The study - developed and commissioned by CA Technologies, and carried out by research consulting firm TRPC - found that Malaysia ranked 6th in the region in terms of its readiness to integrate, develop and benefit from application usage. It is ahead of China, Thailand, India and Indonesia, but behind Singapore, Australia, South Korea, Japan and Hong Kong.
Figure 1 The CA Technologies APJ Application Economy Index 2016 evaluates three main pillars that are critical for a vibrant application economy.
“Regardless of whether they are in the Disruptors, Challengers or Mainstream group, markets will still need to focus on creating conditions for businesses to thrive in the application economy. They can do so by continuing to do well in their key success characteristics, while mitigating current and potential weaknesses,” said Lim May-Ann, managing director, TRPC.
The index evaluates three main pillars that are critical for a vibrant application economy, with each pillar comprising various parameters:
- Government Use and Support of Technology and Innovation: To develop sound technology policies and promote innovation, governments themselves should understand and use software and applications.
- Internet and Mobile Infrastructure: Without the necessary infrastructure and enabled access to technology, an application economy cannot fully develop. Basic connectivity and network backbones must be in place, along with an environment which supports business growth and transformation.
- Business Agility: The ability to move nimbly and quickly in driving – and capturing – market disruption. For this to be possible, countries need to have an environment conducive for entrepreneurship and new forms of commerce to happen.
Malaysia scored in the mid-range across most parameters. Government use and support of technology and innovation is decent, although more can be done to incentivize innovation, which the country ranked seventh for. The lowest scores were in the pillar of Internet and mobile infrastructure, with Malaysia in the bottom half for Internet and smartphone penetration (sixth for both) and average mobile connection speed (eighth). Malaysia’s business agility scores were varied; while it came in first for strength of cybersecurity, it also ranked near the bottom (eighthe) for debit and credit card penetration, suggesting that a more conducive climate for businesses to operate is needed.
“Malaysia’s scores on the AEI show there are both weaknesses to work on and strengths to build upon, with highlights like having the strongest cybersecurity in the region,” said Nick Lim, vice president, Asia South, CA Technologies. “The results offer a snapshot of the environment today, and indicate where Asia’s economies are in terms of how conducive their market environments are for app development and market entry in the present. Businesses will find it more critical than ever to harness software to stay competitive and relevant in a fast changing world, while governments should address any weaknesses in policy or infrastructure.”
The second part of CA’s study examined future leaders of the application economy through the use of Market Potential Accelerators (MPA). This index evaluates factors which have the ability to impact and accelerate market potential in the new application economy. They are: (i) the number of smartphone users in a market, (ii) the number of people who use mobile Internet on a daily basis, (iii) the use of virtual social networks, (iv) the daily use of mobile applications, and (v) the size of the youth demographic in the market.
Figure 2 The Market Potential Accelerators Index evaluates factors which have the ability to impact and accelerate market potential in the new application economy.
When MPA are taken into account, Malaysia risks slipping three spots to ninth place if it leaves market gaps unaddressed. Some of the challenges it faces include a relatively small market of smartphone users, and the lowest number of people who use the mobile Internet on a daily basis. Its population is also not as familiar with new mediums and modes of communication within the application economy, ranking seventh for daily use of applications and fifth for use of virtual social networks. However, Malaysia has a silver lining in the form of an above-average percentage of youth population. Given proper education and training, this group will be in good stead to become the next generation of digital natives.
Malaysia’s drop in rankings in the MPA highlights how markets can fall behind in the application economy, if they do not move fast to address gaps. Malaysia can prepare itself for the future marketplace by investing in its youth population and helping them to be more familiar with applications and social media, while addressing key weaknesses like poor infrastructure. Enterprises must act fast to capture market share, and governments need to push ahead with policies to improve infrastructure ahead of demand.
The ten parameters of the Application Economy Index (AEI2016) and five Market Potential Accelerators are sourced from publicly-available indices.
As indicators used had different units and scales, any indicator that did not use a 10-point scale was normalized to make the indicator values comparable, as well as to construct aggregate scores for each economy.
Read more about CA’s APJ Application Economy Index here.