In our increasingly connected world where devices talk to each other, storefronts fit in pockets and services are accessible over the internet - applications are everywhere. This means every business is really in the software business and needs to embrace digital transformation.
The results of the study - developed and commissioned by CA Technologies, and carried out by research consulting firm TRPC - give a snapshot of where Asia’s economies are today, in terms of how conducive their market environments are for application development and market entry. Disruptions to market conditions often change the digital economy very quickly.
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, markets need to have an environment conducive for entrepreneurship and new forms of commerce to happen.
“The Application Economy Index segments markets based on their ability to integrate, develop and benefit from application usage,” explained Lim May-Ann, managing director, TRPC. “We found Singapore, Australia, South Korea, Japan and Hong Kong most ready to maximize opportunities provided by the application economy, placing them in the Disruptors group. China and Malaysia form the Challengers group in the middle, while Thailand, India and Indonesia make up the Mainstream group that needs to focus on developing conditions for businesses to thrive in the application economy.”
However, a different picture emerges when the study (Figure 2) 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.
China, India and Indonesia were found to have the potential to leapfrog to the top three places if they capitalize on the opportunities before them. On the other hand, the earlier leaders – Singapore, Hong Kong, South Korea, Australia and Japan, run the risk of falling behind if they do not act quickly to address the gaps in their markets.
“The arrival of the application economy has challenged the status quo,” said Kenneth Arredondo, president & general manager, Asia Pacific & Japan, CA Technologies. “The pace of innovation must match the pace of disruption, and forward-looking, pro-active strategies for managing risks and capitalizing on opportunities must be put in place if businesses are to succeed in the application economy.”
“In anticipation of the future marketplace, the best bet is still for enterprises to act fast to capture market share, and governments to improve the enabling infrastructure for businesses to develop and adapt quickly to changing market environments,” added Arredondo.
The 10 parameters of the CA Technologies APJ 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 2016 here and click here for the infographic.