Become data-driven or become extinct, companies told

• Transformation is never easy, however there is no other option
• Digital transformation stymied by cost and shortage of data skills

 
WITH the amount of data the world is generating every day, companies need to inculcate the data-driven culture or perish, industry experts and players argued.
 
According to Microsoft Corp, in an internal study on 940 business leaders in Asia it conducted with Asia Insight, 91% of the respondents believed that becoming data-driven could boost their business.
 
When it came to Indonesia itself, 49% of business leaders said they were willing to undergo digital transformation to enhance their business, especially in these tough economic times.
 
Operational efficiency was cited as the most important reason, followed by the desire to have a sustainable business, and also to help decision-makers make the right decision for the business.
 
“Indonesian business leaders are also very interested in improving customer service using data analytics,” said Aries Triwahyudi (pic), cloud and enterprise business group lead at Microsoft Indonesia.
 
“This includes how to make sure customers get the right message or promotion that is suitable for them,” he said in Jakarta on April 20.
 
But Aries also noted that while the will is there, many business leaders were still looking for the best way to get their digital transformation journey going.
 
The main obstacle was the high cost involved in becoming a data-driven business, which stops many companies from embarking on such a journey.
 
“Then the digital and data skillset limitation comes next – how do you process all that data when nobody in the company understands anything about digital data or data analytics?” said Aries.
 
But despite these difficulties, he argued that the transformation has to start now because data has become a currency in today’s economy.
 
Data for cash
 
Concurring with Aries was Adrian Anwar, vice president director of payment service provider PT Multi Adiprakasa Manunggal (Kartuku).
 
He told Digital News Asia (DNA) that his company had itself transformed from an infrastructure-focused company to a data-focused company.
 
Adrian (pic) claimed that Kartuku manages 60% to 70% of Indonesia’s cashless transaction data, and that this has in fact become the company’s main commodity.
 
“We started off as a hardware and network provider, providing electronic data capture (EDC) machines in 2001,” he said.
 
“We slowly went into providing end-to-end solutions, where we also managed the network and software for cashless transactions.
 
“By 2012, we realised that we were seeing the business in a very narrow way – our solutions had actually captured great amounts of data that we could leverage,” he added.
 
Covering 156 cities in Indonesia, Kartuku now provides transaction data profiles to its banking partners to help them create more personalised promotions, products, and services for their own customers.
 
Adrian believes that banking, retail, and fast-moving consumer goods (FMCG) companies are the ones that need to quickly embark on a digital transformation journey.
 
“In order to keep up with the demands of today’s customers – especially the millennials – these sectors have to have all their data digitised and analysed,” he said.
 
“Millennials are very demanding, and they want promotions or products that are designed to meet their personal interests – they really hate generic advertisements or promotions,” he added.
 
Data for survival
 
Indonesian mining contractor PT Saptaindra Sejati (SIS) learned all this the hard way, before it finally digitised all its data and began its own digital transformation.
 
“We never thought that data was important until we underwent a massive change in our board of directors in 2009,” said its IT head Hermanto (pic).
 
“The new directors were asking for executive reports, and all we could give them were either useless data, or data and old reports that had been ‘tweaked’ to please the previous board,” he admitted.
 
Hermanto said the company was lucky to have identified all the false and ‘tweaked’ reports – and this was thanks to the new directors knowing that the business could not have been as good the reports stated.
 
“In order to regain management’s trust, we had to undergo a massive change – now, all data are filed digitally, from raw data all the way to the executive reports,” he said.
 
SIS was founded in 1991 as a subsidiary of Indonesia’s largest coal mining conglomerate, PT Adaro Energy Tbk. Adaro is led by Garibaldi Thohir, who ranked No 42 in Forbes Indonesia’s list of the 50 richest people in the country last year.
 
In Adaro’s 2015 annual report, the company recognised SIS’ digital transformation, praising its effort to leverage technology to survive in tough times.
 
“SIS continually works to improve its services by applying the best technologies available to increase efficiency, especially during the current difficult coal market condition,” said the report.
 
But there were many challenges in this transformation journey, and a critical one was changing employee mentality to get them to stop tweaking reports, according to Hermanto.
 
“When we started, we faced great resistance from employees – we needed them to show us the real data, the real numbers,” he said.
 
“But once the board said it was a ‘must’ and that there was no choice, all employees had to follow that mandate,” he added.
 
And this data honesty has been good for business too. The company’s operational EBITDA (earnings before interest, tax, depreciation and amortisation) in 2015 was US$127 million, 7% higher than in 2014.
 
Its net debt to operational EBITDA ratio remained at a healthy 1.4x.
 
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