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Business Innovation In Southeast Asia: Can Your Small Business Keep Up?

Roy Wakim

Despite the state of unpredictability and volatility in the world’s most powerful economies, the future looks bright to entrepreneurs in ASEAN member states. Southeast Asian business leaders are now more positive about sales increases, workforce expansion, and investment growth, according to the YPO Global Pulse Confidence Index Survey for Q4 2016.

Perhaps this optimism has a lot to do with the fact that Southeast Asia is one of the most promising emerging markets today, with a consumer class expected to increase from 67 million households in 2010 to 125 million in 2025. Whether you’re a current business owner or just about to start a business in Southeast Asia, you are in the best position to make the most out of this exciting business climate.

Southeast Asia: The region to beat?

In 2013, ASEAN member states—Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam—produced a combined GDP of USD 2.4 trillion. If it were a single country, it would be the seventh-largest economy in the world. Since its founding in 1967, ASEAN policies towards integration and liberalised trading deals within and outside the region have spurred economic growth as well as resilience against external shocks. Average government debt in the region, at 50 percent, remains a lot lower than the United States or the United Kingdom.

Investor confidence in the region has outpaced even its strong neighbour China, as foreign direct investment (FDI) inflows in the ASEAN-5 countries (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) increased by 7 percent in 2013 with USD 128.4 billion in FDI receipts. China had only  USD 117.6 billion.

Furthermore, business executives from the United States look forward to increased profits in their Southeast Asian operations in 2017, according to the latest ASEAN Business Outlook Survey. Although the withdrawal of the United States from the Trans-Pacific Partnership may affect future American business prospects, it may open up opportunities for other potential trade deals such as the Regional Comprehensive Economic Partnership, which includes the 10 ASEAN member states as well as trading partners China, India, Japan, Korea, Australia, and New Zealand.

And while China’s e-commerce landscape is largely monopolised by big players such as Alibaba and WeChat, Southeast Asia remains a fertile ground for Internet businesses, with no single player dominating its diverse market. With its 260-million-strong Internet user base expected to increase to 480 million in 2020, Southeast Asia’s Internet economy may be worth over USD 200 billion by 2025.

The rapid growth of small and midsize businesses in Southeast Asia

According to a 2015 report by the US-ASEAN Business Alliance for Competitive Small and Medium Sized Enterprises, small and medium enterprises (SMEs) comprise 96 percent of firms in ASEAN member states. Despite today’s many economic challenges, SMEs have experienced unprecedented growth in the region.

SMEs in Malaysia, for instance, have significantly contributed to the overall growth rate in ASEAN, contributing at least 30 percent to its own GDP, with SMEs alone growing at a rate of 8.4 percent. SMEs account for almost 50 percent of the country’s labour force, with most engaged in the services sector.

According to a report from Economics World, SMEs in Indonesia have made qualitative and quantitative strides for the country’s overall economy. Employment generation is one of the most significant contributions of Indonesian SMEs. They have always employed more than 96 percent of the country’s workforce, while consistently contributing no less than 50 percent to the country’s GDP.

While information on SME’s economic contribution in the Philippines is limited, the latest data from the Department of Trade and Industry shows that SMEs contributed to 25 percent of its exports in 2014. SMEs in the Philippines generated a total of 4.8 million jobs in 2014, which made up 62 percent of the total labour force.

Potentially the most promising emerging economy in Southeast Asia in the near future, Vietnam is estimated to experience up to 10 percent annual growth rates by 2025. A huge part of this growth is expected to come from SMEs, which have experienced an average of 20 percent profit growth rates over the past few years. A report from The Asia Foundation states that SMEs in Vietnam contribute over 40 percent to the country’s GDP, employ 77 percent of the workforce, and make up 80 percent of the entire retail market.

Meanwhile, in Singapore, 59 percent of polled businesses have experienced growth in 2015, despite economic uncertainty within the business community, according to the CPA Australia report.

Boosting business innovation among SMEs in Southeast Asia

The growing role of SMEs in any region’s overall economic development can be attributed to two separate but interrelated factors: policies and technology.

The implementation of the ASEAN Economic Community (AEC) in 2015, for example, opens up SMEs to a larger potential consumer base. As ASEAN member states integrate into a single market and production base, businesses can access much larger markets than before, rather than being limited to a single market within the country.

As for technology expansion? According to the 2014 ASEAN SME Policy Index, SMEs still face challenges accessing technology, finance, and competitive markets. In fact, the study shows that the biggest policy gap in the region is the promotion of technology and technology transfer in the different stages of a typical SME life cycle.

A country worth emulating in terms of technology adoption is Singapore, which ranks first among the most tech-ready countries in the world and is also the most innovative in Asia. Even non-tech firms in this city-state have embraced the digital revolution, taking advantage of social media, business analytics, and enterprise mobility.

If you’re an SME owner or aspiring entrepreneur in Southeast Asia, you need to maximise the existing technology infrastructure to grow your small business. While the Southeast Asian business landscape is ripe for SMEs, the environment is also getting more and more competitive. Business firms and even governments are aggressively moving towards modernisation and trade liberalisation, chasing the e-commerce “gold rush” and capturing markets even beyond national borders.

So, even with a growing potential customer base, solid technological infrastructure, and supportive policy environment, competing in this exciting business era may produce new challenges. A sudden increase in your customer base, for instance, may burden your staff, especially your customer service, IT, and finance personnel. Such disruptions, although generally positive, may compromise customer service as well as the quality of goods and/or services, making your business lose its momentum in the process.

How to modernise your small business with cloud ERP

To address these issues, SMEs can harness the benefits of technology. Free flow of information through digitised platforms improves not only business-to-customer communications but also business-to-business transactions. SMEs can also benefit from online payment solutions, as customers become more mobile and digitally savvy. Tools that improve day-to-day tasks help streamline business processes, speeding up workflows and improving service delivery. To ease the need for physical technology infrastructure while improving data security, more firms are turning to cloud-based enterprise resource planning (ERP) solutions.

Different aspects of your business like customer relationship management, finance, and supply chain management can benefit from cloud-based ERP solutions in several ways:

  1. More room for innovation and expansion. A cloud-based ERP solution can take multiple aspects of your business into a single platform that is more customisable as your business grows and diversifies. As processes are streamlined, information flows faster and more smoothly, allowing you to make quicker business decisions. It also frees up your technological infrastructure while reducing labour costs typically spent for IT professionals responsible for network maintenance.
  1. Minimised costs from interruptions and glitches. Running a business will not always be smooth-sailing. A lot of business owners and managers end up spending too much time making sure that everything is running perfectly, on top of the time spent solving actual problems. A system that quickly identifies glitches, such as past due bills, late shipments, or accounting anomalies, allows business owners and managers to focus more on solving problems while spending less time finding them.
  1. Integration with old systems. Along with business expansion comes the need to modify and customise existing ERP systems. Older ERP systems, however, may not have this capability. Switching to an entirely different platform can also be costly, especially for SMEs. A good cloud-based ERP allows you to keep existing data and processes from old systems while allowing you to adapt to changing business needs through new, expanded ERP solutions.
  1. Realtime data visibility. As transactions are stored in the cloud in real time, cloud-based and mobile-enabled ERP solutions allow business owners and managers to access their business data anywhere—even on their mobile devices in the middle of rush hour traffic. This facilitates faster, smarter business decisions necessary in a fast-paced business climate.

Without realising the potential opportunity costs, a lot of SME owners initially hesitate to grow their business with cloud-based ERP. SMEs may risk getting left behind, not only by their larger counterparts but also by other SMEs that choose to invest in cloud computing technology. With a conducive policy environment and thriving business landscape, now is the best time to take advantage of the potential gains from modernising your business.

To maximise your SMEs potential in todays rapidly changing business climate, explore SAP Business One and how it perfectly suits your business needs.

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Roy Wakim

About Roy Wakim

Roy Wakim is Director of SAP Business One (Southeast Asia)at SAP. He is responsible for the growth and expansion of this ERP solution within the region. Roy has 15 years of leadership experience, driving innovative sales strategies and execution across Asia Pacific. He has an MTech degree in Technology Management from the University of Western Sydney.

Innovation Without Boundaries: Why The Cloud Matters

Michael Haws

Is it possible to innovate without boundaries?

Of course – if you are using the cloud. An actual cloud doesn’t have any boundaries. It’s fluid. But more important, it can provide the much-needed precipitation that brings nature to life. So it is with cloud technology – but it’s your ideas that can grow and transform your business.USA --- Clouds, Heaven --- Image by © Ocean/Corbis

Running your business in the cloud is no longer just a consideration during a typical use-case exercise. Business executives are now faced with making decisions on solutions that go beyond previous limitations with cloud computing. Selecting the latest tools to address a business process gap is now less about features and more about functionality.

It doesn’t matter whether your organization is experienced with cloud solutions or new to the concept. Cloud technology is quickly becoming a core part of addressing the needs of a growing business.

5 considerations when planning your journey to the cloud

How can your organization define its successful path to the cloud? Here are five things you should consider when investigating whether a move to the cloud is right for you.

1. Understanding the cloud is great, but putting it into action is another thing.

For most CIOs, putting a cloud strategy on paper is new territory. Cloud computing is taking on new realms: Pure managed services to software-as-a-service (SaaS). Just as legacy computing had different flavors, so does cloud technology.

2. There is more than one way to innovate in the cloud.

Alignment with an open cloud reference architecture can help your CIO deliver on the promises of the cloud while using a stair-step approach to cloud adoption – from on-premise to hybrid to full cloud computing. Some companies find their own path by constantly reevaluating their needs and shifting their focus when necessary – making the move from running a data center to delivering real value to stakeholders, for example.

3. The cloud can help accelerate processes and lower cost.

By recognizing unprecedented growth, your organization can embark on a path to significant transformation that powers greater agility and competitiveness. Choose a solution set that best meets your needs, and implement and support it moving forward. By leveraging the cloud to support the chosen solution, ongoing maintenance, training, and system issues becomes the cloud provider’s responsibility. And for you, this offers the freedom to focus on the core business.

4. You can lock down your infrastructure and ensure more efficient processes.

Do you use a traditional reporting engine against a large relational database to generate a sequential batched report to close your books at quarter’s end? If so, you’re not alone. Sure, a new solution with new technology may be an obvious improvement. But how valuable to your board will you become when you reduce the financial closing process by 1–3 days? That’s the beauty of the cloud: You can accelerate the deployment of your chosen solution and realize ROI quickly – even before the next full reporting period.

5. The cloud opens the door to new opportunity in a secure environment.

For many companies, moving to the cloud may seem impossible due to the time and effort needed to train workers and hire resources with the right skill sets. Plus, if you are a startup in a rural location, it may not be as easy to attract the right talent as it is for your Silicon Valley counterparts. The cloud allows your business to secure your infrastructure as well as recruit and onboard those hard-to-find resources by applying a managed services contract to run your cloud model

The cloud means many things to different people. What’s your path?

With SAP HANA Enterprise Cloud service, you can navigate the best path to building, running, and operating your own cloud when running critical business processes. Find out how SAP HANA Enterprise Cloud can deliver the speed and resources necessary to quickly validate and realize solid ROI.

Check out the video below or visit us at www.sap.com/services-support/svc/in-memory-computing/hana-consulting/enterprise-cloud-services/index.html.

Connect with us on Twitter: @SAPServices

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Michael Haws

About Michael Haws

Michael Haws is the Vice President of HANA Enterprise Cloud at SAP. His specialties include Enterprise Resource Planning Software & Services, Onshore, Nearshore, Offshore--Application, Infrastructure and Business Process Outsourcing.

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Consumers And Providers: Two Halves Of The Hybrid Cloud Equation

Marty McCormick

Long gone are the days of CIOs and IT managers freely spending money to move their 02 Jun 2012 --- Young creatives having lunch and conversation. --- Image by © Hero/Corbisexisting systems to the cloud without any real business justification just to be part of the latest hype. As cloud deployments are becoming more prevalent, IT leaders are now tasked with proving the tangible benefits of adopting a cloud strategy from an operational, efficiency, and cost perspective. At the same time, they must balance their end users’ increasing demand for access to more data from an ever-expanding list of public cloud sources.

Lately, public cloud systems have become part of IT landscapes both in the form of multi-tenant systems, such as software-as-a-service (SaaS) offerings and data consumption applications such as Twitter. Along with the integration of applications and data outside of the corporate domain, new architectures have been spawned, requiring real-time and seamless integration points.  As shown in the figure below, these hybrid clouds – loosely defined as the integration of data from systems in both public and private clouds in a unified fashion – are the foundation of this new IT architecture.

hybridCloudImage

Not only has the hybrid cloud changed a company’s approach to deploying new software, but it has also changed the way software is developed and sold from a provider’s perspective.

The provider perspective: Unifying development and operations

Thanks to the hybrid cloud approach, system administrators and developers are sitting side by side in an agile development model known as Development and Operations (DevOps). By increasing collaboration, communication, innovation, and problem resolution, development teams can closely collaborate with system administrators and provide a continuous feedback loop of both sides of the agile methodology.

For example, operations teams can provide feedback on reported software bugs, software support issues, and new feature requests to development teams in real time. Likewise, development teams develop and test new applications with support and maintainability as a key pillar in design.
After seeing the advantages realized by cloud providers that have embraced this approach long ago, other companies that have traditionally separated these two areas are now adopting the DevOps model.

The consumer perspective: Moving to the cloud on its own terms

From the standpoint of the corporate consumer, hybrid cloud deployments bring a number of advantages to an IT organization. Specifically, the hybrid approach allows companies to move some application functionality to the cloud at their own pace.
Many applications naturally lend themselves to public cloud domains given their application and data requirements. For most companies, HR, indirect procurement, travel, and CRM systems are the first to be deployed in a public cloud. This approach eliminates the requirement for building and operating these applications in house while allowing IT areas to take advantage of new features and technologies much faster.

However, there is one challenge consumers need to overcome: The lack of capabilities needed to extend these applications and meet business requirements when the standard offering is often insufficient. Unfortunately, this tempts organizations to create extensive custom applications that replicate information across a variety of systems to meet end user requirements. This development work can offset the cost benefits of the initial cloud application, especially when you consider the upgrades and support required to maintain the application.

What this all means to everyone involved in the hybrid cloud

Given these two perspectives, on-premise software providers are transforming themselves so they can meet the ever-evolving demands of today’s information consumer. In particular, they are preparing for these unique challenges facing customers and creating a smooth journey to a hybrid cloud.

Take SAP, for example. By adopting a DevOps model to break down a huge internal barrier and allowing tighter collaboration, the company has delivered a simpler approach to hybrid cloud deployments through the SAP HANA Cloud Platform for extending applications and SAP HANA Enterprise Cloud for hosting solutions.

Find out how these two innovations can help you implement a robust and secure hybrid cloud solution:
SAP HANA Cloud Platform
SAP HANA Enterprise Cloud

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Marty McCormick

About Marty McCormick

Marty McCormick is the Lead Technical Architect, Managed Cloud Delivery, at SAP. He is experienced in a wide range of SAP solutions, including SAP Netweaver SAP Portal, SAP CRM, SAP SRM, SAP MDM, SAP BI, and SAP ERP.

How Emotionally Aware Computing Can Bring Happiness to Your Organization

Christopher Koch


Do you feel me?

Just as once-novel voice recognition technology is now a ubiquitous part of human–machine relationships, so too could mood recognition technology (aka “affective computing”) soon pervade digital interactions.

Through the application of machine learning, Big Data inputs, image recognition, sensors, and in some cases robotics, artificially intelligent systems hunt for affective clues: widened eyes, quickened speech, and crossed arms, as well as heart rate or skin changes.




Emotions are big business

The global affective computing market is estimated to grow from just over US$9.3 billion a year in 2015 to more than $42.5 billion by 2020.

Source: “Affective Computing Market 2015 – Technology, Software, Hardware, Vertical, & Regional Forecasts to 2020 for the $42 Billion Industry” (Research and Markets, 2015)

Customer experience is the sweet spot

Forrester found that emotion was the number-one factor in determining customer loyalty in 17 out of the 18 industries it surveyed – far more important than the ease or effectiveness of customers’ interactions with a company.


Source: “You Can’t Afford to Overlook Your Customers’ Emotional Experience” (Forrester, 2015)


Humana gets an emotional clue

Source: “Artificial Intelligence Helps Humana Avoid Call Center Meltdowns” (The Wall Street Journal, October 27, 2016)

Insurer Humana uses artificial intelligence software that can detect conversational cues to guide call-center workers through difficult customer calls. The system recognizes that a steady rise in the pitch of a customer’s voice or instances of agent and customer talking over one another are causes for concern.

The system has led to hard results: Humana says it has seen an 28% improvement in customer satisfaction, a 63% improvement in agent engagement, and a 6% improvement in first-contact resolution.


Spread happiness across the organization

Source: “Happiness and Productivity” (University of Warwick, February 10, 2014)

Employers could monitor employee moods to make organizational adjustments that increase productivity, effectiveness, and satisfaction. Happy employees are around 12% more productive.




Walking on emotional eggshells

Whether customers and employees will be comfortable having their emotions logged and broadcast by companies is an open question. Customers may find some uses of affective computing creepy or, worse, predatory. Be sure to get their permission.


Other limiting factors

The availability of the data required to infer a person’s emotional state is still limited. Further, it can be difficult to capture all the physical cues that may be relevant to an interaction, such as facial expression, tone of voice, or posture.



Get a head start


Discover the data

Companies should determine what inferences about mental states they want the system to make and how accurately those inferences can be made using the inputs available.


Work with IT

Involve IT and engineering groups to figure out the challenges of integrating with existing systems for collecting, assimilating, and analyzing large volumes of emotional data.


Consider the complexity

Some emotions may be more difficult to discern or respond to. Context is also key. An emotionally aware machine would need to respond differently to frustration in a user in an educational setting than to frustration in a user in a vehicle.

 


 

download arrowTo learn more about how affective computing can help your organization, read the feature story Empathy: The Killer App for Artificial Intelligence.


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Christopher Koch

About Christopher Koch

Christopher Koch is the Editorial Director of the SAP Center for Business Insight. He is an experienced publishing professional, researcher, editor, and writer in business, technology, and B2B marketing. Share your thoughts with Chris on Twitter @Ckochster.

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In An Agile Environment, Revenue Models Are Flexible Too

Todd Wasserman

In 2012, Dollar Shave Club burst on the scene with a cheeky viral video that won praise for its creativity and marketing acumen. Less heralded at the time was the startup’s pricing model, which swapped traditional retail for subscriptions.

For as low as $1 a month (for five two-bladed cartridges), consumers got a package in the mail that saved them a trip to the pharmacy or grocery store. Dollar Shave Club received the ultimate vindication for the idea in 2016 when Unilever purchased the company for $1 billion.

As that example shows, new technology creates the possibility for new pricing models that can disrupt existing industries. The same phenomenon has occurred in software, in which the cloud and Web-based interfaces have ushered in Software as a Service (SaaS), which charges users on a monthly basis, like a utility, instead of the typical purchase-and-later-upgrade model.

Pricing, in other words, is a variable that can be used to disrupt industries. Other options include usage-based pricing and freemium.

Products as services, services as products

There are basically two ways that businesses can use pricing to disrupt the status quo: Turn products into services and turn services into products. Dollar Shave Club and SaaS are two examples of turning products into services.

Others include Amazon’s Dash, a bare-bones Internet of Things device that lets consumers reorder items ranging from Campbell’s Soup to Play-Doh. Another example is Rent the Runway, which rents high-end fashion items for a weekend rather than selling the items. Trunk Club offers a twist on this by sending items picked out by a stylist to users every month. Users pay for what they want and send back the rest.

The other option is productizing a service. Restaurant franchising is based on this model. While the restaurant offers food service to consumers, for entrepreneurs the franchise offers guidance and brand equity that can be condensed into a product format. For instance, a global HR firm called Littler has productized its offerings with Littler CaseSmart-Charges, which is designed for in-house attorneys and features software, project management tools, and access to flextime attorneys.

As that example shows, technology offers opportunities to try new revenue models. Another example is APIs, which have become a large source of revenue for companies. The monetization of APIs is often viewed as a side business that encompasses a wholly different pricing model that’s often engineered to create huge user bases with volume discounts.

Not a new idea

Though technology has opened up new vistas for businesses seeking alternate pricing models, Rajkumar Venkatesan, a marketing professor at University of Virginia’s Darden School of Business, points out that this isn’t necessarily a new idea. For instance, King Gillette made his fortune in the early part of the 20th Century by realizing that a cheap shaving device would pave the way for a recurring revenue stream via replacement razor blades.

“The new variation was the Keurig,” said Venkatesan, referring to the coffee machine that relies on replaceable cartridges. “It has started becoming more prevalent in the last 10 years, but the fundamental model has been there.” For businesses, this can be an attractive model not only for the recurring revenue but also for the ability to cross-sell new goods to existing customers, Venkatesan said.

Another benefit to a subscription model is that it can also supply first-party data that companies can use to better understand and market to their customers. Some believe that Dollar Shave Club’s close relationship with its young male user base was one reason for Unilever’s purchase, for instance. In such a cut-throat market, such relationships can fetch a high price.

To learn more about how you can monetize disruption, watch this video overview of the new SAP Hybris Revenue Cloud.

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