This article first appeared in The Edge Malaysia Weekly on January 14, 2019 - January 20, 2019

AS the government looks to liberalise industries previously monopolised by big firms, it is important for local companies to leverage data analytics. Breaking up monopolies will invite many new and disruptive players into the market.

The Economic Affairs Ministry has set up an inter-ministerial committee to review monopolies across various economic sectors.

According to reports, this may include Padiberas Nasional Bhd (Bernas) and its hold on rice imports, Pharmaniaga Bhd in the supply of biopharmaceutical products in the public healthcare system, and Grab’s position in the ride-hailing market following its merger with Uber last year.

The CEO of storage and data management company NetApp Inc, George Kurian, says being data-driven is a necessity in deregulated markets. He cautions that Malaysian companies that do not digitise early could lose out significantly should digital players from other countries enter the market.

“Deregulation typically introduces more competition, and what we have noticed is that in the digital world, competition works a lot more quickly than in the physical world. Digital services are much more agile in introducing competition, so companies will have to be on their toes,” he tells The Edge in an interview.

For example, he points to US-based multinational retail corporation Walmart, which invested billions of dollars over five decades to grow its customer base to 300 million, while a popular battle royale online game took only a fraction of the time to expand its subscriber base to about half of Walmart’s.

“In the digital world, Fortnite has reached 125 million subscribers in less than a year and [Epic Games] can now easily charge anybody that wants to advertise or do anything such as product placement on the gaming platform, just like a store,” says Kurian.

In Asia, he points to India, where the telecommunications industry was deregulated in the 1990s and freed from the domination of the Department of Telecommunications as the sole service provider.

Although several private operators came into the picture upon the liberalisation of the market, Reliance Jio Infocomm Ltd was by far the most disruptive. Making its entry in 2016, Jio acquired 16 million subscribers within the first month of its launch and went on to cross the 50 million mark 83 days after launching — the fastest ramp-up by any mobile network operator in the world.

Jio capitalised on the usage of data to deliver new services to customers, quickly stealing market share away from other players. As at the end of last year, the telco had a subscriber market share of 21.57%, the third largest after Vodafone Idea (37.2%) and Bharti Airtel (29.38%).

“Jio has over 400 million mobile phone subscribers and it is creating an enormous number of new services. Most people thought there would be barriers to Jio’s entry but the company was creative in coming up with solutions.

“Companies need to digitise sooner rather than later, because if one of their competitors digitises, or a foreign digital competitor enters the country, they would need to react very quickly as digital businesses grow very fast,” Kurian says.

NetApp chief financial officer Henri Richard observes that a decade ago, the success of a company was determined by its industrial or marketing power, but there has been a shift.

Ten years ago, most would have expected IT giants such as IBM, Microsoft, Cisco and Oracle to dominate the world of business. But now, companies that control a large amounts of data — think Facebook, Google and Amazon — are calling the shots.

“There has been a profound shift over the last five to seven years. We have seen big disrupters coming into various industries and when you look at their true power, it is data. They are utilising the data generated from their businesses to differentiate themselves and attack their competition.

“Today, it is not necessarily the company with the largest customer base, the biggest factory or the best known brand that can be considered invincible. It is really the one that knows how to utilise data. Whatever business you may be in, a smart, insightful utilisation of your data makes a big difference in business results,” Richard says.

He says this is where NetApp shines, as it works with cloud service providers such as Google, Microsoft Azure and AWS to provide a seamlessly integrated view of a company’s enterprise data, making it easier for the company to recall and analyse the data it has stored over different storage infrastructures.

A Fortune 500 company listed on the New York Stock Exchange, NetApp provides hybrid cloud solutions for businesses, providing a more convenient method for companies to access and analyse the data they collect from their operations. This is especially if the companies store data across different data storage infrastructures — either in the public cloud, private cloud or on-premises.

NetApp’s notable clients include the global animation studio DreamWorks and motorcycle manufacturer Ducati. Its business is spread across the globe, with the largest proportion, 55%, coming from the Americas followed by Europe with 25%. Asia-Pacific accounts for 15%, primarily in Japan, Taiwan, Hong Kong and Australia. The group has also started to venture into China via a partnership with Lenovo. Its operations in Southeast Asia are still relatively small.

“The challenge we face in Asean is that a lot of the businesses in the region are not as mature as organisations in the Americas or Australia, for instance, especially with things like cloud adoption. Price is still a very important factor for Asean companies,” Richard says.

However, he says NetApp has flourished in difficult markets such as Germany, where it holds a 30% market share.

“We cannot do it overnight, but I see no reason why we cannot excel in the Asean markets. If we can have 30% of the German market, we should be able to have 30% of the markets in Malaysia, Thailand or Indonesia,” he says.

According to NetApp’s country manager for Malaysia and Brunei, Azrin Abd Shukor, the group is currently working with several big banks, telcos and manufacturers in Malaysia, as well as government agencies such as the Malaysian Administrative Modernisation and Management Planning Unit. The group started out as a storage provider for these companies and agencies but is now assisting them in their digital transformation.

“Their involvement in the cloud and utilisation of cloud technology will make them more agile and more competitive if new players come in. It will definitely be a very important factor in the coming years.

“There is still a big opportunity in the government space. We are just at the beginning of the digital transformation. The latest budget is really encouraging this transformation and I would say that we will see more opportunities for NetApp in the Malaysian market going forward,” says Azrin.

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