AS Asian firms globalise, they face many challenges.

Information technology (IT) can deliver greater value in coordinating and complementing the distributed resources and global digital assets of the organisation.

In an ongoing Nanyang Business School-Business Times Roundtable discussion series, research board members and senior professors at Nanyang Technological University's Nanyang Business School suggest that Asian companies would benefit from taking a more strategic view of IT and leveraging it to enhance their global reach.

Panelists from NTU's Nanyang Business School:

• Professor Peter Weill, Board member, Information Management Research Centre (IMARC), Nanyang Business School (NBS) & Chairman, Center for Information Systems Research, MIT Sloan School of Management
• Professor M Lynne Markus, Board member, IMARC, NBS & John W Poduska Sr Professor of Information and Process Management, Bentley University
• Professor Christina Soh, Associate Dean, Division of Information Technology and Operations, NBS
• Associate Professor Sia Siew Kien, Director, IMARC, NBS

Moderator and Writer: Narendra Aggarwal, Director, Public Affairs, NBS

Narendra Aggarwal: As many leading global businesses are increasingly harnessing IT to enhance efficiency and profitability, is it time for Asian companies to make IT a strategic asset? Why are there differences in Asian firms' way of running their IT?

Professor Peter Weill: The world is digitising at a dramatic rate. Everything we do, whether we interact with another company, whether we interact with the government, whether we interact with our colleagues, is becoming more and more digital. The consequence is that companies worldwide are trying to understand how best to digitise their operations.

In the past, Asian companies typically invested less in IT than similar companies in other parts of the world - sometimes half as much, sometimes 3/4 as much as a percentage of revenue. I think Asian companies need to employ technology to dramatically take advantage of the digitisation of business. Right now they see IT sometimes as less strategic than in similar companies that are multinational and are based in other parts of the world.

Associate Professor Sia Siew Kien: While Asian MNCs recognise that IT is important, they have yet to view it as a strategic asset. Chief Information Officers (CIOs) in Asian MNCs generally do not command the same status in the boardroom as their peers in the West. They are less likely to report directly to the CEO. It is quite common for CIOs here to report to the CFOs. I think that the senior management in Asian firms is generally less aware of exploiting the strategic potential of IT to compete, to grow.

Prof Weill: Working with Gartner, we just collected IT spending data from about 1,550 companies in 70 countries worldwide. There were 11 companies from Singapore in the study and they are reasonably well distributed across the landscape - but still a small sample. These 11 companies are increasing their IT spending at 50 per cent higher than the global average. So, Singaporean firms are increasing spending at 9 per cent year-on-year, while the average global firm was increasing spending by 6 per cent. Maybe that catch-up is already starting and in a down economy I think there is an opportunity to get more bang for your buck.

The average spending on IT for Asia-Pacific was 7 per cent but it was very localised by country and economy. So, India, which you may or may not include in Asia-Pac, was 20 per cent higher and in other parts of Asia the percentage increase was much lower. We have 187 companies in Asia in our study.

Professor Christina Soh: Asia is quite diverse, and Asian companies vary greatly in their maturity of IT use. Some of the lower levels of IT expenditures in the past may have been due partly to the fact that labour costs had been relatively low in Asia, so there was less pressure to invest in IT to automate. But some of the new numbers, especially in countries where the labour costs are going up, may reflect that, as the region becomes more developed we will see increasing levels of IT expenditure, as companies seek to increase the productivity of labour with IT.

As Asian companies move up the IT maturity curve, they are finding that while there is a very good pool of technical talent, there is a shortage of experienced IT management personnel - people who understand the process of managing change, are comfortable interacting with the business and with developing and enacting the right level of IT governance, and who are able to operate in a multi-cultural context. So you could be increasing your spending on IT, but an area of concern is whether you have the IT management expertise in this region to effectively manage and implement the roll out of enterprise wide, global IT initiatives.

Professor Lynne Markus: One aspect of IT management is perennial and independent of geography: How can IT services meet local needs and still be provided efficiently and effectively? Today, many factors are encouraging companies to take a more standardised approach such as installing commercial enterprise software without customisation and building global or regional shared services centres to perform key corporate processes the same way for company locations anywhere on the globe.

Asia's diversity has encouraged decentralisation of IT at the country level. However, Asian companies that are attempting to manage IT in more centralised and standardised ways can benefit greatly from using commercial enterprise software that has been localised and is kept up to date by vendors.

A lower level of IT legacy in Asia makes it easier for Asian companies to implement IT, catching up with and possibly surpassing their western counterparts. However, the poor or varied telecommunications infrastructures in different Asian countries can make it difficult to implement advanced IT solutions: low tech solutions are often the only ones possible in some locations.

Prof Weill: An even bigger issue is that the way in which a lot of governments enable infrastructure in Asia varies a great deal. Countries such as Singapore are very advanced and you see countries such as India with parts and pockets that are very advanced and others that are not in terms of access.

If you roll that up to company levels - when I do presentations in Asia, I find that Asia CEOs are very good at doing more with less. But they also find it much more difficult to justify spending, particularly infrastructure spending. That I think affects education, skills sets and who has responsibility for process re-engineering.

Narendra Aggarwal: Going forward, why in your view, should Asian companies take a more strategic view of IT?

Prof Weill: Digitisation is speeding up as there is an increasing interest from the young in terms of cell phones, Facebook and various other kinds of digital communities. We have an opportunity that is unusual where the vendors of IT capabilities are very interested in growing their business in a tough economy and we have a generation coming through in Asia that is going to be quite digital, quite savvy. So companies will have to find ways to make their offerings attractive to this new generation.

It is a very traditional maturity curve that you start using IT to cut costs, to automate the financial transactions of the firm and when you have those, you then look to use IT in a more strategic and customer service sort of way. We see some companies in Asia really leading the way.

If you take a brand such as 7-eleven, they have very sophisticated user technology in all parts of Asia, particularly in growth areas in China where they have highly digitised and standardised processes for ordering for each of their stores. They have empowered local store clerks who make hypotheses about what products they are going to have in their store the next day. Those products arrive the next day and then two days later they get a message on their handheld device saying their hypotheses was successful or not successful, so what do you want to do tomorrow? That kind of use of technology has led to 7-eleven being one of the most profitable retails in the world with a margin of about 32 per cent and 70 per cent of their products are new each year in each store. That level of leapfrogging in customer service using technology is a real opportunity.

Assoc Prof Sia: As Asian firms are likely to lead the world economy out of the recession, they will grow further, regionalise and globalise, but they cannot operate as before. They need IT as an enabler for them to compete in the global arena so that they can scale up their operations, not just to grow but to grow without losing control, without exposing yourself to excessive risk. IT can partially address such issues. Business processes can be embedded into IT and that enables a company to scale up (and down) readily. Management control information can be tracked and analysed for more dynamic business planning and tighter risk management. For all these things you need IT.

For instance, Olam International - a global supply chain company in agri-commodities, they have been able to globalise rapidly and part of the enabler that allows them to do that is their ability to contain risk as they grow. Their IT capability basically helps them to track their market exposure of their daily commodity positions on an almost real-time basis. IT gives them a sound foundation to be agile, to respond fast as market conditions shift.

Prof Soh: Asian firms need to take a more strategic view of IT as an asset that complements the other strategic assets in the firm, and increases the overall value of their asset pool. For example, as they globalise they are going to have human capital located in multiple countries. If they are looking at innovation, the people who can innovate are a scarce resource and there are likely to be pockets of them in different countries. So firms will be faced with certain important decisions to make with regards to innovation. Do you want to try and pull these people into one place?

Often you may want to leave them where they are because they are sources of local knowledge and diverse sources of ideas. But this is where technology comes in by enabling you to give them a way to interact, share ideas, not just the people who are innovating, but also to link them to people who have to do with the production, marketing and so on. You can see that as you become more and more geographically dispersed that technology is needed to coordinate and complement your other strategic assets.

Prof Markus: Western MNCs have changed their governance structures considerably over the last decade or so. Formerly, they allowed local subsidiaries to operate with great autonomy. Increasingly, however, they have attempted to manage certain activities centrally, while still encouraging local autonomy in market-facing activities. Centrally managed activities include human resources management, finance, IT, and often supply chain management and certain R&D activities. These activities are managed centrally not only to reduce cost but also to better manage risk and to promote greater synergy among market-facing business units.

When these multinationals get the centrally managed activities right, they can be formidable competitors for Asian companies. Managing IT strategically is one way that Asian companies can improve their ability to compete. Business analytics is another big opportunity for Asia companies. Business analytics can help Asian companies assess customers' needs and design appropriate products and services for them.