UEM Group jolts Malaysia’s lacklustre IT market with US$26.5mil tender

• Most top-tier IT companies have missed Q1 and Q2 numbers
• Project to kick off IT transformation for Malaysian conglomerate

IT was as recent as March that research firm Gartner Inc predicted Malaysia’s IT spending would increase to RM65.1 billion (US$17.9 billion) in 2015, a 7.5% rise from last year.
 
Gartner’s IT spend forecast, besides looking at enterprise IT investments, includes spending on gadgets by business and consumers, as well as telco-related spending.
 
But Tier 1 IT industry players in Malaysia have told Digital News Asia (DNA) that most, if not all, of the top-tier companies have missed their first and second quarter (Q1 and Q2) numbers.
 
“Most of the IT jobs from the private sector so far this year have been RFPs (requests for proposals) in the RM5 million to RM40 million range,” one industry observer told DNA. [RM1 = US$0.27]
 
In that context, the just-released RFP by conglomerate UEM Group (United Engineers Malaysia), estimated at north of RM100 million (US$26.5 million), is said to be by far the largest IT job in Malaysia by a private company this year.
 
Around 12 parties have expressed interest and taken the RFP forms, with the submission deadline set for mid-August, industry sources told DNA.
 
According to industry sources, UEM would be awarding the tender by the end of the year, with an expected kickoff by early 2016 for the three-year project that will trigger its IT transformation.
 
“An ambitious timeline,” said one executive who is familiar with such ambitious group-wide IT transformations.
 
The size of the job and its undoubted complexity will also likely mean that it will go to a large multinational player. “The vendor chosen will need to have very strong cash flow to deliver a project of this magnitude,” he added.
 
However, it is believed that the UEM Group has identified major local and international systems integrators (SIs) for the RFP, and has received board approval.
 
UEM is not truly a private company however, being a wholly owned subsidiary of Khazanah Nasional Bhd, the Malaysian Government’s investment arm. It boasts of assets totalling US$6.7 billion and shareholders’ funds standing in access of US$2.2 billion as at end-December 2014.

With diversified businesses ranging from expressways, property, construction, asset and facility management, UEM Group operates via 20 major operating companies, three of which are listed on local and international bourses, and has a headcount of more than 15,000 spread across more than 10 countries.
 
The scope of the RFP is equally wide and ambitious. According to one executive who has seen the RFP, the group is aiming for an ambitious group-wide IT transformation designed to ensure management has clear visibility across the entire group and can make quicker decisions.
 
The project will see the elevation of IT to being a strategic enabler for the group, rather than as just a support function.
 
According to the executive, the RFP focuses on five key outcomes:

• Holistic IT and business process transformation centred on a common ERP (enterprise resource planning) platform group-wide.

• Enhanced capabilities and improved integration for business specific applications.

• Transformed collaboration and knowledge sharing across the group.

• Informed, anywhere and anytime insights for effective business decisions and reporting.

• Simplified and agile IT landscape for ease of support and maintenance that shifts to a centralised IT operating model.

A former chief information officer (CIO) of a government-linked company (GLC) said that the five areas above really represent a mix of “two fundamentals and three ambitions.”
 
The two fundamentals are represented by bread-and-butter needs like ‘ERP’ and ‘integration for business specific applications.’
 
“These fundamental areas, even when couched in fancy wordings, still remain the core business processes and data repositories which drive all organisations,” said former CIO.
 
Getting these bread-and-butter components under control by doing the right thing is crucial to smooth, effective and productive daily business operations, he said.
 
The key is however to combine the two fundamentals with the three ambitions, noted the former CIO.
 
“The three ambitions are essentially game-changers and can provide a competitive advantage (even globally) if things are done right,” he said, highlighting the ambitions in the other areas of ‘collaboration and knowledge sharing’ plus ‘insights for effective business decisions’ as outlined in the RFP.
 
“The ambitions form the holy grail of competitiveness, which is driven by seamless internal collaboration for maximum productivity,” he added.
 
If done well, the project should position UEM well into the future of being a regional powerhouse.
 
However, that is a big if as the former CIO cautioned that such huge undertakings and lofty ambitions “often-times end up as medium- to long-term quagmires into which overly grandiose and cumbersome plans sink, to be buried ignominiously in history.”
 
UEM may be aware of this, as an executive told DNA that “even in this early stage” the real challenge is not the technology itself, but getting buy-in from the various business units to use the tools and data sets that will soon be available to them.
 
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