Ecosystm research shows that customer engagement is emerging as the main beneficiary of AI implementations in Malaysia with 44% of AI investments being led by CX/Marketing/Sales teams.
Explore the key trends that are transforming the Malaysian technology landscape and stay tuned for more data-backed insights on Southeast Asia’s tech markets.
Ecosystm research finds Sustainable IT is becoming integral to technology modernisation in Singapore, with 55% of organisations assessing the carbon emissions of their infrastructure – both cloud and on-premises.
Find out the key trends shaping Singapore’s technology landscape.
The White House has mandated federal agencies to conduct risk assessments on AI tools and appoint officers, including Chief Artificial Intelligence Officers (CAIOs), for oversight. This directive, led by the Office of Management and Budget (OMB), aims to modernise government AI adoption and promote responsible use. Agencies must integrate AI oversight into their core functions, ensuring safety, security, and ethical use. CAIOs will be tasked with assessing AI’s impact on civil rights and market competition. Agencies have until December 1, 2024, to address non-compliant AI uses, emphasising swift implementation.
How will this impact global AI adoption? Ecosystm analysts share their views.
Click here to download ‘Ensuring Ethical AI: US Federal Agencies’ New Mandate’ as a PDF.
The Larger Impact: Setting a Global Benchmark
This sets a potential global benchmark for AI governance, with the U.S. leading the way in responsible AI use, inspiring other nations to follow suit. The emphasis on transparency and accountability could boost public trust in AI applications worldwide.
The appointment of CAIOs across U.S. federal agencies marks a significant shift towards ethical AI development and application. Through mandated risk management practices, such as independent evaluations and real-world testing, the government recognises AI’s profound impact on rights, safety, and societal norms.
This isn’t merely a regulatory action; it’s a foundational shift towards embedding ethical and responsible AI at the heart of government operations. The balance struck between fostering innovation and ensuring public safety and rights protection is particularly noteworthy.
This initiative reflects a deep understanding of AI’s dual-edged nature – the potential to significantly benefit society, countered by its risks.
The Larger Impact: Blueprint for Risk Management
In what is likely a world first, AI brings together technology, legal, and policy leaders in a concerted effort to put guardrails around a new technology before a major disaster materialises. These efforts span from technology firms providing a form of legal assurance for use of their products (for example Microsoft’s Customer Copyright Commitment) to parliaments ratifying AI regulatory laws (such as the EU AI Act) to the current directive of installing AI accountability in US federal agencies just in the past few months.
It is universally accepted that AI needs risk management to be responsible and acceptable – installing an accountable C-suite role is another major step of AI risk mitigation.
This is an interesting move for three reasons:
- The balance of innovation versus governance and risk management.
- Accountability mandates for each agency’s use of AI in a public and transparent manner.
- Transparency mandates regarding AI use cases and technologies, including those that may impact safety or rights.
Impact on the Private Sector: Greater Accountability
AI Governance is one of the rare occasions where government action moves faster than private sector. While the immediate pressure is now on US federal agencies (and there are 438 of them) to identify and appoint CAIOs, the announcement sends a clear signal to the private sector.
Following hot on the heels of recent AI legislation steps, it puts AI governance straight into the Boardroom. The air is getting very thin for enterprises still in denial that AI governance has advanced to strategic importance. And unlike the CFC ban in the Eighties (the Montreal protocol likely set the record for concerted global action) this time the technology providers are fully onboard.
There’s no excuse for delaying the acceleration of AI governance and establishing accountability for AI within organisations.
Impact on Tech Providers: More Engagement Opportunities
Technology vendors are poised to benefit from the medium to long-term acceleration of AI investment, especially those based in the U.S., given government agencies’ preferences for local sourcing.
In the short term, our advice to technology vendors and service partners is to actively engage with CAIOs in client agencies to identify existing AI usage in their tools and platforms, as well as algorithms implemented by consultants and service partners.
Once AI guardrails are established within agencies, tech providers and service partners can expedite investments by determining which of their platforms, tools, or capabilities comply with specific guardrails and which do not.
Impact on SE Asia: Promoting a Digital Innovation Hub
By 2030, Southeast Asia is poised to emerge as the world’s fourth-largest economy – much of that growth will be propelled by the adoption of AI and other emerging technologies.
The projected economic growth presents both challenges and opportunities, emphasizing the urgency for regional nations to enhance their AI governance frameworks and stay competitive with international standards. This initiative highlights the critical role of AI integration for private sector businesses in Southeast Asia, urging organizations to proactively address AI’s regulatory and ethical complexities. Furthermore, it has the potential to stimulate cross-border collaborations in AI governance and innovation, bridging the U.S., Southeast Asian nations, and the private sector.
It underscores the global interconnectedness of AI policy and its impact on regional economies and business practices.
By leading with a strategic approach to AI, the U.S. sets an example for Southeast Asia and the global business community to reevaluate their AI strategies, fostering a more unified and responsible global AI ecosystem.
The Risks
U.S. government agencies face the challenge of sourcing experts in technology, legal frameworks, risk management, privacy regulations, civil rights, and security, while also identifying ongoing AI initiatives. Establishing a unified definition of AI and cataloguing processes involving ML, algorithms, or GenAI is essential, given AI’s integral role in organisational processes over the past two decades.
However, there’s a risk that focusing on AI governance may hinder adoption.
The role should prioritise establishing AI guardrails to expedite compliant initiatives while flagging those needing oversight. While these guardrails will facilitate “safe AI” investments, the documentation process could potentially delay progress.
The initiative also echoes a 20th-century mindset for a 21st-century dilemma. Hiring leaders and forming teams feel like a traditional approach. Today, organisations can increase productivity by considering AI and automation as initial solutions. Investing more time upfront to discover initiatives, set guardrails, and implement AI decision-making processes could significantly improve CAIO effectiveness from the outset.
In November 2021 Ecosystm had said: “With their global expansion plans and targeted offerings to help enterprises achieve their transformation goals, Oracle is positioned well to claim a larger share of the cloud market. Their strength lies in the enterprise market, and their cloud offerings should see them firmly entrenched in that segment.”
At the recently held Oracle CloudWorld Tour in Singapore, Oracle showcased their momentum in the enterprise segment first-hand. There are a number of reasons for this, and the customer and partner testimonials made it clear that Oracle’s vision is firmly aligned to what their customers require in the Asia Pacific region.
Read on to find out what Ecosystm Advisors Darian Bird, Sash Mukherjee, Tim Sheedy and Ullrich Loeffler say about the announcements and messaging during the session.
Download “Ecosystm VendorSphere: Oracle CloudWorld Tour Singapore” as a PDF
Southeast Asia has evolved into an innovation hub with Singapore at the centre. The entrepreneurial and startup ecosystem has grown significantly across the region – for example, Indonesia now has the 5th largest number of startups in the world.
Organisations in the region are demonstrating a strong desire for tech-led innovation, innovation in experience delivery, and in evolving their business models to bring innovative products and services to market.
Here are 5 insights on the patterns of technology adoption in Southeast Asia, based on the findings of the Ecosystm Digital Enterprise Study, 2022.
- Data and AI investments are closely linked to business outcomes. There is a clear alignment between technology and business.
- Technology teams want better control of their infrastructure. Technology modernisation also focuses on data centre consolidation and cloud strategy
- Organisations are opting for a hybrid multicloud approach. They are not necessarily doing away with a ‘cloud first’ approach – but they have become more agnostic to where data is hosted.
- Cybersecurity underpins tech investments. Many organisations in the region do not have the maturity to handle the evolving threat landscape – and they are aware of it.
- Sustainability is an emerging focus area. While more effort needs to go in to formalise these initiatives, organisations are responding to market drivers.
More insights into the Southeast Asia tech market below.
Click here to download The Future of the Digital Enterprise – Southeast Asia as a PDF
For the last two years organisations have been forced to invest on digital services for their customers and giving their employees access to the right technologies to allow them to work from home – or from anywhere they choose to. Organisations find that they have to continue to evolve – and are now looking to build a ‘Digital Workplace’ that caters to the hybrid workplace.
As organisations in ASEAN define the work model that works for their business operations, work culture and organisational goals, there are a few areas that they must focus on.
Here are 5 insights from the Ecosystm Voice of the Employee Study that will help you shape your Digital Workplace.
- Evolve the physical workplace. 72% of knowledge workers in ASEAN will work both remotely and from the office.
- Build a true hybrid work culture. As organisations form their Digital Workplace strategy, they will have to ensure that the workplace is as comfortable as home offices!
- Focus on employee wellbeing. Only 25% of organisations in ASEAN have made changes to their HR policies in the last two years.
- Invest in the right technologies. To build that resilient hybrid workplace, organisations will first have to conduct a gap analysis and consolidation of their tech investments over the last two years.
- Continue to monitor employee behaviour patterns. As organisations work towards a ‘Return to Work’ policy, they will see significant changes in employee usage behaviour patterns. If the right cyber practices are not in place, this could leave organisations vulnerable again.
Read on for more insights
Earlier this month, I had the privilege of attending Oracle’s Executive Leadership Forum, to mark the launch of the Oracle Cloud Singapore Region. Oracle now has 34 cloud regions worldwide across 17 countries and intends to expand their footprint further to 44 regions by the end of 2022. They are clearly aiming for rapid expansion across the globe, leveraging their customers’ need to migrate to the cloud. The new Singapore region aims to support the growing demand for enterprise cloud services in Southeast Asia, as organisations continue to focus on business and digital transformation for recovery and future success.
Here are my key takeaways from the session:
#1 Enabling the Digital Futures
The theme for the session revolved around Digital Futures. Ecosystm research shows that 77% of enterprises in Southeast Asia are looking at technology to pivot, shift, change and adapt for the Digital Futures. Organisations are re-evaluating and accelerating the use of digital technology for back-end and customer workloads, as well as product development and innovation. Real-time data access lies at the backbone of these technologies. This means that Digital & IT Teams must build the right and scalable infrastructure to empower a digital, data-driven organisation. However, being truly data-driven requires seamless data access, irrespective of where they are generated or stored, to unlock the full value of the data and deliver the insights needed. Oracle Cloud is focused on empowering this data-led economy through data sovereignty, lower latency, and resiliency.
The Oracle Cloud Singapore Region brings to Southeast Asia an integrated suite of applications and the Oracle Cloud Infrastructure (OCI) platform that aims to help run native applications, migrate, and modernise them onto cloud. There has been a growing interest in hybrid cloud in the region, especially in large enterprises. Oracle’s offering will give companies the flexibility to run their workloads on their cloud and/or on premises. With the disruption that the pandemic has caused, it is likely that Oracle customers will increasingly use the local region for backup and recovery of their on-premises workloads.
#2 Partnering for Success
Oracle has a strong partner ecosystem of collaboration platforms, consulting and advisory firms and co-location providers, that will help them consolidate their global position. To begin with they rely on third-party co-location providers such as Equinix and Digital Realty for many of their data centres. While Oracle will clearly benefit from these partnerships, the benefit that they can bring to their partners is their ability to build a data fabric – the architecture and services. Organisations are looking to build a digital core and layer data and AI solutions on top of the core; Oracle’s ability to handle complex data structures will be important to their tech partners and their route to market.
#3 Customers Benefiting from Oracle’s Core Strengths
The session included some customer engagement stories, that highlight Oracle’s unique strengths in the enterprise market. One of Oracle’s key clients in the region, Beyonics – a precision manufacturing company for the Healthcare, Automotive and Technology sectors – spoke about how Oracle supported them in their migration and expansion of ERP platform from 7 to 22 modules onto the cloud. Hakan Yaren, CIO, APL Logistics says, “We have been hosting our data lake initiative on OCI and the data lake has helped us consolidate all these complex data points into one source of truth where we can further analyse it”.
In both cases what was highlighted was that Oracle provided the platform with the right capacity and capabilities for their business growth. This demonstrates the strength of Oracle’s enterprise capabilities. They are perhaps the only tech vendor that can support enterprises equally for their database, workloads, and hardware requirements. As organisations look to transform and innovate, they will benefit from the strength of these enterprise-wide capabilities that can address multiple pain points of their digital journeys.
#4 Getting Front and Centre of the Start-up Ecosystem
One of the most exciting announcements for me was Oracle’s focus on the start-up ecosystem. They make a start with a commitment to offer 100 start-ups in Singapore USD 30,000 each, in Oracle Cloud credits over the next two years. This is good news for the country’s strong start-up community. It will be good to see Oracle build further on this support so that start-ups can also benefit from Oracles’ enterprise offerings. This will be a win-win for Oracle. The companies they support could be “soonicorns” – the unicorns of tomorrow; and Oracle will get the opportunity to grow their accounts as these companies grow. Given the momentum of the data economy, these start-ups can benefit tremendously from the core differentiators that OCI can bring to their data fabric design. While this is a good start, Oracle should continue to engage with the start-up community – not just in Singapore but across Southeast Asia.
#5 Commitment to Sustainability at the Core of the Digital Futures
Another area where Oracle is aligning themselves to the future is in their commitment to sustainability. Earlier this year they pledged to power their global operations with 100% renewable energy by 2025, with goals set for clean cloud, hardware recycling, waste reduction and responsible sourcing. As Jacqueline Poh, Managing Director, EDB Singapore pointed out, sustainability can no longer be an afterthought and must form part of the core growth strategy. Oracle has aligned themselves to the SG Green Plan that aims to achieve sustainability targets under the UN’s 2030 Sustainable Development Agenda.
Cloud infrastructure is going to be pivotal in shaping the future of the Digital Economy; but the ability to keep sustainability at its core will become a key differentiator. To quote Sir David Attenborough from his speech at COP26, “In my lifetime, I’ve witnessed a terrible decline. In yours, you could and should witness a wonderful recovery”
Conclusion
Oracle operates in a hyper competitive world – AWS, Microsoft and Google have emerged as the major hyperscalers over the last few years. With their global expansion plans and targeted offerings to help enterprises achieve their transformation goals, Oracle is positioned well to claim a larger share of the cloud market. Their strength lies in the enterprise market, and their cloud offerings should see them firmly entrenched in that segment. I hope however, that they will keep an equal focus on their commitment to the start-up ecosystem. Most of today’s hyperscalers have been successful in building scale by deeply entrenching themselves in the core innovation ecosystem – building on the ‘possibilities’ of the future rather than just on the ‘financial returns’ today.
According to a recently-released report, e-Conomy Southeast Asia 2019 by Google, Temasek Holdings Pte and Bain & Co., Southeast Asia’s Internet economy could exceed US$100 billion this year (a 39% increase from 2018) and will touch US$300 billion by 2025. The report states that Southeast Asian’s are ‘the most engaged mobile Internet users in the world’, and the region is becoming one of the world’s fastest-growing areas for Internet users – fueled by 360 million existing online users.
Analysing the current and future potential of the Southeast Asian Internet economy across its six largest markets – Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam – it has been a momentous time for online travel services, online media, ride-hailing services, eCommerce, and digital financial services to leverage digital tools.
Southeast Asia’s Internet Economy is expected to grow
Southeast Asia’s fundamental changes in consumer behaviour and engagement with mobile internet have grown demand for eCommerce and Ride-Hailing services.
eCommerce is the largest and fastest-growing sector with more than 150 million Southeast Asians engaged in online shopping, and this is indicative of the fundamental changes in the way people consume eCommerce services.
Growth of digital financial services
Currently, Southeast Asia lacks adequate financial services as out of nearly 400 million adults in the region an estimated 98 million are underbanked and 198 million are unbanked.
Commenting on the expanding Internet economy, Ecosystm Principal Advisor – Growth & Expansion, Paul Gestro said “Vietnam, Philippines, and Indonesia will be the markets that could benefit the most from the US$100 billion Internet economy. This is primarily because a large percentage of the population in these markets is unbanked. With the growth and access to some form of banking (traditional or virtual) and the ability to transact a payment, this will have a huge influence on Fintech solutions.”
Another key trend is the growth of digital payment and financial services in the region. The growth of digital financial services will make the Internet economy more wide-ranging and consumers will enjoy greater access to Digital Payments and eCommerce.
Gestro added, “Insurance, payments and investment services will add to what we do now with ride-sharing and food delivery services. We will instantly make decisions on insurance and investment products and deals backed up by seamless payment mechanisms and different forms of payment.”
While most Digital Financial Services are still nascent, Digital Payments are expected to cross US$1 trillion by 2025 and this could open investment opportunities.
“The open investment opportunities for investors in Southeast Asia’s internet economy will be investing in applications that are mobile-ready. There will be a growth in mobile transactions and services, and companies that take a mobile-first approach will be the investors’ target,” said Gestro.
The report advises governments of Southeast Asian countries to align digital financial service regulations across the region to facilitate the development of regional business models and help channel resources towards investments in world-class tech and talent.
Despite the growing Internet economy, talent constraints remain a pressing concern as the Internet economy expands. Gestro said, “programmes in schools are required to promote a digital understanding and offer clear pathways to build knowledge and skills required for an Internet economy. This also includes companies who should be offering internships and working closely with universities to make sure the courses match where talent is needed.”
The use of mobile phones and mobile applications will connect consumers to a raft of services they previously lacked, and allow business owners and leaders to reach a whole new population of customers that was previously under-served. There’s still a lot of work to be done to ensure Southeast Asia’s Internet economy reaches its potential.