Digital transformation will help Asia Pacific add an estimated $1.16 trillion to its gross domestic product (GDP) by 2021, a study finds.

It will also help in increasing the growth rate by 0.8 percent annually, according to the research—Unlocking the economic impact of digital transformation in Asia Pacific—produced by Microsoft in partnership with IDC Asia/Pacific.

In 2017, about 6 percent of the region's GDP was derived from digital products and services created directly through the use of digital technologies, such as mobility, cloud, internet of things (IoT) and artificial intelligence (AI), it said. 

This is expected to surge to around 60 percent by 2021, Microsoft said in a statement yesterday.

The survey was conducted with 1,560 business decision makers in mid and large-sized organisations across 15 economies in the region.

The respondents said digital transformation was mainly leading to higher profit margins, greater productivity, improved customer advocacy, more cost reduction and increased revenue from new products and services.

The research findings say business leaders were already seeing improvements of 15-17 percent and expected to see over 50 percent by 2020, with the biggest jump expected in customer advocacy.

“Digital transformation has a positive and measurable impact on Asia Pacific's economy, and it is widely regarded that every organisation needs to be a digital one,” said Ralph Haupter, president of Microsoft Asia.

“In fact, customers that we are speaking to are increasingly deploying emerging technologies such as artificial intelligence as part of their digital transformation initiatives, and that will accelerate growth even further.”

While 84 percent of organisations are in the midst of digital transformation, only 7 percent can be classified as leaders having full or progressing digital transformation strategies, with at least a third of their revenue from digital products and services.

The study indicates that the leaders experience double the benefits of followers and these improvements will be more pronounced by 2020.

Almost half of the leaders (48 percent) have a full digital transformation strategy in place, it said.

“The pace of digital transformation is accelerating, and IDC expects that by 2021, at least 60 percent of Asia/Pacific's GDP will be digitalised, with growth in every industry driven by digitally-enhanced offerings, operations and relationships,” said Daniel-Zoe Jimenez, research director for Digital Transformation Practice Lead at IDC Asia/Pacific.

“The study shows leaders seeing double the benefits of followers, with improvements in productivity, cost reductions, and customer advocacy. To remain competitive, organisations must establish new metrics, realign organisation structures, and re-architect their technology platform,” said Jimenez. 

The study identified key differences between leaders and others in Asia Pacific, which contribute to the improvements tracked.

It points out that leaders were more concerned about competitors and emergence of disruptive technologies, more aware of challenges in their digital transformation journeys and looking to invest in AI and IoT.

Another two differences were that business agility and culture of innovation were key goals and that digital transformation was always measured for success. 

What sets leaders apart from others are their abilities to ride on the digital transformation wave from an organisational culture perspective.