In Computerworld Philippines' annual CIO Roundtable, four chief information officers and IT heads from top local companies shared with CWP editors and reporters how they were able to innovate in their respective markets. Our roundtable guests this year include: Abet Dela Cruz, chief technology office of gaming firm Level-Up; Amiel Diaz, vice president for development (New Ventures) at Dole Asia; Alexander Escucha, first vice president and corporate planning head of China Banking Corp.; and John Tubongbanua, chief information officer and head of academic services of STI Headquarters.
Internet banking, cross-border business-to-business payment applications, security, online gaming and educational services were just some of the areas discussed in this year's rountable.
CWP: What IT projects or IT programs did your company implement in 2005?
ESCUCHA: We launched our Internet banking. The launch of our Chinabank Online Internet banking is actually a major paradigm shift because the change from brick and mortar to the use of technology has transformed the way customers deal with us, which is a major move for us. The Chinabank online is a major step and I would describe that as the fulcrum of our multi-channel strategy. Five or seven years ago, consultants used to say, 'They're substituting the branch with the electronic channel, such as the ATM (automated teller machine) telephone and the Internet.' But in the various forums I've attended in Asia, Asian banks are reporting that people do not change channels. They just use all of the channels -- they don't necessarily give up the branch, they don't give up the ATM -- they just have more choices on what channel to use at what particular time of day and for what particular transaction. The driving consideration always is 'What's convenient for them?' That's the strategic framework on which we are proceeding and although we do not have the first mover advantage, we believe we have the advantage of having the latest, and the most-robust technology, and the most cost-efficient one, too.
Three software generations ago, you will just get a simple browser and then everything else is an add-on (to the online banking), such as your customer relationship management (CRM). Mobile banking was an additional feature that you had to pay for and it was more expensive then. Today all of these things are in a single engine, including mobile banking. We were the first to showcase our Chinabank online center in a Starbucks branch where people can browse and really look at the features. Hopefully we can duplicate that soon in other locations.
DE LA CRUZ: Does the Central Bank still enforce Memorandum 269 which sets some requirements before you can offer online banking?
ESCUCHA: Yes, you have to go through a series of presentations to satisfy the Central Bank. They have a team of certified IT supervision people whose main concern is to make sure that your security -- the software, hardware at the procedures level -- is in place before they give you the license. That's their highest priority. Getting a license is a very complex process as far as the Central Bank is concerned and it took us months to get that.
DIAZ: I've been on the lookout for gateway facilities (that can handle payment transactions for a regional phase order-processing system). For example I have a new customer coming from Azerbaijan who wants me to deliver 42 containers of banana to Azerbaijan. We consummate the deal online and all I need to do is get his bank to deposit to my bank through a gateway facility that will allow the process. Unfortunately, the banking process we have is taking some time and there's no available facility that simply allows you to get approval and get the money across right away.
ESCUCHA: That's an excellent point. Actually, the retail part of our offering is only phase one. We have something for corporate and we have a cash management back-end that will enable B2B.
DIAZ: Don't worry you're not late. We have a regional cash management project of almost two years ago where we wanted to consolidate all our banks throughout the region and at the same time be able to manage all these banks with user accounts. We have not made the decision which bank to choose because they all still lack the applications.
ESCUCHA: We are going strongly into that because there's really none or very limited revenue handle in retail. It is the corporate where the money is and Chinabank has been a businessman's entrepreneur bank ever since. We're addressing (the cash management cycle) both at the bank level and (at the Bancnet level) since I'm also vice-chairman of the marketing committee of Bancnet. We're trying to make it seamless for the network -- meaning if you go to any Bancnet ATM, you can actually pay your Meralco bill from any bank ATM if you are a Bancnet ATM cardholder. But I am glad to hear that the opportunity is still there for the corporate because there are still very few players and the technology is still not at par with the regional and global players so hopefully we want to make some inroads there.
CW: For Dole what were your biggest projects in 2005 and your assessment of the past year? What were the biggest challenges for you as the head for IT?
DIAZ: More than ever, Dole in all its years of operation in Asia, is on an expansion mode. In 2005, we opened up five new markets. We introduced a whole way of launching new products. To introduce a new product means you have to secure the land; we're talking about thousands of hectares of land development so it's not easy. We are, for the first time, developing our marketing capability because if you take a look at the Philippine company of Dole, it has always been a producing company. We've never cared about the market side, what we did is to make sure that we produced the products that we sold so it was a product push rather than a pull on the market side. We changed all of that and we are now producing on-demand for agriculture. If you've heard of mass customization, we are going into mass customization. Take Taiwan for example, which has the same seasonal pattern as the Philippines; we are now preparing a program to produce products during the months when they have typhoons. We produce products for them and we probably will dominate that market because we have the product that they can't produce at that particular typhoon season. Our expansion has always been triggered by both market development as well as production development.
The problem with (expansion) is that many of the support systems come only as an afterthought and we do it the same way we've done it for years -- have customer development officers on the phone, on the fax machine, and on the computer to do e-mail coordination. That's not an efficient way of doing business and it doesn't make us easy to deal with from the point of view of the customer.
So I was tasked to take a look at those things starting from all our Web sites to order systems in order to make it very easy for any new customer to come in, look at our products and say I want to go and buy this. Let's say I have a customer inquiry for 42 containers of bananas to be shipped to Japan. I'm willing to sell to them for as long as they are able to go and pay for the shipment. To be able to do all of this -- establish bank transactions, bank-to-bank transfers -- would take two weeks or more depending on how the bank looks at transactions and four weeks to put together the delivery. You're talking about two months. My job now is to get that to Internet speed and carry it down to three weeks. We're changing the way we're handling customers and we're making it very easy for them to go and connect to us and purchase as well as make it easy for everybody on our side. So that's the project that I've been doing.
In Japan, we sell our products 16 weeks in advance and we show them pictures of what's supposed to be the product as it is harvested and as it is packed. Now we can get to see that online because I have come across certain technologies which allows me to use the television to be able to broadcast live. Instead of just using cameras for security, we use it for marketing our products. All our buyers will just need to turn on their PDAs, open it up, and get the video feed, and then the buyer can start ordering a couple of thousand boxes.
TUBONGBANUA: Right now we're in the middle of deploying our enrollment system. We have an existing enrollment system but all of them are stand-alone and local to each school or campus. The challenge for STI is to have them all connected back to the headquarters. With a hundred tertiary level schools and several secondary and primary schools, it's becoming quite a challenge to converge all information. Currently, we're in the middle of that process and we're hoping that we'll be able to roll it out next school year or even by May.
The challenge for educational institutions in the Philippines would always be the cost of technology. Gone are the days when the mainstream products that we can to offer to students are Word, Excel, and Exceed. Right now STI is becoming more specific. We're offering multimedia arts, game development, and computer animation. However, software cost is a bit difficult to handle for most schools. Majority of our schools are not that big and won't be able to afford to license 30 computers with 3D studio Max or even Flash and Macromedia.
The challenge is to find software alternatives or technology alternatives. This is where open source comes in. We want to transfer knowledge on technology to our students so that when they finish school, they can immediately hit the ground running with no additional training necessary.
When STI gets to centralize its enrollment system, it would be much easier to monitor the schools and do auditing. Also, we want to have it evolve into a CRM (customer relationship management)-type system in order to get to know our students better as well as what choices and offerings they prefer.
Since a big chunk of our market is in the class C and D level with a limited capacity to pay, STI has to optimize whatever resources are available.
Technology and content-driven applications such as Level-Up inspires STI to come up with programs that will be easier to sell to the students as long as there's something tangible that they see. Right now it's easier to sell the multimedia art- type of program rather than the broad IT.
CW: Moving towards 2006, what else do you plan to improve?
TUBONGBANUA: Right now it's our connectivity. Some of the STI schools are big while some are small, so not all of our students can afford to pay infrastructure. Others don't even have available infrastructure like our branches in rural Mindanao where telecommunications companies are not yet present. The current selling proposition of STI right now is distance learning or e-learning. We want to push the idea that there is no need to come to Manila to get Manila-type education. Every student can use the same materials and follow the same standardized course no matter where they are. It will also help cut down on costs. STI is looking to deploying something like a Web cam but not really as interactive. We'll have facilitators to ask questions on the local side. However, there are no concrete timetables but we're working on developing that.
CW: For Level-Up, what were the major IT projects that you implemented in 2005?
DELA CRUZ: 2005 was filled with a lot of projects. We started out with two games in 2003 and in 2004, technically we were still in startup mode. One of our biggest concerns then was that there was no backup. If there's an incident that the hard disk crashed then we'll have to restore for a week. If you're playing a game and you're on level 99 now and level 60 the previous week, (a disk crash) is unacceptable. A lot of kids will cry due to the wasted effort and time.When I came in the IT system and infrastructure was a little bit of a mess. There was no ventilation and cables were everywhere. All the time from 2004 to 2005, I started cleaning up and integrating all the IT servers. Cabling was a nightmare. We've deployed a central storage system setup so we don't have to worry about disks crashing. Up to that level were very happy. Then little did I know that Level-Up planned to bring in five more games this year in contrast to the two games during the previous years. That's why from a small number of servers we up to more than 500 servers. New projects continue and the problem with that much number of servers is maintenance and keeping track. We don't like to write anything down and more servers mean more integrators.
CW: Moving towards 2006, what else do you plan to improve?
This year we're also looking for an e-wallet type of bidding system. We used to sell everything prepaid. But that means that game time is fixed and value is fixed for every game. If we do the e-wallet type, then every user can have one card and specify how much they want to spend for any of the games and be able to play multiple games using the same card.
Security is also one of our greatest concerns. We're doing strong authentication for critical resources. Level-Up is putting in systems that will have stronger authentication such as biometrics which is generally a dynamic password. The integrity of the game rests a lot in the credibility of the security system. The database is the crown jewel of every company.
At present, we have around 60,000 users at any given moment. And that's for Ragnarok only. It's our biggest killer application so far but we also expect it to have the 'sawa' factor as they move on to our new games. There's a new basketball game coming in and I'm very excited about it. It's like an online NBA live 2006.
CW: Is security still a major problem area for Level-Up?
DELA CRUZ: Yes, the number one complaint is lag time and then hacking. Once a stranger takes hold of a player's user name and password then that's it. He can steal the identity of the player or transfer credits to someone else. Before, we were entertaining the hacking reports but with the cybercrime bill, users are now filing actual hacking cases in the NBI. There are even character kidnapping incidents online. Several virtual rare items being stolen and sold with real money. There are even bids on e-bay for characters and virtual items.
CW: In China Bank, is security an area you wish to improve on especially since the bank has already implemented e-banking?
ESCUCHA: The benefit of having a vendor with a big international installed base is that improvements are driven by that installed base. But really, foremost at the minds of most banks, is to secure standard banking procedures.
Technology is really hard to control, depending on the customer or marketing point of view. We've noticed that even at Internet cafes, people spy on another user, use his or her username, got to the Web site and try different PIN combinations. So we had to resort to activating the account by going to ATM first. But I'm also trying to balance this. Our risk managers and auditors are reminding me to close these 'gaps.' On the other hand, from a marketing perspective, I'm looking at it this way -- this is a very nice house, very convenient, but in the act of promoting, you're closing the doors and windows; it's like how can people get in?
DIAZ: Sometimes security is inversely proportional to efficiency. Security was actually heightened after 9-11. And a lot of the requirements now are coming off regulations that came after 9-11 like Sarbanes -Oxley. Banking is supposed to be a high-risk security area but not in the same level for companies like Dole.
In credit card companies, for example, they try to measure the fraud first and try to measure it statistically. But definitely, our top priority is plugging all these loopholes because we cannot afford the risk. At the end of the day, it's all about the trust. Our business is not money, but peace of mind and our currency is trust. If you don't trust, you will not bank with us. Foremost in our minds is to protect our customers' interest.
Technology is an enabler to all of this. So we push the edge of the envelope but at the same time realizing that doing that we expose ourselves to certain risks and we have to keep on measuring these risks. But there are certain areas wherein you don't know what measurements will be.
CW: In your view, what will 2006 be like in terms of IT in the Philippines?
DELA CRUZ: In gaming there will be more challenges. The first two years (for Level Up) was just actually a wake-up call. More MMORPGS (massively online role playing games) are being developed -- totally different from other platforms and involves thousands of people playing at the same time. I'm pretty sure that correspondingly, the amount of customer support and security issues involved will increase and management of infrastructure will be more challenging. We now have seven games and we're launching more.
At the same time, we are also moving into the other side of this, not just the business but on the social responsibility side of it. We're always coming up with new programs that mediate or help parents have some form of control over their kids. In general, 2006 for me would be more challenging for me than 2005 because we've gone from start-up stage to expansion stage.
TUBONGBANUA: For us at STI, the challenge really is moving to open source. Again, because of the cost of ownership for software licenses especially multimedia arts. But the thing is, what is the industry currently using? If it's really not open source, it's fruitless to teach kids open source. Bottom line, we want our students to realize our promise of enrollment to employment. That's our challenge right now; identify technologies that we can teach students at the least cost.
DIAZ: Right now, the challenge for us is to focus on the Japanese market. Technology-wise, we have all the ERP, supply chain software; name it we have it. Except for CRM. The way we look at it, CRM, from the point of view of contact centers, is making it easier for our customers to deal with us so that we're arming them with a lot of capability. It requires innovative approach mainly because we are not reinventing applications, deploying emerging technologies while making sure it's cost-efficient. In multinational companies, before any project is approved, it has to contribute to cost-savings. But really, nothing leads to cost-savings you incur costs in the long term. Second, is it trying to have ROI? Maybe that's our focus. Because now we're not using technology for technology's sake but we're either creating a new business, expanding the business or changing the business because we want to enhance our revenues. That's where we'll focus on, innovative ways of doing business. And that almost always requires the use of technology.
ESCUCHA: We expect this to be an exciting year because we have a mandate to expand the business. We're looking at evaluating our core banking systems, our key applications. All the things we are pushing are the technology enablers, allowing our customers to deal with the bank in a more efficient and reliable way, and secure at the same time. We're now trying to look at more 'virtual' ways at how to handle remittances, we example, because the old brick-and-mortar model is very expensive for the customers. So we're looking at debit cards and virtual accounts. Remittances remain one of the fastest-growing sectors in the economy.