digital channels, HDS says.

According to the Gartner CIO Agenda Insights report, only 16% of CIOs last year expected the revenues in their business to flow through digital channels, but that has more than doubled this year to 37%.

This is recognition of the fact that digital initiatives are not just coming from the CIO, but from all functions of the business that are creating their own platforms and hiring digital natives, HDS says.

Today's CMOs no longer go to the IT department to build their systems - they go directly to the providers and acquire them as a service, according to the company.

Furthermore, the same is true of businesses as a whole. Rather than waiting for a vendor or a competitor to develop a new platform, organisations are building and actively disrupting their own current systems, says HDS.

Smart companies will build smart cities

Smart cities have been a topic of interest for a long time in Asia Pacific, with many countries in the region rolling out their own initiatives to tackle everything from public safety to improved transportation, says HDS.

However, it has become apparent that few governments have the experience or the financial means to build and run these initiatives on their own. Instead, they are partnering with major industry players who are investing deeply in the Internet of Things (IoT).

By bringing their own intellectual property, assembling ecosystems of technology providers and integrating them together, they can develop the solutions needed to make these cities a reality, the company says.

This means that smart companies will act as the catalysts for making smart cities a reality, as governments open the door through initiatives.

The business opportunities for companies in the sector are huge, with the annual smart city investment in technology alone set to quadruple to US$11.3 billion by 2023, according to Navigant Research.

Cross-modal IT will unify business silos

It is now recognised that there are two modes that IT organisations can follow to meet the needs of the digital enterprise, HDS says.

Mode 1: Applications that handle traditional systems of record - such as CRM and eCommerce systems. These systems are built around predictability, accuracy and availability, given the sensitive data they hold.

Mode 2: Systems of insight, that are more exploratory such as big data analytics. They give a perspective of what is going on inside a business - enabling users to test certain hypotheses by layering datasets over each other.

These systems emphasise agility and speed, giving organisations the ability to quickly and inexpensively test ideas, throw away anything that doesn't work and test out new ones.

The need to fuse these two modes together to become cross-modal will intensify - especially as organisations strive to continually optimise the cost of running their systems and incorporate their systems of insight into new business processes and customer interactions, according to HDS.

HDS says, the companies that will realise the greatest benefits will be those that are able to use agile methodologies in their workforce and offer quick-to-build application programming interfaces (API) of their business services.

Businesses that also successfully build data lakes across their digital assets and standardise their infrastructure will do well, too.

Multicloud will enable transregional business

According to De Luca, the emerging Trans-Pacific Partnership (TPP) will bring benefits to economic trading conditions within Asia-Pacific.

To realise the full potential of this agreement, investment in technology infrastructure to connect these economies will be critical, he says.

Several companies are already expanding data center capacity to cater to the growing use of cloud computing. They are also investing in improving cross-border, high-speed connectivity, De Luca says.

“This opening up of the market will have an impact on how businesses consume cloud and expand the options that they have today.

"With as many as 70% of organisations either using or evaluating hybrid clouds nowadays, as well as provisions in the TPP to protect offshore data and avoid electronic duties, creating a multicloud across continental borders to allow businesses to expand becomes viable,” he says.

Skills shortage will spark a talent pursuit

Several factors will impact the technology employment market in 2016, forcing many organisations to look at how they will fill the talent deficit to continue to innovate and remain competitive, HDS says.

Addressing the IT skills shortage will not just be about pumping out more IT graduates with in-demand skills like data science. Appealing to the interests of the best young talent while investing in increasing the productivity of existing employees will be critical to bridging the gap over the long run, the company says.

"The working practices of ‘Gen Z' workers are vastly different from those before them. With this generation expected to work an average of 17 jobs in their lifetime, they will develop a broader variety of skills as well as be exposed to multiple industries during their careers.

"Companies will need to figure out how to tap into this. They are driven more by their contribution to society than the logo of the company they work for,” says De Luca.

Governments recognise this economic imperative and generational shift by changing the labour market, introducing new tax incentives and passing laws to allow for easier investment, such as through crowdsourcing, according to HDS.