How Indonesia is doing digital transformation better than you
The only certainty is continued disruption.—Denee Carrington, Forrester
Transformation is now the new normal in business. It is what is required to keep up with competitors. It is what customers demand. It is the direction that suppliers and vendors are moving in. For organisations that choose not to accept this, a short operational future is ahead. The companies and governments across Asia are starting to realise this. They see that digital transformation is an excellent way to kickstart an economy. One such country that is slowly moving up in the ranks of digital transformation is Indonesia.
Digital Transformation In Indonesia’s Government
Around the globe, digital transformation is proving to be a combined effort of the public sector and the private sector. Indonesia is an excellent example of this. The government, over the last few years, has made a very visible effort to digitise the country. In 2014, the government announced a strategy that would enhance internet connectivity across the country. And while the country is only ranked ninth in Asia in digital infrastructure, tenth in industry connectivity, and eleventh in human capital, they are beginning to move up in the ranks.
Proof of this digital advancement can be seen in recent predictions that Indonesia will soon be ranked with India and China when it comes to e-commerce. However, Indonesia’s government wants to outshine these two giants of e-commerce by being the biggest digital economy in Southeast Asia in the coming years. They plan to do this by targeting tech entrepreneurs and by following their Presidential Decree on the E-Commerce Roadmap. This roadmap notes that the key priorities include fostering the SME and startup culture in Indonesia, as well as building fibre optic connectivity across the country by 2019.
The Indonesian government’s interest in digital transformation, however, expands well past investment and encouragement of digitisation in the private sector. The government wants to transform itself. The International Data Corporation has estimated that by 2019, a fifth of regional and local governments across Indonesia will be incorporating the use of IoT. The government will be using IoT with as much infrastructure as possible, including traffic and street lights, as well as roads.
And IoT is just the beginning. Indonesia already has three smart cities that are impressing the rest of the world. Makassar, a city in the eastern region of the country, has started implementing a very strategically planned smart city initiative. Not only has the new smart CCTV system significantly helped the local police, but infrastructure reboots have made daily life in the city much more efficient. The public transportation system has been revamped into a land rapid transit system, old roads have been fixed, and to help with traffic congestion, inner rings roads were elevated. The city also created several apps that were directed at both answering citizens’ questions and gathering feedback from them.
Another smart city that has garnered significant attention from a global audience is Bandung. The local government has created hundreds of apps to help and serve citizens, as well as allow government operations to be completed more efficiently. An example of one of these apps is GAMPIL. This recently created app enables small businesses to avoid the long waits and corruption at government offices by applying for all of their permits through the app. Bandung is also relying on e-budgeting, which creates a much more transparent and intelligent view of how the city spends its money. In 2016 alone, it saved the city nearly U.S. $200 million.
Then there is Jakarta. The government in the capital city has launched several initiatives to make government run better and citizens live better. One example of an effective smart program that was launched in the city is the app Qlue. This app is a place for citizens to report any problem in their neighbourhood, whether it is crime or a power outage. Jakarta also undertook a massive lighting project. Not only did they upgrade nearly 100,000 lightbulbs in the city to more energy-efficient ones, but they also connected them to a lighting management system that will allow government officials to monitor and enhance the city’s lighting infrastructure in the future. As Jakarta’s government has made clear, this is only the beginning of a long and intensive digital transformation in the city.
Digital Transformation In Indonesia’s Businesses
Indonesia’s private sector is beginning to see significant growth in terms of digital transformation. One of the leaders in this arena is the Lippo Group. This real estate development company has consistently been an early adopter of various digital strategies. Through a significant investment of U.S. $500 million into e-commerce, the Lippo Group has been able to become the biggest online retailer in the country, with a platform that has a larger selection of items than any competitor. The company has also created advanced and efficient digital procurement solutions that serve both the government and businesses well. While e-commerce accounts for only 0.5 percent of the total retail sales in Indonesia, it is expected to have a compounded annual growth rate of 23 percent over the next few years. For this reason, the Lippo Group has created a sale goal of U.S. $1 billion in two years.
The Lippo Group is not alone in their push for digitisation. The banking industry in Indonesia is also seeing rapid advancements with digital transformation. Bank Mandiri is a perfect example of this. Bank Mandiri created Mandiri e-Cash, a digital financial service that allows customers to avoid opening a branch-based bank account. Instead, customers can simply use an app that provides them with the option of making micro-transactions. This option, along with other solutions provided by various banks in Indonesia, is allowing Indonesians who had not been previously involved in the financial sector to get involved, as well as making Indonesia a less cash-dependent country.
When it comes to mobile telecommunications in Indonesia, Telkomsel is leading the way. The mobile provider realised that their customer base was becoming more digitised and that they needed to catch up. In order to do this, the company created an app, MyTelkomsel. The app allows the company to react much more efficiently and effectively to customer needs. Through MyTelkomsel, Telkomsel customers can purchase additional services, can make mobile payments, and have access to offers that are relevant to them. The new app and the convenience that it creates has not only brought in new customers, but it has increased digital business by over a third.
Another Indonesian digital transformation success story can be seen in Emtek, the media company. While the conglomerate is best known for owning television networks, it is purposefully expanding its reach to allow it to be an early adopter of some of the most advanced technology. To accomplish this it is investing in startups. These startups are in every sector from IT services and publishing to travel and e-commerce. Emtek has also partnered with BBM to transform the once dying out messaging app. Instead of attempting to retain its position as a way for individuals to message each other, Emtek is transforming BBM. It will now serve as a mobile payment platform that will help Emtek offer its products to its 63 million customers across Indonesia.
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