Speech by Minister Lee Boon Yang at the Opening of the 7th Internet Commerce Conference at the Suntec Convention Centre
Transforming Your Business to e-Business: Connectivity & Collaboration
Mr Kwek Leng Joo, President of Singapore Chinese Chamber of Commerce and Industry
Ladies and Gentlemen
The Singapore economy has been hit by a series of setbacks since the 1997 regional financial crisis. Falling demand especially in the electronic sector has been keenly felt by the MNCs and supporting industries. The global terrorist threat added an air of uncertainty upsetting businesses everywhere. SARS added to the woes of many businesses especially those related to the travel and tourism sectors. Furthermore, companies faced frequent changes and shorter business cycles brought about by rapid technological advancements. As a result our economy has slowed down sharply. Our unemployment rate has gone up to 4.5% and retrenchments have been high in the past few years.
To help companies weather this adverse turn of events, save jobs and minimise job losses, government has proposed to lower the CPF contribution rate. This will reduce significantly cost of doing business. However as entrepreneurs and businessmen, you should not just depend on the government to help you overcome current business slowdown. You have to do your part, as employers to ensure that your companies are well equipped to face the rigours of a more difficult business climate. Hence today I want to talk about how companies can be better prepared to cope with technological changes and harness technology to re-engineer and improve business model so as to be in position to take advantage of every opportunity.
The infocomm technology sector is one of the most rapidly advancing industries. Fortunately, the government and our people realised the importance of harnessing infocomm technology early. Our efforts started some two decades ago, with the Government’s spearheading the national computerisation programme. Since then, infocomm usage has become pervasive in all sectors of society - business, government, education institutions and homes. According to IDA’s Annual Survey of Infocomm Usage in Businesses for 20021, 83% of our companies used infocomm technology, 78% had Internet connectivity, 41% had broadband access and nearly 10% used wireless LAN. All these represent improvements over the corresponding figures in 2000.
While these figures may look impressive, we should not rest on our laurels as there is always room for improvement. On closer scrutiny, you will find that many companies use the Internet only for basic online activities like information search, email and exchange of electronic files. This is a little like acquiring a 3-tonner to make small deliveries from time to time. Or like driving a Ferrari in a carpark rally. It is still a race, but certainly not one to fully exploit the capability of a Ferrari. Companies that use the Internet merely for information search or email have either not realised the potential of the Internet or have yet to unleash the full potential of infocomm technology.
E-Business – Hurdles and Successes
In today’s rapidly changing business environment, our companies must not lag behind in exploiting technology as a capability multiplier. Infocomm technology can serve as an enabler helping you to manage your company more efficiently. It can put you in a better position to seize business opportunities created when your customers, partners and suppliers are closely linked online. While most companies have exploited infocomm technology to improve internal production efficiencies, the next wave of productivity gains will be derived from optimising interaction with external stakeholders. Studies have shown that 60% of product costs result from outside the organisation because of inefficient or complex linkages with suppliers and customers.
For instance, Accord Logistics, a local firm, fully exploited IT in its Supply Chain Management to connect with its clients, partners and subsidiaries. Accord's e-Supply Chain Model gave it a competitive advantage in the logistic industry as evidenced by its rapid growth from a 10-man company in 1984, to global operation in 14 countries today.
Similarly, Stamfles, a local food management company with $20 mil in turnover this financial year, has exploited IT to increase the efficiency of its entire business process. Stamfles had deployed an Enterprise Resource Planning System to enable its staff to carry out web reporting. This allowed Stamfles to export its business overseas while retaining centralised co-ordination and control. Stamfles is also exploring wireless transmission and e-payment methods so as to streamline the ordering and payment procedures for their customers.
Although many companies in Singapore have long been aware of the benefits of e-business, not many have integrated e-business into their planning and operational activities. There are three common concerns which may have contributed to delay adoption of e-business practices. They are:
- Online security - Is it safe for my company to do business on the Internet?
- Value chain integration - How do I ensure that my company is able to communicate with suppliers and customers?
- Capability development - Does my company have the skilled people to get e-business going?
IDA is aware of such concerns. Hence it is keen to initiate appropriate projects and collaborations with industry to pilot e-business solutions. IDA wants to work with businesses to address these common concerns and speed up the application of infocomm to give you an extra edge.
Companies, regardless of size, are naturally concerned with whether it is safe to conduct business on the Internet. To address the online security issue and instil public confidence in e-commerce, the Government passed the Electronic Transactions Act in 1998 to recognise the legality of electronic records and signatures. Since then, IDA has built up a highly reliable infrastructure to provide online authentication of parties and signatories.
To further enhance public trust in online business transactions amongst consumers, IDA has also initiated the TrustSg programme. Companies can qualify for the TrustSg mark if they have sound e-business practices. This gives their customers peace of mind in their online transactions. Currently, 40 companies have qualified for these trustmarks. In fact this has been considered quite an innovation by the United Nations and was one of the reason for its award of the prestigious United Nations Public Service Award to IDA in June this year.
In addition to IDA initiated programmes, companies have also come forward to undertake collaborations to make online transactions more secure and user-friendly. Take for example, the Certificate Of Origins or CO system for the trading community, developed by CrimsonLogic with the four chambers of commerce in Singapore2. The import and export trade involves frequent exchange of documents, sealing of contracts, and transfer of funds. In the past, exporters had to physically submit an application for a CO at the office of a chamber of commerce, together with a list of supporting documents. Thereafter, certified hardcopies would have to be dispatched to all relevant parties. The process was tedious and costly. Now, exporters have only to submit an application electronically from their office and print COs from their computer, anytime, saving them time and money. Online access of this certified CO is also extended to designated recipients such as banks, overseas buyers and the Customs and Excise Department for easy verification. This greatly enhances system integrity by reducing the likelihood of document falsification and human error. this regard, IDA is embarking on a new project to develop an e-Supply Chain Management Ecosystem for the Fast Moving Goods (FMCG) industry, together with their partners SPRING Singapore and the Singapore Article Number Council (SANC). Supermarkets have been selected as an ideal test-bed for the system. This is because to remain competitive, supermarkets can neither afford to over-stock its inventories, especially on perishable produce, nor run out of essential goods to meet popular demand.
Value Chain Integration
By exploiting infocomm technology, companies can effectively streamline their business processes to bring about greater integration across their value chains. To achieve this, a common standard is required to allow information to flow seamlessly from one IT system to another. Such value chain integration results in higher efficiency as it eliminates multiple data entries, reduces possible data mismatch errors and brings about cost savings.
Under the new system, the logistics of participating supermarkets are integrated electronically with their numerous suppliers, eliminating communication gaps along the supply chain. The system is expected to generate savings equivalent to about 2% of revenue for the supermarkets. I am pleased that three major supermarket chains in Singapore have come forward to participate in this project. It will go some way toward the lifting of productivity in the local retail sector and accelerating the adoption of infocomm technology and best practices.
Moving forward, IDA will identify and put in place more of such cluster-based projects so as to enhance business information exchange and competitiveness in key economic clusters.
At the heart of every business, whether "e" or not, is people. In 1995, NTUC Income began conducting its insurance business online, only a core group of its employees in the insurance business were trained in the use of IT. Today, its online business has grown from the sales of insurance online to motor repair and home services. These were made possible only when more of their staff and contractors also acquired the necessary IT skills to conduct business online. Hence to promote IT adoption across the various industries, IDA has put in place the e-Business Savviness Programme to equip professionals with essential skills and knowledge for the development and management of e-business activities. Since its introduction in Aug 2001, the programme has trained 671 people, most of whom hold executive or managerial positions in their organisations.
Even workers who are not directly involved in planning or executing the "e" part of your business should be brought IT-enabled. Equipping them with basic infocomm literacy skills would help them understand your business better and enhance the overall environment for e-business in the company. The National I.T. Literacy Programme is designed to acquaint individuals with basic computer and Internet skills so that they can adapt and stay relevant in today’s fast-paced business environment. I encourage employers to send more of their workers with no infocomm knowledge to the NITLP for training.
e-Business Transformation – Your Catalyst for Growth
In the current economic climate, every investment dollar is closely scrutinised to ensure value for money. As the examples highlighted earlier have shown, wise investments in infocomm technology will reap commercial benefits. In the next phase of our economic development, companies will have to learn how to achieve optimisation, horizontal integration and deconstruction of their activities to focus on what they can do best in collaboration with their suppliers and partners to transform business. Later, you will hear more about the approaches adopted by the companies I mentioned earlier and their successes in integrating IT into their business process. You will learn how their investments in infocomm technology have helped their businesses survive in today’s adverse economic climate by delivering greater efficiency and cost savings.
On this note, it is now my pleasure to open the 7th Internet Commerce Conference and to wish you all a fruitful discussion.
1Source: IDA Annual Survey of Infocomm Usage in Businesses for 2002
Percentage of Companies Using Various Infocomm Services
The survey was conducted on a sample of 1,037 companies across all sectors during the period Nov 2002 to Jan 2003.
2 The four chambers of commerce are Singapore Chinese Chambers of Commerce and Industry, Singapore Confederation of Industries, Singapore Indian Chamber of Commerce & Industry and Singapore International Chambers of Commerce.
(ie, usage of computers, laptops, workstations)