Managing & Sustaining Profitable Growth

[Final Paper Assignment]

~~~~~~~~~~~~~~~~~~~~~~~~~~~`

PT. Metrodata Electronics, Tbk

Created by:

Annisa Nurrachman – 1040002023

Business Management – Strategic Management

Post Graduate Program

Binus Business School

I. Executive Summary

As one of the big players in the IT products distribution and one of the major IT

solution providers in Indonesia Metrodata is consistent in its competitive field that is IT

distribution, solution business as well as on progressing to IT Outsourcing. Metrodata

sees that IT Outsourcing business is a business that will be fast growing.

As time goes on, customers tend to put its IT operation over the IT outsourcing

company. Because they can be more focus in their core business, other than that the

IT outsourcing can help them to eliminate the complexity of IT handling, start from the

selection of which technology is appropriate, implementing it, maintenance, up to the

problems of those IT human resources that handle the IT job within the company. The

quality can be maintained based on SLA (service level agreement). In financially it is

also has benefit, such as the failure in technology selection and in implementation can

be reduced. Then usually the payment is done step by step, so it really helps the

company’s cash flow.

But being an IT company to to this outsource is not easy. The reputation is

needed to be built and maintained. Beside of that, it is crucial to keep the IT

professional human resources continuously updated and equipped by certification in

up-to-date technology development. Trust is also the key factor to see whether the

company will be success or not in running this IT outsourcing services.

This kind of IT services covers:

 Technical Support (database administration, messaging, network management,

security)

 Infrastructure outsourcing (desktop & printer management, helpdesk, asset

management, call center, server & storage maintenance)

  Business Process (application development, application managed services,

application service provider)

 Operation Support (data center management, back up & recovery)

II. Introduction

Background

Nowadays, IT solution service is one of those that have a very potential market

in Indonesia. By entering into this segment, the company will take its services into

more advance level.

The activity run by Metrodata is currently divided into 4 main business units:

 Bisnis Distribusi TI (PT. Metrodata E Bisnis) handling the distribution

business in IT field

 Bisnis Solusi TI (PT. Mitra Integrasi Informatika) providing integrated and

complete solution starting from design, implementation, support, managed

services and training

 Bisnis Konsultasi TI (PT. Soltius Indonesia) yang menawarkan keahlian

dalam bidang solusi bisnis transformasional dan jasa konsultasi, serta

 Bisnis Information & Communication Technology Retail (PT. My Icon

Technology) yang menyediakan produk-produk ICT secara ritel dan

langsung kepada konsumen selaku pengguna akhir.

This leading ICT company in Indonesia has partnership with many Word-Class

IT companies which are as follow:

 Adobe, Alcatel-Lucent, Altiris, APC, ASUS, Autodesk,

  Bank Trade, BigFix, Blue Coat, BMC Software,

 CheckPoint, Cisco Systems, Citrix Systems,

 DELL, EMC, Emerson Network Power, EPSON, F5, Fujitsu,

 Hitachi Data Systems, Hewlett-Packard, ISS, IBM, Infor Global Solutions,

Ironport, JDA Software,

 K2, Lenovo, Microsoft, mySPSSolution, Netscout, NetApp, Nucleus

Software,

 Oracle-Sun, Pearson VUE, Prometric, RSA Security,

 SAP, Salesforce.Com, Strategic Partner Solution, Symantec, Software AG-

webMethods, S1 Postilion,

 Trend Micro, vmWare, and WebMethods.

Metrodata’s headquarter is located in Jakarta, and its service centers are in

Medan, Bandung, Yogyakarta, Surabaya

Objectives

The objective of this writing is to implement the theories obtained in the

Managing and Sustaining Profitable Growth course into the real life application in the

related company and industry. Therefore, the student will get comprehensive

understanding about what has been learnt in the course.

Scope of Work

The limitation of this writing is only focus on the IT Solution Business industry,

which the involved industry’s key players are include METRODATA, PT. Anabatic

Technology, PT. Astragraphia, PT. Computrade Teknologi Internasional. METRODATA

 is chosen as the main target company to be focused on and discussed.

Methodology

The methodology used in this writing is through research on the data and

information collection which is available for the writer, such as: article, internet

searching, Annual Report, the written and published of speaker’s speech in the events

or exhibition conducted by the company.

III. Analysis on external environment: Macro Environment

In general, the economic condition in Indonesia has been improving in recent

years, and at the same time many industries are also proportionally growing. This

makes any industry frequently establishing partnership with the world-class companies

from many countries supported by the regulation from the government.

The huge amount of population in Indonesia which is as the time being their

lifestyle becomes more technology-conscious that integrate into their daily life.

Companies in Indonesia also follow this trend which is its daily operational is always

closely attached with the IT system, in infrastructure of hardware and software,

because IT makes the works easier effectively and efficiently.

Certainly, this indication is perceived as the potential target market for many IT

companies in Indonesia as well as worldwide to expand their business in Indonesia to

deliver their best IT solution they can offer. This one of the reasons many partnership

established between world-class IT companies and local IT companies.

On the other hand, now mostly companies want to be more focus on their own

core business without have to be busy with their various IT problems that may

occurred within their daily business operational. Due to highly human resources

turnover issues exist in many companies, especially the IT staffs, it raises another
 problem in the difficulty managing those IT staffs. Therefore, there are needs of

integrated IT solution from experienced IT company in various IT field (e.g.Web

Services, Internet Provider, IT Infrastructures, etc), the need of skillful and reliable IT

people and full guarantee IT services (24 hours / 7 days) for the end-user company’s IT

performance.

IV. Industry granularity analysis

The key industry players in IT field in Indonesia, the writer chooses two public

companies as their data and information is published and the other two companies that

not listed in the stock exchange:

1. PT. Metrodata Electronics, Tbk (Metrodata)

2. PT. Astragraphia, Tbk (Astragraphia)

3. PT. Anabatic Teknologi (Anabatic)

4. PT. Computrade Teknologi International (CTI)

Company Total Asset

PT. Metrodata Electronics Tbk 945.242.001.932
PT. Astra Graphia Tbk 982,479,682,109

Even though there is still some challenges occurred in the increment of global

crude oil price that affecting the higher operating costs, but certain sectors like banking

and financial services, telecommunication and manufacturing is still growing that

makes them to allocate large enough portion of their investments in IT, supported by

the market condition for IT products and services is getting better.

However in order to increasing the IT industry development in Indonesia still

need much hard work and learn from those of IT companies abroad to be competitive

in worldwide. It can be conducted through business partnership and joint venture. If

compared with other countries (e.g India, China), Indonesian IT industry position is still

far below (see Figure 1).

By Budi Rahardjo

Figure 1.

The key industry players have their own strategic movement to have their

company is sustainable and profitable growing.

- Metrodata’s strategy: is want to providing its customers with the flexibility of

IT solution choices. This variation is ranging from distributor of many IT

products, giving variety of IT software solution, IT consulting services, and IT

products online-offline retailer. This dedicate to big enterprise and small-

medium enterprise.

- Astragraphia’s strategy: is focusing on IT services solution that strengthening

the focus on government sector and internal of Astra business group, and

provide office document solution, such as printer.

- Anabatic’s strategy: is committed to support, develop and offering the SAP IT

 solution that is targeted for the market of medium size business in

Indonesia, and specific in the financial and telecommunication industry

- CTI’s strategy: is focusing its IT solution on provide IT network and security

services, and in IT product distribution it establishes new subsidiaries where

each handle only one IT product brand (Oracle, IBM)

V. Analysis/review on target company's internal environment

 Core diagnostic

Core diagnostic from Metrodata is focusing on flexibility and variety of IT

solution, and also expand its existence into wider market (nationally,

internationally-Asia Pacific). It is indicated through its active move in

establishing partnership as many as they can with many other world class IT

companies and vendors.

 core competencies

Core competencies owned by Metrodata is in IT solution business,

Metrodata develop software applications in a template, it can make easier to

deploy in the clients in any type of industry, and either it is big enterprise or

small medium enterprise. The way it works is the developed software

application template is just adjusted as requirement in client’s internal

business process.

In value proposition, Metrodata is applying the implementation of Selling

Process Assurance (SPA). This aim is to minimize company risk in the

project they handle. Inthis process, everything that is proposed is evaluated

in realistic and smart way by the division that is involved such as sales team,
 presales team, product team, and delivery team. So each team really

understands the project being handled before approving the project. All of

this is implemented in a work system named Automated Project Approval

that can reduce risk in the company business.

 Business model & past/current growth expansion strategies

In the solution business that has been operated since 1996 is starting to

balance the distribution business. It is shown in 2005, the net profit

generated by solution and distribution business is relative equal. The

souliton business is handling its job to implement IT solution in several

industry UKM or enterprise with professional consultant and reliable IT

engineer. Those many solutions provided by Metrodata is merely giving

pilihan the alternatives solutions for its customers.

One of the strategies to sustain Metrodata position is by expanding the

company’s reach to cover Singapore, Malaysia, Thailand and other

surrounding countries. The growth framework is to achieve this is: keep

enhancing core competence beside of through strategic alliances with the

key players in the related region. Therefore, full dedication and contribution

from the employees is the key to get significant growth and keep sustaining

Metrodata as a market leader in this industry.

In 2008, PT. Metrodata Electronics Tbk through its subsidiary of PT Mitra

Integrasi Informatika (MII) acquired Soltius Asia Pte Ltd, an established SAP

consultant company. Soltius Asia Pte Ltd (the owner of PT. Soltius Indonesia,

Soltius Australia Pty Ltd., and Soltius Thailand Ltd) is now being one of

subsidiaries of Metrodata in the solution business area. This acquisition is

 very important because it encourages the company to compete with other

SAP partners in the enterprise segment.

The change in management is occurred after Metrodata acquired PT.

Soltius Indonesia in 2008. This change has impact to the employees. Then,

HRD has responsibility to socializing the programs of HRD in Metrodata to

those of PT. Soltius Indonesia new acquired employees to ensure that the

employees in PT. Solitius Indonesia have the same vision, direction, and

objectives with the other Metrodata employees.

 Historical financial and operational trends & statistics such as: Profitability &

growth rates, operating costs, number of employees, revenue per employee.

The sales growth in Metrodata is seen from the revenue of sales in 2006

through 2010, which are as follow:

2006: Rp. 1,636,281,896,338

2007: Rp. 2,712,986,628,572

2008: Rp. 3,422,199,694,667

2009: Rp. 3,396,917,071,000

2010: Rp. 3,953,971,372,337

According to the revenue in 2006 (Rp. 1.6 trillion) and 2007 (Rp. 2.7

trillion), it has growth of 66% growth. This growth is even faster than the

industry growth (15%). In the other side, The revenue obtained from IT

Solution business is (Rp 604 billion) lower than the revenue obtained from IT

distribution business. But IT Solution business contributes operating profit in

almost 166% compared with IT distribution business.

The operating costs from 2006 through 2010:

2006: (Rp. 132,738,787,837)

2007: (Rp. 172,475,599,151)

2008: (Rp. 202,693,788,636)

2009: (Rp. 255,361,961,940)

2010: (Rp. 276,554,099374)

Net Profit from 2006 through 2010:

2006: Rp. 20,775,872,977

2007: Rp. 28,480,083,561

2008: Rp. 29,956,430,437

2009: Rp. 10,064,638,280

2010: Rp. 30,438,567,670

In managing its human resources, it is fully oriented to the employee’s

performance. The remuneration given to the employee is based on his/her

performance, and it is neither based on education level nor university

background (from local or abroad). The principle is to allocating the right

person in the right position at the right time. This is done to fulfill the need of

every employee that has contribution to the company’s profitability and

growth.

The company is concern with the competitiveness of its employees’

remuneration compared with the other company of the same type industry.

Therefore, Metrodata follow the remuneration survey from human resources

consulting to get the objective data to specify its employees’ remuneration

according to the average market of IT professional remuneration.

The number of employees from 2006 through 2010 (whole employees of

Metrodata and its subsidiaries):

2006: 710 employees

2007: 801 emloyees

2008: 1,307 employees

2009: 1,427 employees

2010: 1,653 employees

The number of employees from 2006 through 2010 (Distribution and

solution):

2006: 600 employees

2007: 786 employees

2008: 1000 of Metrodata employees + 130 new employees from the

acquired company

2009: there were new 27 employees hired

2010: there were new 200 employees hired

Salary (whole company and its subsidiaries):

2006: Rp. 78,954,169,228

2007: Rp. 108,166,804,730

2008: Rp. 116,556,287,976

2009: Rp. 166,549,798,084

 2010: Rp. 182,289,086,609

Salary increment rate per annum:

2006: 9% - 10%

2007: 9% - 10%

2008: 9% - 10%

2009: 5% - 10%

2010: 9% - 10%

VI. Conclusion & recommendation

To grab larger market share, in the tight competitiveness in technology industry,

these strategies are needed. They are: Creating innovation products, The right way to

synergize with the industry at the outside country, Read the opportunities and

challenges more aggressively.

The IT solution required by many end-user companies will be more accurate,

faster, and much better handling, if those jobs are specifically controlled by the IT

company that have focus on this field. Thus, the end-user companies do not have to

spend an extra cost on health insurance premium, company’s bonus and allowance of

its IT employees. Because all those things being handled by the IT outsourcing

company. The company only needs to pay the fixed package of contract with the IT

outsourcing company.

The contract model that can be implemented in this IT outsourcing services is as

follow:
  Dedicated Outsource: the contract is dedicated during full of one month, the IT

professional fully assigned to manage IT tasks and jobs in the company that

need this service.

 On Demand Outsource: the contract to outsource the IT services based on

demand / on call. It means that the professionals will come anytime or on call to

overcome the IT problems / services in the company that pays for the contract.

This should be complemented with the IT experts that have variety of capacity

and skills. This IT support service should be in fully support for 24 hours.

VII. References

1. www.metrodata.co.id

2. www.computradetech.com

3. www.astragraphia.co.id

4. www.anabatic.co.id

5. http://rahard.wordpress.com/2007/12/06/mengusung-it-outsourcing/#comment-66200

6. http://www.iglobalsolution.co.id/index.php?

option=com_content&task=view&id=24&Itemid=44