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In late 2020, we fielded a Forrester Analytics Business Technographics® survey in two key Southeast Asian markets to understand the current state of digital transformation and cloud adoption. This article post looks at the state of digital transformation (DT) in Indonesia.

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Just 43% of firms in Indonesia are on a digital transformation journey

Forrester found that fewer than half of firms in Indonesia are currently implementing or expanding their digital transformation. The good news is that another 34% of Indonesian firms are planning to start their transformation by the end of 2021. Most organizations focus their transformation efforts on a specific business unit, product, or service line. Only 40% indicate that they take a more mature, companywide approach.

Indonesia firms focus their business priorities on adaptiveness, CX, and growth in 2021

COVID-19 has emphasized the critical importance of adaptiveness for business resiliency and growth. Revenue growth tops the list of business priorities for firms in Indonesia. Improving products and services comes in a close second. Improving customer experience (CX) and priorities aligned to adaptiveness—increasing innovation and accelerating responses to business changes—make up the rest of the top five. The majority of surveyed services decision-makers in Indonesia stated that accelerating the shift to digital is a high or critical priority.

Digital transformers have recorded improved business outcomes along operational efficiency and CX

Digital transformers in Indonesia have already seen benefits for their transformation efforts, particularly in the areas of digital experiences and digital operations. Indonesian firms successful in their digital transformation report improved operational efficiency and improved CX most often as reasons for success. Better innovation and agile capabilities in IT, along with product and service innovation, are further success drivers. These firms have also recorded direct impact on the top (revenue growth) and bottom line (cost reduction). However, firms in Indonesia must improve the experience of their employees and adoption of agile beyond IT to sustain their early successes.

Digital transformation efforts are challenged by skills and employee availability, as well as security and data issues

Indonesian firms are facing people-related challenges most often in their digital transformation. Lack of technology skills and knowledge, and a shortage of employee availability, indicate a critical talent crunch. Firms may pay a price already for not putting employee experience higher on their business agenda. Besides data issues, challenges also include securing the digital transformation. Only 17% of firms in Indonesia are currently adopting a zero trust strategic cybersecurity framework. Fewer than 20% mention securing budgeting and funding for DT as a key challenge. This indicates that early successes are recognized in boardrooms and with executive leaders and that the vast majority of firms in Indonesia have prepared their transformation budgets well.

Indonesian tech executives must balance investments in technology and employees to continue the success

Indonesian firms face fewer budget challenges for digital transformation than their peers in other markets. Firms are also prioritizing cloud and are building new applications and services primarily on public cloud. Tech executives in Indonesia therefore face their most immediate challenges around people, skills, and culture. Upskilling, retention, and aligning employee priorities to digital transformation are crucial for ongoing success—and firms must act immediately. Agile has successfully taken hold in IT organizations, but tech executives must take the lead and collaborate across lines of business to drive adaptiveness across the organization.

What’s next on Indonesia’s journey to digital innovation

By the end of 2021, Forrester expects more than three-quarters of Indonesian firms to be implementing or expanding their digital transformation. Tech executives of these companies—particularly those starting out in 2021—must address the challenges head on. This means investing in people, skills, and culture and allocating parts of the budget to accelerate this. To keep up their success story, tech leaders must mature their initiatives to focus more on organization wide digital transformation. They must continue to drive operational efficiencies, customer experience, and product and service innovation across their organizations.

Organizations still hesitant about digital transformation will see their competitors accelerate and will increasingly fail to attract digital talent. They may run short on budget and resources and therefore fail in getting off the ground entirely.

This post was written by Principal Analyst Achim Granzen, and it originally appeared here.