PHL must improve connectivity to be ‘cloud-ready’ -- NetSuite

Posted on June 09, 2016

THE COUNTRY needs to widen and improve its network infrastructure to let small and medium enterprises flourish by taking their businesses to the cloud, officials of an enterprise software company said.

Cloud computing hit the mainstream about six years ago and this technology has become crucial in the success of businesses as it frees them from managing their own IT infrastructure, which equates to savings in operation costs. A recent study by The Economist Business Intelligence showed that cloud technology has not only improved efficiency in business operations, it was proven to boost customer demand and grow revenues as well.

“The Philippines is a terrific market to leverage cloud computing because it allows [businesses] to expand into areas outside urban centers… with [less than] the cost of an actual build-out, ” Thomas Kim, managing director of NetSuite Philippines said on the sidelines of the company’s annual SuiteWorld industry conference in San Jose, California.

Mr. Kim added that there’s a “tremendous number of businesses” outside major urban centers that are ripe for cloud adoption, but Internet connectivity still remains a major hurdle. The Philippines has one of the slowest Internet speeds in Southeast Asia with an average speed of 3.6 Mbps per household, compared to the average speed of 12.4 Mbps in the region. A reliable Internet connection with sufficient bandwidth is required for businesses to run smoothly in the cloud.

Mr. Kim however noted that the Philippines has made progress in cloud adoption, citing the Cloud Readiness Index 2016 by the Asia Cloud Computing Association (ACCA), which showed the country climbing one spot to number 9 (compared to the previous year) among 14 countries in the Asia Pacific. But the same report also showed that the country still lags behind its neighbors in the region when it comes to cloud business competitiveness. In the report, the ACCA said the country’s “inadequate connectivity” and high incidence of natural disasters (making it a risky destination for data centers) affected the Philippines’ overall score in the metrics for cloud readiness.

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The Cloud Readiness Index measures 14 economies across Asia Pacific on ten parameters indicating how prepared each is in adopting cloud computing. The parameters measure each country’s international connectivity, broadband quality, power grid, green policy and sustainability, data center risk, cyber security, privacy, government regulatory environment and usage, intellectual property (IP) protection, business sophistication, and freedom of information.

Jan Pabellon, NetSuite Director for International Products, said “making sure broadband is widely available and more affordable” would improve the country’s ranking. He also noted that while natural disasters are the bane to data centers in general, these turned out to be an advantage for NetSuite when it opened its Manila office in 2007. The country’s exposure to earthquakes and typhoons, he said, has driven most of NetSuite’s clients to move their businesses to cloud, so they can easily save and restore their data and other records when disaster strikes.

He mentioned the case of one of NetSuite’s local clients, an automotive service company that lost all its records in 2009, when typhoon Ondoy (international name: Ketsana) left its office in Marikina submerged. “All their records essentially were destroyed. But since their records were in the cloud, they were able to recover fairly quickly. The other businesses in the neighborhood lost all their records,” he said.

Helping small companies act big
While NetSuite declined to disclose details of its latest sales performance and market share in the Philippines, Mr. Kim said its expanding workforce in Manila -- the latest count is 1,100 since the company is still hiring, he said -- is proof that demand for cloud services is high and NetSuite is keen on strengthening its position in the local market. NetSuite’s Manila office is its largest office location outside the United States and it also serves as a key center for its global technical support, services and back-office operations and product development.

Mr. Kim said the company’s Philippine current customer base mainly consists of distributors, manufacturers, retailers, digital media companies and other service-based companies.

During its annual industry conference in San Jose, California, NetSuite rolled out new products designed to “help small companies act big,” as described by NetSuite CEO Zach Nelson during his keynote speech.

“The cloud has completely won -- in almost every industry,” Mr. Nelson said, adding that today, a system built on the cloud is a necessity to a modern company. “If you’re running your business that doesn’t live on the cloud, you’re not running it effectively," he said.

One of the products introduced in the conference was SuiteBilling, which NetSuite touts as an industry-first billing software that unifies both the billing and revenue recognition processes regardless of business model with complete controls and auditability, helping businesses comply and reduce risks. “Built natively into NetSuite’s core ERP system, SuiteBilling delivers the functionality and business value that are unmatched by any other competing product. It is the industry’s first and only comprehensive cloud solution that synchronizes complex processes from order to billing to revenue recognition all within one system,” NetSuite said in a statement.

NetSuite also updated its OneWorld platform, with 16 enhancements designed for global enterprises. The new release, OneWorld 16, allows global enterprises to become as agile and flexible as startups, especially when reaching out to new markets. The updates allow global businesses “to increase operational efficiency, streamline financial reporting, deepen local and global compliance, and localize business processes,” among others.

“Every market has its own unique [business] requirements, for example, if you look at the Philippines, the BIR rules and regulations are very different from what you’ll see in Thailand or anywhere in Asia, which are also very different from those in Europe or North America. Oneworld16 was designed around making sure that we are able to support different indirect tax regimes as well as sales tax in the US and in other markets,” Mr. Pabellon said.

Mr. Pabellon added that NetSuite's Manila office plays a key role in product development of NetSuite products. “We think the Philippines is a great source of talent. For example, the Philippines has a lot of certified public accountants whom we hire. Add to this the fact that we have an English-speaking workforce and that we have accounting rules that are very much aligned with the International Financial Reporting Standards (IFRS) or even familiar with US accounting rules. We also employ a lot of software engineers who graduated from Philippine universities,” he said.

NetSuite has also partnered with leading universities in the country to help the latter produce more graduates equipped with skills that are relevant to the cloud industry.

While the Philippines' has yet to fully embrace the cloud, Messrs. Pabellon and Kim are confident that cloud adoption in the country will accelerate in the coming years as telecommunication companies continue to expand their network infrastructure.

On May 30, PLDT and Globe Telecom, Inc. announced their joint acquisition of San Miguel Corp.’s telecommunications business, which would allow them to obtain the coveted 700-MHz spectrum. Upon approval for the telcos' takeover of the 700-MHz spectrum, however, the National Telecommunications Commission (NTC) gave the two telco giants to boost Internet speeds within a year or the regulator will revoke its approval.

This is good news for cloud software companies like NetSuite, which established its business in the country long before cloud became a mainstream technology.

“Businesses are changing really fast. The next generation of business owners are looking to disrupt their industries and NetSuite is well poised to cater to their demands because of its capability to customize and do things differently than the incumbent players in the industry,” Mr. Kim said. -- Mira B. Gloria