The introduction in Malaysia on 1 April 2015 of a 6 percent Goods and Services Tax (GST), which will replace the current sales and services tax, is driving a resurgence of the Malaysian enterprise resource planning [ERP] sector, according to local ERP firm iContro Software.
"The local ERP market has been soft for quite some time due to economic uncertainties, so the GST deadline is a silver lining as it forces local manufacturers to overhaul their ERPs," said Fran Lee, chief executive officer of iContro Software [iContro]. "Many Malaysian manufacturers have long been coping with their legacy ERP systems because they started adopting ERP technology much earlier compared to other Asean countries."
"With the implementation of GST, it is mandatory for businesses to have a complete end-to-end automation starting - from manufacturing to distribution and accounting operations as GST entails tracking and reporting throughout the entire chain of operations, within the organisation as well as the entire group and business ecosystem," he said.
"It is common to still find Malaysian manufacturers operating in partial computerised and automated environments," said Lee. "Therefore it is essential that manufacturers leverage on ERP investment that goes beyond the statutory GST compliance, for better business automation."
GST, which was first announced by the Malaysian prime minister Datuk Seri Najib Tun Razak in his 2014 Budget, will be at an initial rate of 6 percent will replace the existing Sales and Services [SST] model [10 percent and 6 percent respectively totalling 16 percent], and has also been welcomed by industry organisations and analysts including the National ICT Association of Malaysia [PIKOM] and IDC.
'Asian Business Culture'
"However, major ERP vendors have overlooked the need to offer companies in this region with ERP solutions that are infused with 'Asian Business Culture,'" said Lee.
"Contrary to market perception, Asian businesses are more dynamic, fluid and versatile than their Western counterparts, where business is more linear, direct or simple," he said.
Lee cited a 2014 survey released by Panorama Consulting in which nearly one in five respondents expressed that their companies ERP implementation was a failure. In addition the report indicated that 63 percent of implementations were over budget.
"Cost of customisation of western ERPs often comes as a shock to companies as the existing technology isn't able to fully integrate the 'Asian Business Culture' into this core enterprise IT system without heavy customisation that costs a lot of money," he said.
"Already by default, most ERP are extremely costly projects that require huge amount of product customisation, which experts will tell you is the main reasons for many failed projects," Lee said. "Panorama Consulting's survey points out that, 25 percent of respondents shared that their companies ERP projects were implemented after extreme or complete customisation."
"Therefore businesses that choose ERP systems, which do not integrate 'Asian Business Culture' functionalities and automation, invariably face significantly higher project (implementation) failure risk as this core IT system (ERP) of the business is already a mismatch with the inherent business culture," he said.
"Local manufacturers require an equally dynamic, and a lot more powerful yet easy to use ERP system that delivers higher efficiency, higher productivity with higher control mechanism, as compared to their Western manufacturing counterparts," said Lee.
"Asian manufacturers can only thrive by being successfully supported by technologies that are reflected in their automated design of the ERP - which is indeed the most crucial IT support for all of their business operations," he said.
iContro expansion plans
"Our iContro G5 solution is currently making waves in Malaysia," said Lee. "We have successfully replaced several top 10 ERP providers and ensured that our customers experience higher efficiency and returns on investment [ROIs]. We are certain our certification and in-depth market intuition will be a benefit for customers who are still looking for an ERP system to meet the 2015 GST deadline,"
"Having established ourselves in Malaysia, we've been seeing increasing demand for iContro ERP in Singapore," he said. "We have already started working on a few clients there and believe this is a good time for us to expand our business into the region, first to Singapore and soon to Indonesia."
"In line with this, we have just confirmed with a public listed company which will be purchasing our ERP's financial, distribution and manufacturing modules. This is a great start to our Singapore expansion; iContro is confident that we will generate a sales revenue of about SG3 million by the end of 2014 for Singapore," said Lee.
"The iContro ERP system is fully developed based on the Asian business culture," he said. "The 5th Generation iContro G5 is a massive 62-million line of codes system that comes standard with 1850 reports as compared to the average 500 reports available from the nearest competitors. iContro G5 is also among the first full-fledged ERP system in the world to be TUV-Certified (of Germany)."
"Typical ERP upgrades are usually associated with risks and unacceptable disruptions, but the TUV-certified iContro G5 delivers smoother upgrades within shorter periods without having to re-do any previous customizations," said Lee.
"In the next few months we will also be heading into Indonesia with iContro, followed by the Philippines, China, Korea, Taiwan and Japan as there is a high demand for Asian Business Culture centric ERP modules that currently requires high optimisation at a bigger cost with existing western ERP counterparts," he said. "To facilitate this expansion into various markets, iContro will be launching a Multi Lingual version of the TUV-certified iContro G5 ERP in 2015."
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