Why is having a modern information technology (IT) infrastructure important and how ready is Southeast Asia (SEA)?
Digital transformation is reshaping businesses across Asia-Pacific (APAC). Companies are looking to adopt technology and harness its power to overcome key challenges and unlock new growth opportunities. From improving operational efficiency to empowering a mobile workforce, enhancing customer experience, and opening new markets, technology can benefit companies in multiple ways.
To understand how prepared the companies in the Association of Southeast Asian Nations (ASEAN) and APAC are overall, Cisco surveyed 1,325 senior information
technology (IT) managers in companies with more than 500 employees across a range of sectors in APAC.
Cisco’s study 1 highlighted that IT managers in ASEAN rate Cloud, Cybersecurity, Big Data and Analytics, and Automation as the top technologies that are shaping the digital future of their business. The study found that the majority of companies in the six largest economies of the ASEAN bloc are confident that their current digital transformation strategy is appropriate to help them stay competitive (94 per cent), and that they are adequately prepared to adopt relevant technologies to accelerate digital transformation (93 per cent). The confidence among companies in ASEAN is higher than the rest of the APAC region (84 per cent). Such levels of small- and medium-sized enterprise (SME) penetration is uniquely ASEAN—presenting a great opportunity to capitalise on the back of SME growth.
President for Cisco ASEAN, Mr Naveen Menon gives three reasons for their confidence: “(1) SMEs are lean, agile, and can therefore move quickly. (2) They tend to be disruptors—disrupting industries and having everything to gain and nothing to lose. That mentality is important because they are innovative. (3) SMEs typically work in a hyper local context. They work in a small local market and tend to come in with a clear offer that hits (or addresses) customer needs right away and makes them successful. When you are successful, you tend to be confident and vice-versa.”
“Over the next decade, technological innovation will accelerate the pace of change across industries. The ASEAN region, and companies operating here, have a unique opportunity to leapfrog the more developed nations on this front as they don’t have legacy IT infrastructures encumbering them,” says Mr Naveen.
Importance of a Modern IT Infrastructure
Most organisations focus on digital transformation because of the benefits they get from being customer-focussed. Therefore, organisations want to run whatever legacy infrastructures they have had for as long as they can. However, chief information/technology officers (CIOs/CTOs) face mounting pressures: as more business functions get connected and more people come online, the need for businesses to automate their backend infrastructures becomes more pressing.
(L-R) Ms Tay Bee Kheng (moderator), Mr Naveen Menon, Mr Ajay Sunder, and Mr Vish Iyer in a panel discussion at the release of Cisco’s study on APAC’s readiness for digital transformation. (CISCO)
Employees are consumers too. If we consider the level of sophistication and automation in the consumer space, and how every mobile phone gets automatically updated, can we say the same for our enterprises? Vicepresident, Architectures, Cisco Asia-Pacific, Japan and China, Mr Vish Iyer explains the disparity: “Employees who are consumers will have a different experience when they get home in the evenings than when they enter the office. Old infrastructure must be automated for greater efficiency. Furthermore, artificial intelligence (AI) only makes sense based on the quality of information available. This is why automating infrastructures (whether on campus, wireless, data centres, and more) is something we need to do a lot more of.”
Without the right resources (especially budgets and talent), companies will be limited in their ability to lay the right foundation to adopt and develop technologies they truly need to accelerate their transformation. Despite the high confidence and awareness of technologies shaping business’s digital future, adoption rates are relatively low across the region. Among the respondents in ASEAN, only 60 per cent have started to adopt Cloud, 59 per cent Cybersecurity solutions, 55 per cent Big Data and Analytics, and 48 per cent Automation. Nineteen per cent of IT leaders in large organisations (more than 10,000 employees) do not think they are ready to adopt relevant technologies for digital transformation, compared with seven per cent in smaller companies. The IT leaders attribute low adoption rates to budget constraints (47 per cent), lack of adequate talent (43 per cent), and unfit IT infrastructure (42 per cent).
Considerations for Upgrading IT Infrastructure
There are three considerations for upgrading one’s IT infrastructure:
(1) Ask “how quickly and how much of my current infrastructure can I automate?” Businesses depending solely on manpower to solve problems will find themselves losing ground to progressive start-ups which possess leaner and more agile automated operating models. The enormity of monitoring a few billion threads a day for instance cannot be accomplished by humans alone; one needs technology. You need to have the intelligence to monitor internal data flows.
If they are connected, then (2) cybersecurity becomes a key operating construct. The more automated your infrastructure, the better your security posture must be. Yet, the budget spent on cybersecurity is not as it should be and almost half of the respondents (47 per cent) admitted to having a reactive approach and implementing security solutions and upgrades only after a breach. What then should companies do to protect themselves?
Mr Naveen says that cybersecurity does not merely mean installing software and upgrading patches; but technology should be the starting point for securing oneself. “You cannot secure your enterprise unless you have the right technology that is up to date. That is the basis for everything. But technology has to be working in tandem with operating processes that have been designed with strategic intent signed off and aligned with the chief executive officer (CEO) and the board. And that strategy links to operating processes that are enabled by seamless technologies which offer constant protection in the background.”
“You need strong incident management in your operating process as well to reduce the mean time it takes to respond to a threat so that when it happens, you can quickly contain it, put in the right resources, stop it from spreading, and protect your assets without impacting revenue and market capitalisation. A strong strategy and robust governance (with strong processes behind it) is needed too. The board must ask intelligent questions that forces the leadership to take action. Since cyber attacks can happen frequently, strong governance and line management ensures that staff can deal with issues as and when they arise instead of escalating every case to the CEO, CIO, or to the board.”
Trade-offs of being Price-sensitive
While a majority of IT leaders (92 per cent) in ASEAN say their companies have modernised the IT infrastructure (including networks, data centres, and cybersecurity) in the last three years, almost half of them (46 per cent) admit to ignoring innovation and post-sales support in a bid to lower overall pricing. These cost-based decisions, however, have led to regret among more than one-third (37 per cent) of IT leaders and help to explain the lack of confidence in their IT infrastructure to support new technologies.
“SMEs tend to trial-and-use,” says Mr Naveen. “They tend to be cost-conscious and are free to switch infrastructures to other providers if they are not satisfied,” he says. “So, in providing them technology at the right cost where they can reap the benefits, SMEs can implement, learn quickly, and move from being costconscious to being quality-conscious. When they get to quality, they are willing to pay for higher levels of service and technology.”
When there is a limited budget, SMEs are forced to make trade-offs and cut corners by buying individual point products or systems. This is why a lot of the operations are not being purchased. Automating those operations will cost a little more, but SMEs will still want to cut back. “These individual point systems don’t talk to each other and don’t offer the visibility to fully monetise one’s infrastructure in the midst of a cyber attack,“ says Mr Vish.
“Looking at the buyer’s remorse and the reasons for the trade-off, while they acknowledge that their infrastructure is unfit, SMEs wouldn’t want to share that they have made a poor choice a mere six months after their investment. The performance does not meet their expectations, it doesn’t talk to different systems, and organisations are making sub-optimal decisions which then translate to regret. Because of this, they have to invest more and top-up those investments. This is one of the few times we saw 1,325 responses agreeing on one thing which reveals an important variable on cost and consumption.”
So what is the right criteria for a new IT investment? This leads to the third consideration: (3) "Consult your stakeholders in your IT investments." As organisations grow to include various lines of businesses or technological functions, systems like network, data centre, or security functions tend to be bought in a silo fashion. “Those systems do not talk to each other,” says Mr Vish. “You go from having one stack to multiple vertical and horizontal stacks. Now you are eyeing a huge problem of complexity of managing all of that. How can you simplify and integrate that entire infrastructural construct across different boundaries and lines of business in your organisation?”
“All of these businesses must therefore operate in a cloud-first, mobile-first construct. That is the reason why the orchestration and gathering of various strands from a big-picture perspective is such an important function for the CIO. Network intuition is constantly learning, adapting, protecting, and streamlining network and security paradigms into a single paradigm,” says Mr Vish.
Vice-president, ICT Frost & Sullivan, Mr Ajay Sunder adds that the procurement process is a big challenge facing ASEAN. “SMEs in ASEAN must ensure that IT procurement is not just the CIO’s responsibility. The silo approach means many business units, functions, and stakeholders are not involved nor consulted for their input in the actual procurement process. This causes IT problems at multiple levels and sub functions within the organisation—whether it is a security, network, or data centre function.”
“This process must change. This is where advisory around both the service provider and vendor community is needed. SMEs must be educated about a network-intuitive approach for instance, about how this will enable the organisation, and identify key stakeholders who should already be part of the procurement process before discussing about the actual requirements,” says Mr Ajay.
1 Cisco, 2018. Ready, steady, unsure–a technology perspective into Asia-Pacific’s readiness for digital transformation, https://www.cisco.com/c/m/en_au/digital-ready/index.html.
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