Maximising Return on Investment of Technology – Takeaways from AIBP Insights Indonesia
Indonesia's President Jokowi has been pushing harder for economic reform during his second term to boost Indonesia's economic growth. Amidst rallies by workers and students over the past weeks, the legislators & government have passed the Omnibus Law on jobs. This law, also known as the jobs creation bill, is aimed to simplify complex and overlapping regulations that have hindered investments into the country, creation of businesses & jobs, and thus enhancing economic growth.
Many view this bill as a fresh breeze in this current difficult business situation as Indonesia is facing an imminent recession due to the coronavirus pandemic after it contracted by 5.32% in the second quarter - it is expected to further contract by 1-2.9% in Q3. The Indonesian stock market is still down ~20% compared to pre-Covid level despite various fiscal stimulus by the government. Looking at their business performance, almost no industry is sparred from the impact except for a number of sectors such as those related to the e-commerce and healthcare ecosystem.
We had the honour of hosting a CXO focus group discussion focusing on the relevance of technology to businesses including the impact on their financial performance. Does the current pandemic accelerate digitalisation initiatives? What are some of the latest initiatives pursued by local enterprises in Indonesia? What is the expected return on investment (ROI) of technology? These were some of the questions posed to the enterprise stakeholders in Indonesia; including Astra International, Blue Bird, Cikarang Dry Port, AnterAja, and Kimia Farma.
To complete the discussion, it was only right to include the technology providers' perspectives too, namely Oracle, Talend & Microsoft, and they offered some thoughts as to how their firms are providing real value to their enterprise clients, especially during the pandemic.
New Business Models
All panelists agree that digitalisation has influenced various aspects of their businesses including new business offerings and the panelists highlighted just how important these offerings are especially during the current cycle..
Both Bu Meliza (Chief of Group Digital Strategy of Astra International) and Pak Kemas (Director of Astra Digital International) shared that as a conglomerate, Astra International has been trying to stay relevant to the market through digitalisation. Their latest initiatives include introduction of digital products and applications such as CariParkir, sejalan, Movic and seva.id. These are expected to complement the existing products and services and also aimed to be independent revenue generators in the future too.
Speaking about the utilisation of technology to create a new business, Pak Suyanto (CEO of AnterAja, a subsidiary of Triputra Group) shared his experience leading a new company that focuses on e-commerce parcel delivery. He regards AnterAja as a digital native business where he minimises capex on assets through the utilisation of data. Through the massive amount of data that the group companies own, Anteraja is able to pinpoint the optimum amount of resources needed to serve a specific area while maintaining good customer experience. AnterAja did its first parcel delivery less than 2 years ago and currently, they handle more than 200,000 parcels a day.
Pak Arifin (Director, ASEAN Systems Business Group, of Oracle) shared that he has also seen a number of similar cases in the region including Malaysia too. While this trend is encouraging, he noted some of the common challenges that businesses usually face; which include system reliability and data security. It is important for digital businesses to ensure that the customer experience and trust are maintained to ensure business sustainability.
A direct way of looking at the impact of technology investments is by looking at the company's cost structure and bottom line. Pak Benny (Managing Director of Cikarang Dry Port) shared that the use of technology has enabled them to drive operational efficiency (processing time) and cost savings too. These benefits, in turn, can be passed down to the customers and partners. In the highly inefficient supply chain ecosystem in Indonesia (logistics cost amounts to 24% of GDP; dwelling time of around 3-4 days), Cikarang Dry Port shines through, securing long-term partnerships and deals with P&G, Astra International, and Blue Bird.
Pak Ferro (Head of IT Policy, Planning & Governance of Kimia Farma) chimed in by sharing that Kimia Farma's current focus includes supply chain optimisation for upcoming vaccine distribution. While IoT solutions have been implemented in the production facilities to monitor drug production since 2018, massive vaccine distribution in a short amount of time across different parts of Indonesia is still a challenge. One of the initiatives to overcome this is to better manage and utilise their data to create operational visibility.
Having a number of case studies on the healthcare industry globally, Bu Vony (Director of Small & Medium Corporate of Microsoft) shared her thoughts on the issue of enterprise agility. Integrated platform and managed services could be options that healthcare companies consider especially in their preparation for rolling out vaccines, due to its complexities. However, the benefits of cloud solutions and services are not limited to the healthcare industry only. In Indonesia, cloud solutions have played an important role in enabling businesses to quickly continue their operations remotely during mobility restrictions.
Data as the New Currency
Data will be fundamental to the way businesses across industries are conducted in the future. Fortunately for many traditional enterprises, they still have this competitive advantage of owning significantly more data compared to startups. Pak Sigit (Director of Blue Bird) mentioned that they have the data edge, having served millions of customers. Similar to Pak Suyanto, he believes that by utilising data effectively, businesses can explore untapped opportunities. Blue Bird, for example, has been able to explore different business initiatives over the past few years which include Blue Bird COD (Chat - Order - Delivery) and BirdKirim in response to Covid-19 and mobility restrictions.
As the amount of data collected/utilised is growing exponentially, Pak Yoga (Country Sales Director of Talend) also shared his perspective on the importance of data governance, which includes hygiene, transparency, and timeliness. He believes that this concept is crucial as it will allow businesses to be agile and scale their initiatives further in the future. Solution providers have to work hand-in-hand with their clients on their data journey to ensure that specific KPIs and ROI are achieved as different organisations or departments would have different objectives.
Enterprise Digital Transformation as a Journey
Dr. Chet (COO of Good Doctor Technology) shared with the local stakeholders in Indonesia his experiences in the region in dealing with digitalisation for the past few years. Drawing parallels to his time as Chief Innovation Officer in Ananda Development, Thailand, he believes that change management should be at the center of any enterprise digital transformation. Management has to be prepared to make difficult decisions including those that can impact short-term profitability. He also stressed the importance of ecosystem play in digital transformation. No company can survive alone in the digital transformation journey and thus they have to be open to collaboration.
This idea was echoed by Microsoft, Talend and Oracle too as they believe that even from the solution providers' point of view, creating an ecosystem to support their clients and partners has become paramount in this age.
100 minutes flew by in a blink. All in all, it was a very insightful session and we hope to continue driving the conversations in the ASEAN enterprise digitalisation ecosystem through connecting business leaders and creating value.
Our enterprise discussions in ASEAN are still ongoing till early November - drop us a note at email@example.com if you are interested to join.