Focus: Annual Roundup
Gopalakrishnan Nair
IT Malaysia-01/12/01
The Technology
The last century has been the century of technology, or at least that’s what it promised for the 21st century. What has the industry players has to say about the particular technology which dominated year.
Shane Hodge, Chief operating officer of Cordoda Corp.
The increased availability of secure redundant Internet infrastructure is pushing confidence in transacting and transferring data via e-business networks. This demand is being driven by organisations in Malaysia, aiming to become first movers in delivering compelling e-commerce and e-business solutions. Companies are seeking a wide array of connectivity solutions, managed network services and e-business capabilities such as data centre hosting services, managed Internet access bandwidth management and loadbalancing services Malaysia has been propelled into the 21st century by technology The Malaysian government has been a major driving force behind the promotion of the increased Internet usage. Malaysia aspires towards a knowledge-based economy and the inception of the Multimedia Super Corridor (MSC) acts as a catalyst for electronic commerce (e-commerce) in Malaysia. A fundamentally strong e-commerce model would requite that the technology infrastructure be in place. It is the ready availability of a secure and extremely reliable info-communication structure that will act as the catalyst to the widespread adoption of e-business.
As existing networks and infrastructure available to most business are lagging behind the requirements needed to support e-commerce, organisations are turning to outsourced partners to provide the much needed comprehensive solution to meet the accessibility and info-communications needs.
The economy
It was one hit after another. While the whole region was going through a bad economic patch, the September 11 incident took place and added salt to the injuries. How has Malaysia and the ICT (information and communication technology) been affected?
Shane Hodge, Chief operating officer of Cordoda Corp.
In essence, companies were forced to scrutinize their IT budgets allocated for technology upgrades, change in systems, and change in business processes. This further delayed the decision making process for major projects. Outsourcing is increasingly being considered as a serious option as a result of the downturn. Organisations are starting to realize the value proposition of the outsourcing option, i.e. to be able to focus on core competencies, while benefiting from the professional expertise and leading edge technology offered by third party service providers, at lesser costs as compared to undertaking these tasks in-house.
Companies are now able to budget IT needs better since they have contracted outsource providers and will not be subjected to capital-intensive infrastructure but rather maintain fixed operational expenses. Besides outsourcing their networks requirements, companies are also starting to look towards next generation service providers in accessing applications which can be centrally managed and maintained and still enjoy the benefits of maintaining a fixed operational expense, such as Application Service Providers (ASPs).
The Performance
The participants of IT Malaysia annual roundup have so far voiced their opinion about the dominating technology and the economy in general. How did they themselves perform throughout 2001?
Shane Hodge, Chief operating officer of Cordoda corp.
We have achieved significant growth over the year 2001. The size of our customer base has increased as well. More importantly, we were able to tap into diverse business sectors such as retail, manufacturing, trading and education. Since our inception, Cordoda’s primary targets have been in the finance and corporate sector, which now comprise over 50 percent of our customer base. In addition, our Enterprise Broadband Network, Cordoda’s core managed service offering e-business enabling solutions designed for every business sector, facilities much of the leading e-business portals and e-commerce engines in the country. This has allowed is to secure a significant market share.
We have also evaluated the local SMI/SME market by undertaking a 4-week study of IT and e-business needs within various organizations. Based on the study and feedback from local authorities and associations, we decided to further develop opportunities in the SME sector by assembling a team that developed these opportunities based on their vast knowledge of the business challenges, through strategic alliances with leading IT providers, and ready e-business infrastructure.
The SME/SMIs
Some say they are catching up and some say they have a lot of catching up to do. Malaysians SME/SMIs are constantly in the mind of vendors, solution providers and users alike, when it comes to ICT.
Shane Hodge, Chief operating officer of Cordoda corp.
On the contrary, I believe the SMEs are beginning to see the value of ICT adoption. The adoption has been slow and very limited in certain areas. This has been mainly due to lack of information on available options to assist their migration onto the e-platform, and the unavailability of customized solutions that meets their specific needs. Traditionally, SMEs in Malaysia have mainly constituted family run businesses that have been successfully running their operations in the conventional brick and mortar manner. As the younger, Internet savvy generation, start being more involved in the business, they will start looking beyond domestics markets leading to greater operational efficiency and to compete in the global market.
However, at the moment there is still a demand and indeed an immediate need to educate the SME/SMIs in Malaysia about the benefits of not only the Internet but also the technology, As a results, the Internet penetration among the SMEs is still relatively low in comparison to other segments. Taking this concept further, Internet based applications and solutions are an obvious enabler for these businesses in very uncertain and difficult economic times. Technology, especially Internet technology, enables SMEs to compete where they would previously find it difficult to succeed. Also through the level playing field of the Internet, SMEs are better positioned to realize their competitive advantages over bigger and international competition.
Educating to set realistic targets and expectations for investment of technology is a key issue in managing technology investments and implementation. SMEs must be mindful of the fact that there is an element of re-training and re-programming of corporate culture to fit technology and also to enjoy the benefits of such investments. Traditional practices would often be eradicated or subordinated to new methods. Efficiency can only be realized if one of the most vital components – human factor – cooperates.
If you take a closer look at the traditional markets for the Malaysian SMEs, it has been a predominantly export oriented industry. Local SMEs are facing increasing competition from regional locations such as China, India, Philippines and Singapore. As a result, majority of their business is focused on supporting bigger MNCs or companies who, in turn are international in their focus. These bigger companies adopt technology as a key business driver to gain the vital competitive advantage in globally tough market conditions. The trickle-on effect on smaller SME’s is significant as these smaller companies are being forced to adopt technologies and Internet based exchanges, and adapt to the technology rationalization that is going on around them. Unfortunately many are facing, or will begin to face, an ‘accept or die’ scenario in dealing with the export market. With increased adoption of technology, SMEs will maintain their competitiveness by ensuring higher efficiency, productivity and faster delivery cycle. Improved quality of service, on-time fulfillment and efficient management of marketing network intermediaries are other benefits that can be realised. This, I believe, is another key aspect SMEs need to be educated upon.
The 2002 budget
Malaysian government has been increasingly generous in their budget allocation when it comes to ICT (information and communication technology). Solution providers and users alike are affected by it. How much of benefit can we reap from the 2001’s budget?
Shane Hodge, Chief operating officer of Cordoda corp.
The budget is very supportive in developing a knowledge economy here in Malaysia, such as the incentives that focus on rewarding taxpayers (individuals or corporations) that create or enable e-transactions to take place. An example of this in the Budget is the tax on income derived from offshore trading through websites hosted in Malaysia to be reduced from 28 percent to 10 percent for five years.
The net reduction of 18 percent is a significant amount and some of this can be passed on to the customer. As a result, companies that engage in selling via the Internet will be more competitive than conventional brick and mortar operations. The savings passed on to the customer will, in turn, encourage customers t transact via the Internet.
With Cordoda’s increased focus on the SME/SMI segment, factors encouraging the growth of this market are of great interest to us. The recent Budget extended the tax incentives for SMEs to participate in the global supply chain using online and real-time Internet solutions, beginning from Jan 2002. In line with the national agenda to spur e-business and e-trading, Cordoda has implemented education and training programmes to equip conventional brick and mortar companies in the SMI segments with necessary proficiency and expertise to migrate onto the e-commerce platform.
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