Tough times have their upside. Companies tend to sharpen their focus on what needs to be done internally to maximise their competitiveness. For the smart ones, this does not merely involve cost-cutting but more importantly, investing in a smarter manner.

Indeed as T F Chong, managing director of HP Malaysia, puts it, “Instead of slashing budgets, there are three key actions that businesses should take to reduce costs in the short term and ensure long-term competitive advantage.” Chong lists them as:
•     Standardise, optimise and automate to enhance efficiency;
•     Prioritise new investments based on business value by using agreed-on-criteria to maximise return on investment (ROI); and
•     Use flexible sourcing to keep key projects running and align costs to actual use.

To help companies make these choices and to talk about some of the trends they see, Business Automation and Software Special Focus spoke to a few other industry experts for their views. These include Ooi Chik Hoe, assistant director, BIS, Canon Malaysia Sdn Bhd; Jonathan Ang, head of Communication and Security Solutions Department, Panasonic Malaysia Sdn Bhd; and Lim Eng Weng, managing director Ricoh (Malaysia) Sdn Bhd.

 In the current climate, cost-cutting is the obvious and easy first step to take as companies tighten their belts. But when it comes to the tools — both software and hardware — that companies utilise to run their business, especially the office, should they undertake a rough cost-benefit analysis of whether to buy or lease, what to keep, what to refurbish, what to upgrade and what to scrap?
Ooi: Effective cost-management measures that are adopted during times of need should not only be for short-term relief. If a control system is enforced on, say, paper and cartridge usage for 2009, what about the coming years? Would it be all right to revert to wasteful consumption?

 When cost-cutting becomes a need to businesses, they must look at long-term results instead of a minute’s relief followed by the same old problem. Hardware and software solutions like Canon’s imageRUNNER, uniFLOW Output Manager, eCopy and so on, are designed to address companies’ immediate needs and maintain the result for a long time. Some companies need cost reduction, others may need document security or smarter print routes; regardless, businesses need to ensure that the solutions that they install will give long-term benefits. Companies should always think of long-term advantages as it will help reduce their overheads for years to come, instead of a few months when anticipation of bad times hits.

Careful analysis of existing expenses must be done to identify areas that require improvement. Based on current cash flow, decisions should be taken on whether the company requires hardware or software upgrades or buying or leasing. An internal audit is also essential to study the pattern of employees’ usage of company property and to use the information as a cost-saving strategy that bears long-term results.
 
Chong: Previous experience has taught us that cost-cutting alone is not enough. Organisations may end up with IT that is inefficient, outdated and unable to provide competitive advantage to the company. It is prudent cost reduction combined with targeted investments that puts organisations in a better shape to operate efficiently in the short term and then to emerge stronger, leaner and more competitive when the economy rebounds.

 Before undertaking any form of cost-cutting or cost-benefit analysis, companies should look at overall technology strategies to ensure that critical business objectives are supported. Instead of slashing budgets, three key actions that businesses should take to reduce costs in the short term and ensure long-term competitive advantage are:
•     Standardise, optimise and automate to enhance efficiency.  
•     Prioritise new investments based on business value by using agreed-on-criteria to maximise return on investment (ROI); and
•     Use flexible sourcing to keep key projects running and align costs to actual use. Alternative financing and delivery options, such as outsourcing, flexible financing solutions and innovations, such as cloud computing, are some examples.
 
Lim: During these challenging times, companies need to work on the objective of improving workflow efficiency and productivity, which will ensure long-term productivity. It would be best to get an accurate audit on office equipment so that companies can clearly see what software and hardware that they actually require to be able to improve work productivity in the office.

A number of companies consider cost-cutting as the best solution to better suit their tightening budgets. However, Ricoh believes companies can avoid cost-cutting by being smart, such as choosing the best software and hardware to operate when they run their business. Think of quality, not quantity. For example, owning a multi-functional device with the right software that has low total cost ownership (TCO) and high productivity can save cost and improve workflow, compared to owning many printers that have higher printing costs and do little to increase work efficiency and productivity.

Ang: Yes, it is important to be cost-conscious; however, (it should not be) to the extent of affecting the work performance and efficiency of employees. It is important to know the needs of the company, then decide whether the purchase is necessary. Leasing is always an option for companies which are a little bit tight in this current situation. Panasonic offers a wide range of cost-effective solutions from communication solutions, document management solutions to display solutions to provide a cost-effective solution.

Have you been hearing anything different from your customers ever since the economic crisis hit in mid-September?
Ooi: Everyone is tightening his belt in times like these and the first area to be affected is always the consumables in daily operations. Customers find it important to ensure printing is done only when necessary and with the most cost-effective machines available. Also, a proper system to tabulate the cost of printing is essential to create budgets and forecast for earnings. At Canon, we make it a point to keep our consumers updated on our solutions and advise them periodically on what is good for their system or necessary during times of need. This is to ensure that effective changes can be made for results that would reflect on their cash flows.

Chong: A global study commissioned by HP early this year indicated that CEOs and CIOs are increasingly aware of the need for strategic and targeted investments in their technology needs to maintain and even gain ground after the downturn. In Asia Pacific, 48% of respondents indicate that they see the current economic climate as an opportunity to restructure for the future.

Some 75% of the Asia Pacific respondents also feel that in today’s economic climate, it is more important than ever to have good alignment between technology and the organisation’s business goals. They indicate they are either planning or considering the following projects in the next 12 months: server and storage consolidation (62%); virtualisation (58%); application modernisation or consolidation (49%) and automation (42%).

Lim: It is inevitable for companies to change their mindset since the economy crisis hit end-2008. Most companies begin to take drastic cost-cutting measures during the economic crisis, believing it is the best solution to solve their financial problems. Unfortunately, they tend to do cost-cutting without doing an accurate assessment, thus they will not obtain the end result that they hoped for. Ricoh instead chose an option that most people would avoid taking, especially during a recession, which is spending and expanding one’s company.

By investing smartly, companies will slowly get out of recession, gain back what they have lost, as well as have the chance to seize more business opportunities when the recession ends. Therefore, Ricoh focuses on offering a platform that provides long-term benefits to our customers, especially during troubled times.

Ang: Green is definitely the way to go. Panasonic Malaysia is serious and active in our quest to promote green. In line with our global direction to produce products which are environmental friendly, we introduced to the public ‘Eco Ideas’. Eco Ideas represent products which are environmental friendly like our refrigerators, washing machines, air conditioners, light bulbs and cordless phones.

In the area of business automation, we have our ECO DECT cordless phone, TG7301, which reduces standby power consumption by 40%. Future products will be developed to be in line with our global direction to be environmental friendly.

Green has become an important criterion for clients when making purchases. Do you think this is a fad or trend that will stay and how well are you positioned to deliver green products?
Ooi: Canon agrees that it is high time that we started paying attention to earth. It is not a fashion or a fad as it is a global phenomenon and those who have undertaken environmental conservation should see it through.

The push for development and growth has drained the earth of so many of its elements. Canon has a global direction in terms of green manufacturing processes, energy-saving printers, and solutions which do not encourage wasteful printing and advocate duplex printing to reduce the use of paper. We practise what we preach through our products and solutions, and our employees are educated to conserve energy and cut down unnecessary usage of power and consumables.

Instead of periodic activities that call for a one-off green awareness, we incorporate our commitment and R&D capability into all of our products to constantly innovate power- saving and environmental-friendly manufacturing methods worldwide. All of Canon’s business machines that have entered the market since last year have had the duplex printing and energy-saving feature installed. This has become a standard feature in our machines to assist our consumers to contribute towards the green effort.

As a major corporation, it is important that we lead by example. We make it a point to stress the importance of conserving the earth not only to our consumers, but also to Canon’s extended network worldwide.

Chong: HP has a legacy of environmental leadership, so environmental responsibility is definitely not a fad for us. For decades, HP has been driving company stewardship through our holistic design for environmental strategy, influencing industry action through our long-standing commitment to maintain supply chain responsibility, sustaining energy- efficient operations, reducing our climate impact and offering product reuse and recycling options.

We also make it easier for our customers to recognise environmentally preferable features through HP Eco Solutions, a programme that helps customers identify products and services designed with the environment in mind. We develop products and services that reduce environmental impact throughout their lifecycles. Our leadership in eco-thinking qualifies our products for many recognised standards such as ENERGY STAR, EPEAT, Japan PC Green Label, IT Eco Declaration, Korea Eco-Label and TCO.

Lim: Going green is no longer a fad. It has been evident that people are becoming increasingly aware of the environment and recognise the importance of preserving it. Clients do consider the green factor when they make a buying decision. One of Ricoh’s core values is to harmonise with the environment; thus we encourage environmental awareness through our products and services. We also hold local and global environmental conservation activities that help reduce the overall environmental impact on society. For example, Ricoh has been promoting forest ecosystem conservation projects around the world in partnership with environmental non-governmental organisations and local communities.

We now also offer total green office solutions (TGOS) as part of our office consulting services. A result of a regional breakthrough, TGOS aims to reduce office cost and environmental burden so as to realise the balance between environmental conservation and economic profits. This is incorporated in the ‘live office’ concept, where an office improves working efficiency and reduces environmental impact by applying the office solution. By going green, Ricoh aims to enhance our longstanding sustainable environmental management to ensure an increase of corporate value and business sustainability.

What are the key trends in the industry today besides the shift to colour and networked equipment?
Ooi: As printing now plays a key role in today’s competitive business landscape, businesses are searching for document solutions that will help streamline their office workflow, maximise their productivity and keep costs to a minimum yet grow their business.

To address this particular need, Canon offers a unique combination of hardware, software and services that are designed to help power businesses and at the same time, multiply their wealth and success.

Customers are also becoming very savvy and well-informed in their purchasing habits and they demand a higher level of service. It is important that vendors offer the right business solutions and excellent service to help customers keep their operations simple. As such, Canon offers eMaintenance support — a smart, remote diagnostic service that monitors customer’s devices 24/7 for maximum uptime. The system assists in pre-empting serious breakdowns, does one-time repairs during breakdowns… With this in place, Canon’s after-sales service is given a boost and customers are also assured of maximum uptime of their resources.

Chong: Two examples are managed print services and unified communications.
•     Managed print services: Many organisations do not know the true cost of managing their imaging and printing environments. Studies show that as much as 90% of an enterprise’s total printing expenses may be invisible or uncontrolled. HP’s managed print services help customers streamline management, minimise costs, maximise results and contribute to environmental sustainability goals. Customers can enjoy cost-savings of up to 30% of the imaging and printing costs.
•     Unified communications: With unified communications, end-users can integrate their myriad communications tools — instant messaging (IM), web conferencing, IP telephony, expertise identification, email, unified messaging and mobile devices — to reduce complexity and minimise costs. For example, one can receive a voice mail message and then read it in one’s email inbox using a unified communications program. This will help companies reduce telecommunications costs and increase productivity.

Lim: Ricoh believes the shift to colour equipment is more than just a trend. Colour printing creates a richer impression in the mind of customers, which is essential for businesses. Therefore, we aim to lead in the office automation industry by providing best office solutions with the latest technology, such as colour printing.

Companies now rely heavily on documents, both hardcopy and softcopy. Thus, there is increasing awareness that information confidentiality and security is crucial. Ricoh aims to provide the desired information security since it was awarded the Information Security Management System (ISMS) certification. ISMS refers to a comprehensive framework by which business enterprises and other organisations manage information while protecting classified information. Therefore, through our products, services and experiences, we are able to earn our customers’ trust and confidence by offering the best security protection that prevents information leaks and breaches.

Ang: We are looking at the convergence of fixed and wireless devices as the next trend to hit the industry... cost-savings will be encouraged… employees will be able to make free calls to one another under the same carrier and also free calls between headquarters and branches. They can also re-route calls via the GSM network. With cost-savings in mind, the other area is implementing video/teleconferencing.

Is product innovation driven by customer needs or technology?
Ooi: I believe (the innovation) is driven by customer needs. Each technology is born to address a need that rose at the consumer level. Without a need, a technology will not fulfil its purpose. We believe in receiving constant feedback from our customers and using it as a tool to assess the needs of our current and future clients.

Our R&D capability puts us at the forefront as a business solutions expert. For instance, when we collaborated with uniFLOW, the main objective was to address the need for proper document routing and monitoring of printing volume. This was required by corporations to avoid wastage and to carefully monitor the outflow of documents from the company. Now our hardware consumers have no problem matching software to Canon’s hardware; they get a whole package that poses no compatibility issues… For example, the idea to enter into the printing industry was conceived in 1996. Much study and research went into learning the needs of this customer segment… we visited 500 major print companies globally. Our first commercial production printing machine was launched in 2006.

Chong: At HP, we believe that technology is the driver that help customers achieve their needs, be they individual or for the organisation. We make technology our focus, from designing notebooks and desktops that are energy-efficient to developing servers, storage and solutions that help companies achieve their objectives. Ultimately, our main aim is to meet the needs of our customers and technology is the means to achieve it.

On a global basis, how much do you invest in R&D?
Ooi: Canon invests 10% of its revenue annually in R&D. It is also one of the largest holders of patents around the world.

Chong: HP invests US$3.6 billion annually in R&D. We conduct R&D to support HP’s business strategy in three core areas — personal systems, imaging and printing, and enterprise storage and servers.

In addition, HP Labs innovates… to address the most complex challenges facing technology customers in the next decade. It focuses on these key themes: analytics, digital commercial print, dynamic cloud services, content transformation, immersive interaction, intelligent infrastructure and sustainability.
 
Is product design an important consideration today or is it mainly about functionality and services?
Ooi: Yes, I would agree that product design is an equally important factor. We have also seen a shift of outlook for office designs. Now people look towards small and compact offices — open office systems with distinct style and equipment to complement infrastructure planning.

Canon has the technology to package all of the best functions into a well-designed machine… It gives us an edge for supplying compact, sleek and highly effective machines for the new-age offices.

As for functionality and services, Canon Business Imaging Solutions are focused on three major thrusts:
•     Ease of use — simple to implement, minimal training required, easy-to-use Graphical User Interface;
•     Scalability — print and document solutions that grow with the customer, removing the need to reinvest as the business outgrows existing solutions; and
•     Fitting different needs — specific product families for specific needs.
 
Has the dynamics between customer and vendor changed over the years and in what manner?
Ooi: The vendor is no longer the basic installation person. The customer now views the vendor as a technology consultant. We study the consumers’ operating environment and customise our technology to address their needs accordingly.

There is a lot of interaction between the consumer and the vendor — pre, during and post-installation. The role does not extend only to servicing the machines and software periodically, but also providing the best advice on making the technology feasible. The informed and well-read consumers treat their vendors as sound advisers on the best business solutions instead of treating them merely as tools.
Chong: Tight IT budgets and the changing demands for technology as a key business driver rather than just a support function have led to the evolving dynamics between the customer and the vendor.

IT products, by themselves, no longer take centrestage. These days, vendors need to truly understand the business environment and areas that are relevant to the customers as well as the problems they need to address. Vendors are expected to assist customers in finding the most relevant business solutions for their needs and developing long-term cooperation to build mutual trust to help customers generate more profits — this is now a key priority.

Lim: Yes, the dynamics have changed between the customer and the vendor over the years… We have evolved from being a brand that only sells copiers… we are now able to manage our customers’ print services. This service will allow our customers to focus on important business issues, without having to worry about print jobs and maintenance as Ricoh will be handling them.

The availability of advanced technology also allows faster communication and easier access. We are now able to connect faster and better with our customers, which also enables us to work closer as partners. Partnership allows us to achieve better results, thus creating a win-win situation.

Is brand loyalty a factor in the buying decision or does it boil down to cost for customers?
Ooi: Cost is a factor for consumers who have a limited budget and are not looking at technology as a long-term investment. However, for those who treat technology as a long term business asset, brand loyalty is a crucial factor. Brand is essential as it carries with it years of innovation, advancement and quality. Most of our consumers have been with us for years as they believe in investing in a solid technology with assured quality and proven customer service.

This article appeared in Netvalue2.0, the Special Focus of The Edge Malaysia, Issue 748, March 30-April 5, 2009