Adoption of Artificial Intelligence on the rise in ASEAN

Indonesia is leading the trend, with almost 1 in 4 organizations already adopting AI, ahead of Thailand, Singapore and Malaysia

A recent survey conducted by leading IT market research and advisory firm IDC titled IDC Asia/Pacific Enterprise Cognitive/AI survey highlights that AI adoption in the region is on the rise. Current AI adoption rates stand at 14% across Southeast Asia as compared to just eight percent last year, marking a clear move by companies to embed some form of AI/cognitive intelligence into their operations.

Discovery of better business insights has become the most important adoption driver according to more than half (52%) of respondents, moving from third most important in 2017, revealing a maturity in the way the region is harnessing AI to enhance their business. Other top drivers this year are enhanced process automation (51%), and improved productivity (42%).

With 24.6% of organizations in Indonesia adopting AI, the country leads the pack in terms of adoption, followed by Thailand (17.1%), Singapore (9.9%) and Malaysia (8.1%). The top use cases in Southeast Asia include algorithmic market forecasting (17%), and automated asset and infrastructure management (11%).

"With its positive impact already visible across banking, manufacturing, healthcare and government, there are clear opportunities for more organizations in Southeast Asia to leverage AI to create differentiating value. We expect investments in AI to continue to rise, as more organizations begin to understand the benefits of embedding AI into their business and how data and analytics can help uncover new insights. Organizations that do not incorporate AI in their business operations will lose out to their AI-enabled peers who will benefit from the greater predictability, efficiency and innovation that advanced analytics can bring" said Chwee Kan Chua, Global Research Director, Big Data and Analytics and Cognitive/AI, IDC Asia/Pacific.

Strategy still in flux, with high costs and lack of skilled talent top barriers to adoption

Despite the rise in adoption, organizations in the region are trailing behind those in North Asian countries, in terms of making AI a strategic agenda. For example, more than 80% of companies in China and South Korea believe AI capabilities will be critical for organizations' success and competitiveness in the coming years, compared to less than 40% of companies in Singapore and Malaysia.

Lack of Skills & Knowledge (23%) and High Cost of Solutioning (23%) are among the most frequent barriers to adoption named by survey respondents.

In solidifying their strategy to turn AI into a differentiator for the business, companies find data from Sales, Commerce and Marketing to be the most ready, followed by that from Customer Service & Support operations, and IT, Security & Risk operations.

For those already embarking on their data-to-insights journey, there are varied challenges across sectors. Organizations in the financial services space face more challenges in data federation and model building, while public sector organizations are hindered by data readiness issues.

Indonesian companies must hasten AI journey in the face of stiff competition

With a 14 percent jump in adoption since 2017, Indonesia’s increasing AI use can be attributed to the rapidly growing presence of Internet companies here. The country is increasingly the battlefield of technology companies – those provide ride hailing, micro-financing, mobile and e-commerce, as well as gaming. The vast population size and the surging spending on infrastructure bear great resemblance with China market, where business successes underpinned by digital innovations and disruptions have been very much talked about.

While the country has the highest adoption rates amongst ASEAN countries surveyed, it also has the highest percentage of organizations with no plan to adopt AI within the next 5 years (59%), reflecting a dichotomy between the rising digital native companies, and a large number of traditional businesses. For the latter group, there are still many barriers in sight before they jump the bandwagon.

About one third of Indonesian companies indicated that AI investments are driving popular use cases such as automated claims processing and fraud detection.

"Indonesia is the perfect market for AI to flourish. The fundamentals of AI and analytics really lie in the availability of data and Indonesia certainly has the right volume and scale that clearly justifies the investment in AI" said Peter Sugiapranata, Country Manager, SAS Indonesia. "The challenge for Indonesia is to truly envision how AI and analytics can be a differentiator to business. This begins with defining the outcome and drawing up a clear path from data to innovation. Access to talent can also be an obstacle but there are options today to make data insights accessible not just to data scientists and experts but to every level of the organization. Such solutions can accelerate AI adoption for Indonesia and help make analytics a true driving force for the economy."

The IDC Asia/Pacific Enterprise Cognitive/AI survey is an annual study undertaken to understand adoption trends, challenges and key barriers, and business priorities in the space. In 2018, a total of 502 executives and IT line-of-business heads across Asia Pacific (excluding Japan), were surveyed including 146 respondents from Southeast Asia (Singapore, Malaysia, Indonesia, Thailand).

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Editorial contacts:

SAS Asia Pacific
Shu Ling Chan
+ 65 6398 3343 

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