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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.

Taking Learning Back to School

Dan Wellers

 

Denmark spends most GDP on labor market programs at 3.3%.
The U.S. spends only 0.1% of it’s GDP on adult education and workforce retraining.
The number of post-secondary vocational and training institutions in China more than doubled from 2000 to 2014.
47% of U.S. jobs are at risk for automation.

Our overarching approach to education is top down, inflexible, and front loaded in life, and does not encourage collaboration.

Smartphone apps that gamify learning or deliver lessons in small bits of free time can be effective tools for teaching. However, they don’t address the more pressing issue that the future is digital and those whose skills are outmoded will be left behind.

Many companies have a history of effective partnerships with local schools to expand their talent pool, but these efforts are not designed to change overall systems of learning.


The Question We Must Answer

What will we do when digitization, automation, and artificial intelligence eject vast numbers of people from their current jobs, and they lack the skills needed to find new ones?

Solutions could include:

  • National and multinational adult education programs
  • Greater investment in technical and vocational schools
  • Increased emphasis on apprenticeships
  • Tax incentives for initiatives proven to close skills gaps

We need a broad, systemic approach that breaks businesses, schools, governments, and other organizations that target adult learners out of their silos so they can work together. Chief learning officers (CLOs) can spearhead this approach by working together to create goals, benchmarks, and strategy.

Advancing the field of learning will help every business compete in an increasingly global economy with a tight market for skills. More than this, it will mitigate the workplace risks and challenges inherent in the digital economy, thus positively influencing the future of business itself.


Download the executive brief Taking Learning Back to School.


Read the full article The Future of Learning – Keeping up With The Digital Economy

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Dan Wellers

About Dan Wellers

Dan Wellers is the Global Lead of Digital Futures at SAP, which explores how organizations can anticipate the future impact of exponential technologies. Dan has extensive experience in technology marketing and business strategy, plus management, consulting, and sales.

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Why Millennials Quit: Understanding A New Workforce

Shelly Kramer

Millennials are like mobile devices: they’re everywhere. You can’t visit a coffee shop without encountering both in large numbers. But after all, who doesn’t like a little caffeine with their connectivity? The point is that you should be paying attention to millennials now more than ever because they have surpassed Boomers and Gen-Xers as the largest generation.

Unfortunately for the workforce, they’re also the generation most likely to quit. Let’s examine a new report that sheds some light on exactly why that is—and what you can do to keep millennial employees working for you longer.

New workforce, new values

Deloitte found that two out of three millennials are expected to leave their current jobs by 2020. The survey also found that a staggering one in four would probably move on in the next year alone.

If you’re a business owner, consider putting four of your millennial employees in a room. Take a look around—one of them will be gone next year. Besides their skills and contributions, you’ve also lost time and resources spent by onboarding and training those employees—a very costly process. According to a new report from XYZ University, turnover costs U.S. companies a whopping $30.5 billion annually.

Let’s take a step back and look at this new workforce with new priorities and values.

Everything about millennials is different, from how to market to them as consumers to how you treat them as employees. The catalyst for this shift is the difference in what they value most. Millennials grew up with technology at their fingertips and are the most highly educated generation to date. Many have delayed marriage and/or parenthood in favor of pursuing their careers, which aren’t always about having a great paycheck (although that helps). Instead, it may be more that the core values of your business (like sustainability, for example) or its mission are the reasons that millennials stick around at the same job or look for opportunities elsewhere. Consider this: How invested are they in their work? Are they bored? What does their work/life balance look like? Do they have advancement opportunities?

Ping-pong tables and bringing your dog to work might be trendy, but they aren’t the solution to retaining a millennial workforce. So why exactly are they quitting? Let’s take a look at the data.

Millennials’ common reasons for quitting

In order to gain more insight into the problem of millennial turnover, XYZ University surveyed more than 500 respondents between the ages of 21 and 34 years old. There was a good mix of men and women, college grads versus high school grads, and entry-level employees versus managers. We’re all dying to know: Why did they quit? Here are the most popular reasons, some in their own words:

  • Millennials are risk-takers. XYZ University attributes this affection for risk taking with the fact that millennials essentially came of age during the recession. Surveyed millennials reported this experience made them wary of spending decades working at one company only to be potentially laid off.
  • They are focused on education. More than one-third of millennials hold college degrees. Those seeking advanced degrees can find themselves struggling to finish school while holding down a job, necessitating odd hours or more than one part-time gig. As a whole, this generation is entering the job market later, with higher degrees and higher debt.
  • They don’t want just any job—they want one that fits. In an age where both startups and seasoned companies are enjoying success, there is no shortage of job opportunities. As such, they’re often looking for one that suits their identity and their goals, not just the one that comes up first in an online search. Interestingly, job fit is often prioritized over job pay for millennials. Don’t forget, if they have to start their own company, they will—the average age for millennial entrepreneurs is 27.
  • They want skills that make them competitive. Many millennials enjoy the challenge that accompanies competition, so wearing many hats at a position is actually a good thing. One millennial journalist who used to work at Forbes reported that millennials want to learn by “being in the trenches, and doing it alongside the people who do it best.”
  • They want to do something that matters. Millennials have grown up with change, both good and bad, so they’re unafraid of making changes in their own lives to pursue careers that align with their desire to make a difference.
  • They prefer flexibility. Technology today means it’s possible to work from essentially anywhere that has an Internet connection, so many millennials expect at least some level of flexibility when it comes to their employer. Working remotely all of the time isn’t feasible for every situation, of course, but millennials expect companies to be flexible enough to allow them to occasionally dictate their own schedules. If they have no say in their workday, that’s a red flag.
  • They’ve got skills—and they want to use them. In the words of a 24-year-old designer, millennials “don’t need to print copies all day.” Many have paid (or are in the midst of paying) for their own education, and they’re ready and willing to put it to work. Most would prefer you leave the smaller tasks to the interns.
  • They got a better offer. Thirty-five percent of respondents to XYZ’s survey said they quit a previous job because they received a better opportunity. That makes sense, especially as recruiting is made simpler by technology. (Hello, LinkedIn.)
  • They seek mentors. Millennials are used to being supervised, as many were raised by what have been dubbed as “helicopter parents.” Receiving support from those in charge is the norm, not the anomaly, for this generation, and they expect that in the workplace, too.

Note that it’s not just XYZ University making this final point about the importance of mentoring. Consider Figures 1 and 2 from Deloitte, proving that millennials with worthwhile mentors report high satisfaction rates in other areas, such as personal development. As you can see, this can trickle down into employee satisfaction and ultimately result in higher retention numbers.

Millennials and Mentors
Figure 1. Source: Deloitte


Figure 2. Source: Deloitte

Failure to . . .

No, not communicate—I would say “engage.” On second thought, communication plays a role in that, too. (Who would have thought “Cool Hand Luke” would be applicable to this conversation?)

Data from a recent Gallup poll reiterates that millennials are “job-hoppers,” also pointing out that most of them—71 percent, to be exact—are either not engaged in or are actively disengaged from the workplace. That’s a striking number, but businesses aren’t without hope. That same Gallup poll found that millennials who reported they are engaged at work were 26 percent less likely than their disengaged counterparts to consider switching jobs, even with a raise of up to 20 percent. That’s huge. Furthermore, if the market improves in the next year, those engaged millennial employees are 64 percent less likely to job-hop than those who report feeling actively disengaged.

What’s next?

I’ve covered a lot in this discussion, but here’s what I hope you will take away: Millennials comprise a majority of the workforce, but they’re changing how you should look at hiring, recruiting, and retention as a whole. What matters to millennials matters to your other generations of employees, too. Mentoring, compensation, flexibility, and engagement have always been important, but thanks to the vocal millennial generation, we’re just now learning exactly how much.

What has been your experience with millennials and turnover? Are you a millennial who has recently left a job or are currently looking for a new position? If so, what are you missing from your current employer, and what are you looking for in a prospective one? Alternatively, if you’re reading this from a company perspective, how do you think your organization stacks up in the hearts and minds of your millennial employees? Do you have plans to do anything differently? I’d love to hear your thoughts.

For more insight on millennials and the workforce, see Multigenerational Workforce? Collaboration Tech Is The Key To Success.

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