a Safety Net
Indonesia, survival is the pressing priority
WARREN CARAGATA Jakarta
1000 Biggest Companies
It is hardly surprising that the Internet-spawned stampede
to electronic commerce remains more of a dawdle in Indonesia.
With the country still reeling from the effects of the regional
Crisis and recent political turmoil, most companies prefer
to concentrate their energies on more pressing problems.
"The first concern is whether a company can survive," says
Kees Poelman, a senior technology consultant at PriceWaterhouseCoopers
in Jakarta. Yet once the immediate hurdles are overcome,
companies face another dilemma: For Indonesians, the Internet
is still more a future promise than a current reality.
Only about 250,000 of the country's 210 million people have
Internet accounts. Even enthusiastic estimates put the total
number of users at no more than 1.5 million. That makes
the economics of using the Internet to reach customers extremely
challenging, says Scott Desmarais, a vice-president at Boston
Consulting Group in Jakarta. Internet use by companies is
higher, making business-to-business applications a better
bet. Again, however, the market is small and fragmented.
"It is going to take a long time for the Internet to really
take hold and start dividends in a place like Indonesia,"
adds Desmarais. Poelman notes that the existing network
is relatively congested. Connections to the global network
remain the monopoly of state-owned Indosat, putting a premium
on bandwidth. As well, charges for local calls make Internet
use expensive. But, says Poelman: "It's no longer a choice
companies can make. They just have to do it."
Two already moving into cyberspace are PT Telkom, the state-owned
telephone monopoly, and Garuda Indonesia, the state-owned
national airline both of which are profitable and
slated for privatization. Like most Indonesian companies,
blue-chip Telkom is still working its way through financial
tangles. It needs to streamline a portfolio of businesses
built up when foreign companies entering Indonesia's telecommunications
market gave it pieces of the action. It is also in dispute
with partners brought in before the Crisis.
Telkom, however, began using the Internet and its predecessors
for internal communications in the late 1980s. One benefit
is that at least 80% of its workforce has an Internet connection
and a PC, says Kristiono, Telkom's senior executive vice-president
for planning and engineering. Now the company is moving
to a so-called paperless office: all financials and company
policies are already available through the corporate intranet.
When someone calls to order a telephone line, the information
is recorded online and the front office can track progress.
Everything but the application form itself, which requires
a signature, is done electronically.
The company also is running a trial in which Jakarta customers
can access their phone bills online. Online procurement
will not be ready until next year, Kristiono says. But requests
to potential partners for proposals to help Telkom speed
up a range of high-tech ventures, including broadband access
and improvements to the Internet backbone, have been made
online. Though the cost of setting up an e-procurement system
has not been finalized, Telkom has struck a deal with Samsung
as its technology partner. First it wants to bring major
suppliers online not a huge challenge, since most
are large companies and 70% of Telkom's purchases come from
30 strategic vendors, Kristiono says. For telephone switches,
Telkom deals only with Lucent, Siemens and NEC. As it moves
to bring the system to its smaller suppliers, it plans to
offer help to companies without Internet connections and
Garuda was slower off the Internet mark and hit much
harder by the Crisis. It used a state bank to restructure
a $1.8-billion debt and is still rebuilding routes abandoned
when the rupiah plummeted. Yet the company also has begun
to integrate its various information systems and link them
to the Internet, says Hadinoto, an executive vice-president
and member of its I.T. committee. "We don't want to be left
behind," he says. Already competing with other airlines
domestically and internationally, Garuda should be able
to sidestep some typical Indonesian obstacles. First, its
customers are well-heeled and more likely than most to use
the Internet. Second, its suppliers include Boeing and General
Electric companies at the head of the technology
revolution. Hadinoto says Garuda is automating its back
and front offices, and software for financial, human resources
and inventory management has been installed. Now financial
information from domestic and international offices, which
used to trickle in over a month or more, is available immediately.
Yet Garuda is still lagging behind many other regional airlines.
Plans for e-business are still being developed. The company
hopes to begin online ticketing from its website early next
year and plans to make available details on points accumulated
from its frequent-flyer program. But Hadinoto admits online
procurement will come more slowly, with a trial planned
for next year involving key vendors. One way to speed things
up: joining a global airline e-business portal. "We would
like to use this technology to improve our efficiency,"
Hadinoto says. Rousing Indonesian business to the call of
the new economy may take some time. But for companies able
to see beyond their current woes, it's no longer a case
of if, but when.
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