Diversification, flexibility key to ST Engineering growth

Singapore technology company focuses on ability to tweak operations according to requirements of local markets in globalization strategy, says CEO.
Written by Liau Yun Qing, Contributor

Diversification and flexibility play an important part in Singapore Technologies Engineering' (ST Engineering) growth strategy, helping to drive the company's path to globalization and overseas acquisitions, according to its head honcho.

In his keynote address at the SAP World Tour 2010 held here Tuesday, Tan Pheng Hock, president and CEO of ST Engineering, touched on how being flexible and willing to take risks boosted the company's competitive edge.

He explained that ST Engineering, in its early years, operated as a Singapore-centric company running its operations from the local office with some overseas customers. By 2001, the company realized that the local market had matured and its growth potential constrained.

The turning point for the company came in 2003 when SARS (severe acute respiratory) struck most parts of Southeast Asia, said Tan. Business was affected as foreign businesses avoided Singapore despite reassurance that it was safe to visit, he added.

From the incident, ST Engineering realized it needed to diversify its operations, customer base and even its workforce, Tan explained. The company then focused on inking mergers and acquisitions overseas, and its operations soon extended into the United States, China and Europe, he added.

The ability to be flexible also helped push the company's growth, especially in foreign markets. Instead of holding on to its brand name, Tan said ST Engineering localized itself according to the requirements of each foreign market so that it could be seen as a local brand in the different countries. For instance, the company acquired local companies and hired local staff in the respective markets.

Localization is especially important when entering big markets because it lowers the company's risk of being disadvantaged by protectionist policies, he said.

Also, in the past, ST Engineering preferred holding a majority of the local subsidiary's shares. However, in China, due to regulative issues, the company accepted that it could not hold majority shares and worked with local companies in joint ventures.

"We must be prepared to do things differently," he noted, stressing the importance of being flexible.

Another growth driver was the company's willingness to take risk and diversify into new emerging markets, such as Kazakhstan and parts of Africa, said Tan.

New markets also offer companies the benefit of a level playing field due to the lack of major players, both local and foreign, he added. Thus, the company would not be disadvantaged in these markets, he said.

SAP goes for flexibility, too
Offering customers flexibility is also part of SAP's mid-term strategy. Krish Datta, president of SAP in Southeast Asia, highlighted the software vendor's focus on delivering software in three platforms: on-premise, on-demand and on-device.

While on-premise is the traditional way of delivering software where the user owns the installation and have control over the delivery, on-demand is based on the utility model and users pay for only what they consume, much like the cloud computing model--although the software is still integrated on-site. On-device is the ability to access software on any device.

Datta explained that SAP wants to offer customers the freedom of choice in selecting their platform of delivery so they can innovate at their own pace and not be constrained by only one application delivery method.

He also pointed to the company's service-oriented architecture (SOA) where the company release upgrades as enhancement packs, offering customers the flexibility to implement software upgrades module-by-module to minimize disruption to their business.

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