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Peer Perspective. IT Leadership. Business Results

Automated SMEs

By the Computerworld Philippines Staff
June 1, 2008

While large organizations often tend to be the first-movers in adopting IT, local small-to- medium-sized enterprises (SMEs) refuse to be left behind as they now take small but concrete steps towards automation.

Although their use of IT vary in scale relative to their core businesses, four IT heads present at Computerworld Philippines’ 5th CIO Roundtable for the year discuss how their businesses have grown over the years with the help of information technology.

The participants were Marino Adriano Encarnacion, chief information officer of Ayala Automotive Group; Edgar Javeniar, IT manager of Dunham-Bush Philippines Inc.; Jan Alvin Pabellon, vice president for business development at IT Group Inc.; and June Tucay, IT manager of Holy Cow! Animation.

During the two-hour roundtable discussion sponsored by Acer Philippines Incorporated, Encarnacion shares that his company’s use of IT is largely business driven. For his part, Javeniar discloses that IT plays a big role in his company—especially in facilitating communications—since most of their suppliers are based in Singapore.

“Since our business is based on knowledge work, using IT as a tool for collaboration and communication is really very important to us,” says Pabellon. “Our people should always be online, they should always have access to their e-mail.”

Holy Cow’s! Tucay says that IT is used in about 90% of his company’s operations. “Actually, in animation, the only manual process left is drawing, because after the drawings are made, these are scanned, digitized, painted and animated in the computer so IT basically makes the process faster and helps us produce better special effects.”

Excerpts of the discussion follow:

CWP: What kind of role does IT play in your company? Is IT regarded as an important growth enabler?

Javeniar: IT plays a big role in our business especially because, for one, our suppliers are from Singapore, so constant communication about the items, price, etc. is necessary. Communication between our branches is very important. Our CEO had to regularly travel to our branches in Cebu or Davao, but when I made the system online he clearly saw the difference and did not realize that it could be done. Actually, justifying the value of IT to top management was really a problem when I joined the company; they would say “we survived for many years without this, why do we have to buy this now?” But I stood by my objectives because I believe that the time will come when they would realize the value of these investments to the company.

CWP: Do they see it now?

Javeniar: Now they are realizing the benefits of IT. Our CEO, for one, used to travel to Singapore every other week just to sign documents so I told him that, once I have the system online, he need not spend on airfare and hotel accommodations anymore, so he began seeing the value of these investments. Another thing is with e-mails; when I joined the company we only had one server, e-mails are redundant, and the bosses would complain that their mailboxes are always full so they could not receive other incoming mails. You see, around 42 employees in our office currently have access to the Internet so when they arrive in the morning all of them would go online, that’s why I have subscribed to three DSL providers all on load balancing to ensure we remain connected even if one of them goes down. I noticed, however, that there really tends to be overload because in the morning they would go online all at the same time, so our vice president would often complain that his Internet connection is too slow. That’s why I purchased a dedicated Exchange Server, this is online by night so that mails could come in and, in the morning, these could be retrieved through the local area network already. This way I am able to prove to the management that investments in IT are really necessary.

Pabellon: Since we are an IT company, our business obviously revolves around IT but we use IT heavily in marketing. We do a lot of demand-generation since it’s very expensive to approach companies one by one to market your services, so we do a lot of IT-enabled marketing like search engine marketing. You see, we’re seeing a trend nowadays where, unlike before when companies would usually contact a vendor who would, in turn, call a reseller to get in touch with the client, a lot of companies now search for information online so the playing field is somehow leveled; if you are visible online, you get a good chance at getting clients who “google” search for these services. We also do a lot of e-mail marketing; we use a system which sends out personalized e-mail introducing our company and things like that, so we have a database and we do customer profiling where we segment them by industry and by size, etc. We also use IT for project management so we have a system where we track the utilization of our people—what projects are assigned to them, the scope of their work, the duration of the project, etc. Since our business is based on knowledge work, using IT as a tool for collaboration and communication is really very important to us. Our people should always be online, they should always have access to their e-mail, data should be archived in a system that makes it easy to search for it, and that information should be kept so knowledge and technology transfer is easy should there be employee turnover.

Encarnacion: We are in the dealership management business, we sell cars, we service them and we take care of the parts and inventory so basically our use of IT is largely business-driven. IT provides the support to do business, that’s how it works; it cannot be IT going there first, we have to follow the business; that has always been my philosophy since IT is not the core of our business. But IT does serve a critical role in making our business operation as efficient as possible. The other side of technology—the car itself— is not our area, that’s the area of Honda Motors Japan and Isuzu Motor Corporation. When the car comes to us, the technology is already there so our emphasis would be on the efficiency in delivering the service. What differentiates us from the other dealership companies is that we try to harness the strength of our group and integrate. First within the company itself—for example, with Honda, we have five dealerships in Metro Manila and another five in the provinces; we interconnected them in such a way that we have one centralized virtual inventory. Inventories are separate but at one glance, virtually, we can see the total inventory as a whole so that can really minimize the inventory cost—this is not only for parts sales but also for vehicles. So when a particular model is not in your dealership, you can always can check the whole inventory and make that reservation, of course with the consent of the other branch. In effect, IT does play a critical support role. We are also using an ERP system and this makes it easier for us to translate our operational information into financial information making it easy to access our financial reports.

However, it’s a different story with Isuzu. We also considered using SAP to serve as somewhat a synergy of the two companies’ systems but we decided to forego this for now because its operations are not big enough to support that kind of cost. Although it’s always at the back of our minds, eventually when we get to that critical level we can make that investment already. So I treat the two companies differently because they have different needs, but even if they have different needs I still try to find out what can be used by both companies so that I save on IT cost as well.

Tucay: I would say we use IT, in one way or another, in about 90% of our operations. Actually, in animation, the only manual process left is drawing, because after the drawings are made, these are scanned, digitized, painted and animated in the computer so IT basically makes the process faster and helps us produce better special effects. There is pressure on us, however, to always be updated with the latest technologies related to animation because, as the capabilities of the machines get better, so will the demands of clients. For example when the HD (high-definition) standard came out, advertising agencies wanted output in HD and that is really processor-heavy so we had to keep our computers updated, make sure they are fast enough, etc. Sometimes there are machines that we only get to use for one project, when the next project comes out, the demand is higher or by the time this project is done, something new comes out so our machines somewhat seem obsolete for the process already so we have to upgrade again.

CWP: So what happens to your old machines?

Tucay: We usually keep them temporarily until the next projects and determine whether the machines can still handle any of the new projects that come in. If the machines really cannot handle any of the new projects anymore then we would have to purchase new ones and cascade the old machines to other departments like, accounting. We also rely heavily on the Internet because we do most of our marketing and negotiations online. Most of our clients are from other countries so we only get to see our clients in person during the actual contract signing. We also use the Internet to send and receive the files for the projects through FTP (file transfer protocol) so IT really does play a big role in our business.

CWP: Please describe your company’s IT infrastructure. What benefits has the company derived from such an infrastructure?

Tucay: We are just a small company so we basically have 40 workstations and three servers—we have one server dedicated to the US Animation software because it is a client server application so we need to have a separate server for that. Then we have a file server, and one more which serves as our active directory server. We also rely heavily on open source; our servers run on open source because it’s cheaper. We would like to use open source in all our workstations as well but 3D and flash animation do not have open source versions yet so we use Windows for those. We do use Linux for our workstations that run US Animation. Maya (animation software from Autodesk), on the other hand, has a Linux version but most of our artists learned and studied Maya in Windows so there is a resistance to studying the Linux version. Storage is also a big thing for us because you can probably imagine how much data we are dealing with, given that we work with images, audio, animation, etc. which all take up huge storage space. In terms of benefits derived from our infrastructure, our heavy use of open source has, of course, led to savings and, although there is a long learning curve, we do get optimum performance, especially with the US Animation application. In terms of server, it’s the same, we use open source for our firewalls because it is easier to customize.

Encarnacion: Like I mentioned earlier, we have a centralized system and our dealership systems are interconnected with each other. One other thing I wasn’t able to mention though is, in terms of service operation, we are also able to view the service history of our customers abroad within our group. Then, of course, we have the basic e-mail and Internet.

CWP: Do you have separate systems for Isuzu and Honda?

Encarnacion: In terms of dealer management system, yes they are separate and also since we are talking about two different principals, we don’t want them complaining about that so it has to be separate; although we do share some resources but application- wise they are separate. To give you an example, we use on HR (human resource) but we use separate databases for that so we share the same resource but we manage them differently because each company has its own general manager and they have their own, different needs. We are considering centralizing other functions or other departments as well; for example, we are starting to look at purchasing and whether it will help if they are interconnected.

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