In the Asia Vision Series, we explore key industrial, social and technological trends, opportunities and issues in our region. In the third and final part of this series, Michelle Simmons – General Manager, Southeast Asia New Markets, Microsoft Asia Pacific – tells us how digital technology is transforming companies in emerging markets and making them globally competitive. She sees the cloud as the prime game-changer for small and medium businesses as well as established big players that have their eyes set on the future.
Optimism is the powerful new force sweeping through some of Asia’s poorest and least developed economies. It’s changing how business is done, what’s being produced, and who’s moving ahead.
“One of the things I love about Asia is that anything is seen as possible,” says Michelle Simmons, General Manager, Southeast Asia New Markets, Microsoft Asia Pacific. “Companies look at things and say: ‘How do we embrace technology in order to do something differently than how we’ve done it in the past? To compete in a different way, to bring new solutions to our customers, to build new business models.’ That promise of possibility is alive and well throughout Asia, and in the emerging markets especially.”
Michelle operates across nine emerging markets – Bangladesh, Bhutan, Brunei, Cambodia, Laos, Maldives, Myanmar, Nepal, and Sri Lanka. Most of the companies she encounters are small-to-medium businesses. Some are startups. Some are state-owned. Some are family-owned. Some cling to traditional ways of doing things. But many are adopting new mindsets as they look to the future. Some have already made substantial inroads into the global economy and supply chains.
For Michelle, the “anything is possible” attitude of outward-looking entrepreneurs in Asia’s emerging economies today can be loosely compared to the expansive free enterprise culture that took hold in the United States in the late 19th and early 20th centuries. Being described as “emerging markets”, of course, implies that they are rising. But they do face their own limitations and the pace of their digital journeys varies.
“I’d say they are willing to take bigger risks. But they’re limited by what skills – what capabilities – are available to them in their markets. I’d say they’re open to possibilities but may not see how to get there. We try to help customers see what is possible and how to get from A to B – how to transform their businesses and realize their full potential.”
Many companies in emerging markets – big and small – are privately controlled. Unlike corporates in developed markets, they do not face stockholder and governance demands. But they do have their own set of checks and balances.
“They are usually family-owned. And so, it’s about their money, not somebody else’s money,” Michelle explains. “They’re making decisions based on their own livelihoods, the livelihoods of their family members. That rings true for small businesses and all the way to some of the largest conglomerates.”
Until now, it has been easy for them to tap massive pools of cheap and relatively low-skilled workers to solve problems or meet targets rather than adopt new technologies. That strategy works in the production of low-end goods, such as in a garment factory or a food processing plant. “But that can only take them so far, and they’re starting to recognize that,” she says.
The change in mindset often comes when a company steps up into the production of higher-end goods and services aimed at sophisticated export markets and foreign partners who hold higher expectations of quality and other standards. “This is a matter of survival on a globally competitive scale, and so they are recognizing that technology will help them to be more competitive.”
Some of the largest companies in emerging economies are rapidly taking up technology solutions so they can join the global business community. “If they want to have foreign investments – if they want to be competitive globally and work with global partners – they need to have a strong governance model. They need to have technology in place in order to be competitive,” Michelle says.
She cites the example of how one regional company modernized its internal communication across a string of different plants and over a range of industries. Previously, paper memorandums would have been distributed from the CEO’s office. Now, that same CEO can have regular bi-directional conversations with his workers and managers on all sorts of issues, from improving productivity by reducing errors to better managing absenteeism.
The big game changer in all this is the cloud. Economical and flexible, the cloud not only provides efficiency, communication, and better governance, it also brings unprecedented security. This is of grave importance to a region regarded as particularly vulnerable to cyberattacks. Microsoft’s most recent Security Intelligence Report found that four out of the nine countries which Michelle covers were dangerously open to cyberthreats because of lax regulations, the widespread use of malware-infused pirated software, poor IT management, and simple complacency.
It is clear that cybersecurity is an essential part of any business expansion strategy. One example is Chip Mong, a conglomerate in Cambodia that has its eyes set on spreading its reach across the whole of Southeast Asia. Since 1982, it has been producing a diverse array of services and products – from manufacturing and distributing concrete to importing and distributing cement, ceramic tiles, and steel. It has also moved into a range of consumer goods.
But to move to the next level, its leaders understood that data protection would be essential to winning market share and satisfying customers. And so Chip Mong adopted a cloud-based Office 365 solution to transform its operations. Not only did this resulted in a robust security posture, it produced competitive efficiencies within, and collaboration across, its many business units and teams. Furthermore, its digital transformation journey bolstered Chip Mong’s reputation as an attractive employer for Cambodian millennial professionals who understand that doing business in the cloud can open the door to the world.
For many years, manufacturers in emerging markets relied on their comparatively low costs to be effective exporters. But things are getting more complicated as industries develop and global markets become more sophisticated and discerning. Quality control, and the costs associated with it, are now key. And, data-driven technology is playing a crucial role.
Let’s look at the Hirdaramani Group. It started as a single retail store in Sri Lanka’s capital, Colombo, and today, it stretches across multiple sectors with more than 60,000 employees working in dozens of facilities in four countries. With an eye on growing its apparel manufacturing business further, Hirdaramani has adopted an end-to-end quality management system, it calls Res.Q. This solution integrates real-time data and analytics with Power BI to monitor key production quality indicators. This eliminates reporting time lags and enables data-driven decision-making, which, in turn, slashes costly wastage, builds new efficiencies, and boosts competitiveness.
Michelle sees ongoing innovation, based on cloud technologies, as the way forward for emerging economies as more globally-minded entrepreneurs establish new industries, tap new export markets, and create new jobs.
“The cloud changes everything for small and medium businesses. If you think about how they operate without technology, it’s a paper-based. Their borders are typically within the distance that they can reach their customers, which might be a walking distance, it might be a driving distance. But with the cloud, they can theoretically operate anywhere.”
“That means barriers are broken down,” Michelle says. “The cloud provides them with capabilities that, not so long ago, only the top 1,000 companies globally would have had access to. The whole world becomes an opportunity for anyone in any country at that point. From a customer perspective – everyone can access the global economy. You can have a company in Bangladesh or Cambodia competing with companies in Western Europe. And that is a very different story today than it was 10 years ago.”
This is a pivotal change for Asia’s emerging markets, Michelle says. If companies anywhere can compete anywhere, there is no reason why a now small company based in Bhutan or Brunei, Nepal or wherever, cannot grow, prosper and “one day make it on the Fortune 500.”
Catch up on part 1 of this interview series where Michelle Simmons discusses why digital transformation in emerging markets in Asia is like running a marathon. In part 2, she talks about the importance of digital skills development and how it can transform lives and the economy.
You can also read more Asia Vision Series interviews with our other thought leaders and subject matter experts here.
General Manager, Southeast Asia New Markets, Microsoft Asia Pacific
Based in Singapore, Michelle leads Microsoft’s business across nine countries that make up some of Asia Pacific’s fastest growing markets including Bangladesh, Bhutan, Brunei, Cambodia, Laos, Maldives, Myanmar, Nepal and Sri Lanka. Before her current role, Simmons was the senior director of Marketing & Operations for Microsoft Korea. In this capacity, she was responsible for business operations, marketing, customer satisfaction, and driving overall business priorities for the Korean market.
Digital Content Editor, Communications, Microsoft Asia
Geoff has worked extensively in Asia as a reporter, correspondent and editor for The Associated Press, The Sydney Morning Herald, and MSN, as well as the US-based Asia Society. He has covered a wide variety of big stories over the years, including the Asian financial crisis, the fall of the Suharto dictatorship in Indonesia, East Timor’s independence struggle, and the hunt for Osama bin Laden in Afghanistan after the 9-11 attacks in New York. His journalistic interests are now focused on how the world is changing through digital transformation.