Digital-Native Businesses in APJ to Grow Tech Spending on generative AI and Cloud

A recent IDC report unveils a resilient trend among Asia Pacific including Japan (APJ) Digital-Native Businesses (DNBs), defying the region’s economic slowdown.
TeamViewer user on a laptopDespite various financial headwinds, over half of APJ’s DNBs are anticipated to escalate technology spending by up to 20 percent within the coming year. This strategic move aims to leverage cutting-edge technologies like generative AI and cloud platforms, enabling these businesses to sustain competitiveness, foster innovation, and ensure financial sustainability.

The report highlights a divergence in this trend from the declining venture capital (VC) investments in 2023, contrasting the prosperous trends witnessed in 2021 and 2022. The reduction in VC investments arises from factors including mounting interest rates, global economic recession, and currency fluctuations.

Strategic alliances with leading cloud vendors are proving pivotal for APJ’s DNBs, particularly scale-ups in the region. Partnering with these vendors grants access to sophisticated cloud solutions and allows the development of innovative tech solutions by harnessing established vendor expertise. IDC’s data showcases the preference of APJ DNBs for top cloud platforms such as AWS, Alibaba Cloud, and Microsoft, dictating market share and wielding substantial influence among decision-makers.

However, spending on technology across APJ nations varies, contingent on the maturity of individual markets. IDC foresees a 36 percent year-on-year surge in cloud adoption among APJ DNBs, encompassing Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).

Nevertheless, concerns surrounding security, risk, and compliance loom large for DNBs across all maturity stages. Despite budget constraints stemming from the decrease in VC investments, these businesses remain committed to investing in robust security solutions to fortify digital assets and safeguard customer data.

For technology suppliers aiming to cater to APJ’s DNBs, distinct value propositions, customizable offerings, and collaboration with regional suppliers and service providers are paramount. The credibility of vendors hinges on factors like robust customer support, expertise, and experience, pivotal in ensuring swift and successful implementation of their platforms.

Supriya Deka, Senior Market Analyst at IDC’s Asia/Pacific Small and Medium-sized and Digital Native Business Program, emphasizes the strategic importance of alliances between DNBs and technology vendors in the digital age. Deka underscores the significance of solid partnerships that foster innovation and enhance core competencies, essential for businesses navigating the dynamic technology landscape.

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