Enhancing ROI of Enterprise Technology Investments: The Connected Supply Chain and Realizing IIOT – Takeaways from AIBP Insights Philippines
The 3rd day of AIBP Insights Philippines was focused on addressing considerations for ROI of enterprise technology investments for connected supply chains and realizing IIOT among manufacturing firms First Philec, Sime Darby Plantation, Integrated Micro-electronics (IMI), CEMEX Holdings Philippines, and solution provider Magnifi Machines. Today’s discussion raised issues in driving enterprise technology investment and the meaning of ROI for enterprises.
AIBP Insights is a series of country-focused sessions held online which brings together a focus group of ASEAN stakeholders to discuss topics related to enterprise technology adoption in the region. AIBP Insights will be held across Malaysia, Philippines, Indonesia, Thailand and Vietnam over a course of 5 weeks. The agenda is available here.
Priorities of the Manufacturing Industry
The manufacturing industry is the top driver of ASEAN’s GDP growth and there has been an increasing focus on driving Industry 4.0 initiatives in the region. For ASEAN manufacturers, technology investments are largely focused on reducing costs and improving business processes.
The 3 recurring themes of our discussion today are:
- Customer Experience: Understanding what customers want from the customers themselves
- Culture: Aligning company culture for everyone
- Costs: Justifying ROI in more than just the monetary sense
Digital transformation is a journey that requires the coordination and alignment of ideas, expectations and efforts from top-to-bottom and end-to-end in an agile manner to address an enterprise's core purpose and objectives.
Drivers of Enterprise Technology Investments
Our panelists from CEMEX, First Philec, Sime Darby Plantation and IMI generally agreed that digital innovations encompass digital solutions, human capital and customer feedback. Addressing the issue of sustainability is also a key challenge for manufacturing firms. Companies will struggle in their digital transformation journey, but embarking on digital initiatives is necessary for optimizing business processes and customer experience, and addressing sustainability challenges.
Responding to Expectations
Ignacio Mijares, CEO and President of CEMEX Holdings Philippines shared that one of the key challenges identified was the misalignment between what customers want and what CEMEX thinks their customers want. This was addressed by their digital innovation plan and CEMEX Go platform that promoted customer centricity, allowing for them to review internal processes and meet client expectations. Similarly, Ariel Ong, President of First Philec, and Azli Razali, Head of Sime Darby Oils, Philippines agreed that digitalisation should value-add to the customer experience.
Besides customer expectations, manufacturing firms have the responsibility to ensure that business practices are sustainable. Azli shares how technology has assisted Sime Darby in meeting their goals in sustainable palm oil production through geo-mapping their plantations and launching Crosscheck 2.0 to increase transparency and awareness of Sime Darby’s sustainable practices.
While most customers appreciate the increased convenience and responsiveness brought about by digital adoption, Sherwin Nones, Head of Strategic Planning & Marketing at IMI mentioned that their business clients do resist digitalisation and automation at times, preferring to conduct their businesses with traditional methods.
Realizing IIoT from the Bottom-up and from the Top-down
Realizing IIoT involves the efforts of the entire organization, and human resources play a key role in an enterprise's digital transformation journey. However, enterprises may face internal resistance to technology adoption. Ariel and Sherwin both believe that regardless of whether initiatives are top-down or bottom-up, the alignment of employee and company values will greatly support digital initiatives.
For organization-wide reception of digital transformation, Azli highlighted both the importance of employees realizing the value of technology in their day-to-day jobs, and creating an ecosystem that creates opportunities for the employees base to propose ideas in encouraging reception of digital initiatives.
For firms with wide geographical coverage like CEMEX, positive competition among teams from different countries serve to drive innovation adoption as well. Ignacio also noted that business divisions in emerging markets display more excitement for digital transformation than those in developed markets.
In addition, the issue of aligning employee capabilities and skill sets was agreed upon by most panelists as a major obstacle in digital adoption. Firms must prepare employees for any digital initiatives they undertake. Ignacio shared that in their innovation plans, CEMEX worked on preparing their employees during the process of digital transformation.
What does ROI Really Encompass?
The general consensus among our panelists is that technology adds value to their business in the long run, and ROI cannot be seen overnight. More importantly, the panel agreed that ROI of technology investments cannot be measured in sole monetary terms. Our panelists brought up the importance of assessing the impact of digital initiatives on customer and employee experience, social responsibility and realizing company objectives and purposes as possible indicators of ROI on technology investments.
Ariel believes that the ROI of technology investments should be measured in accordance with a company’s mission and purpose which differs from business to business. He also highlights that digital tools do more than just maximize profits - they enable transparent business practices and social responsibility as well.
However, the reality is that shareholders may not necessarily prioritize social indices and qualitative factors in assessing ROI of investments. Sherwin shared that IMI’s annual reports are not focused solely on financial information, but social indicators and other company activities as well. He thinks that this might be helpful in helping employees and stakeholders understand the importance of investing in technology for the common good as well.
ROI of enterprise technology investments also come from the solutions provided for business challenges. For example, Sherwin shared that IMI looks for areas to improve on and find vendors to address business challenges such as reducing lead time in supply chains and delivery to customers.
To address skepticism of technology adoption and concerns about the costs involved, Sherwin proposed the possibilities of collaborating with government agencies and academia and start-ups to pilot small projects at low costs. Winho Choy, CEO of Magnifi Machines shared that 3rd-party vendors may offer subscription-based services and POCs to demonstrate the benefits of technology adoption. More importantly, businesses must identify key pain-points and adopt solutions that address their needs.
As much as technology can provide data, businesses must take actionable measures for them to realize IIOT. The use of technology differs for businesses with different business needs, purposes and values - the key is to find a balance between monetary and social indicators of ROI on technology investments. Digital transformation is a long-term journey that requires enterprises to be aware of their goals and responsibilities.
We will be hosting AIBP Insights sessions for Philippines, Indonesia, Thailand and Vietnam over the next few weeks. Feel free to register interest if you are interested to participate in our sessions.