Epicor sees Malaysian manufacturing-based SMEs lagging regional neighbours in digitalisation

• ERP is a fundamental first service to digitise, acts as the backbone.
• Change pushed by associations, govt, new gen of company leadership

The pandemic has accelerated digitalisation in Malaysia, that much has been evident over the past two years. But how quickly manufacturing SMEs can get on board depends on the experience they have already built, and the resources they have at their disposal. However, where do you even start?

Ben Lim (pic), Epicor Malaysia Senior Country Manager, says that implementing an Enterprise Resource Planning (ERP) system is frequently the first step taken. "ERP serves as a fundamental and backbone platform."

Epicor serves all top seven subsectors of manufacturing in Malaysia, focused on mid-market manufacturing companies. In his 10 years of working with Epicor Malaysia, Lim has seen a shift in acceptance of cloud computing.  "When people talked about the cloud three years ago, it took time for them to digest it," he shared. There was still a preference for on-premise installations.

But after the MCO started, he says that not only did people accept the importance of being able to work from anywhere, they also saw that cloud computing brings other advantages.

In particular, although it looks to be more costly than on-site installations, cloud computing simplifies the tasks of disaster recovery and security, while also removing the need to find a physical location. 

Ultimately, it comes down to cost for mid-sized and smaller organizations. "The upfront costs are lower, so they can go faster. (They) start small and grow skills together with the solution."

Internet shortcomings and implementation issues

Although Epicor claims 30% growth in cloud services in Malaysia, this is small compared to other countries.

Vincent Tang (pic, right), Epicor Software Regional Vice President Asia, acknowledged, "Cloud readiness in Hong Kong (and) Singapore, is much better. And I am actually quite surprised to find out our business in Bangkok, in terms of cloud adoption, is actually very, very high." He says that in regions outside the US, Epicor is seeing around triple digit growth.

While the appetite for cloud in Malaysia is apparent, there are issues to be circumvented. Tang recalled a customer who wanted to get on cloud, but had problems connecting to it. The internet in the customer's location was not very stable. “In terms of the communications (quality to) that particular factory, it was not possible. Otherwise, we might have more customers going for the cloud."

However, although using the cloud offloads a lot of the operational complexity, Tang is adamant that companies still need to have the right talent on call to implement it.

"My experience is that the implementation consultant is very important," he said, referring to consultants who help implement the ERP solution. "We are not just selling a standard solution, we are trying to provide a solution to address the customer's challenges and pains."

He added that it also helps if the customer has already had experience implementing an ERP solution before, even if it isn't an Epicor product. "If they have never implemented ERP before, the (ambition) might be at the sky, but if the budget is very low, then this expectation gap will make the implementation challenging."

Impetus for change

All this can be seen as individual steps taken by Malaysian companies on the road to digital transformation and IR4. Given that some of these changes can seem quite substantial, Tang sees ambitious moves made in SMEs by the second or third generation founders, for example when a father passes on the leadership to the daughter or son. 

He also sees that industry associations have a role to play, updating their members of the latest trends in IT automation, and sharing possible first steps. "We are also working together with the Federation of Malaysian Manufacturers (FMM)," added Lim with a webinar organised targeting manufacturing.

Ultimately, Lim feels that local manufacturers do want to digitise, but they just need that little bit of help. He lauds the government's role in making available suitable grant schemes. "If they aggressively push in terms of grants, I believe most manufacturers will love to adopt this sort of technology, honestly," he said.