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Exclusive Case Study: How IT shared services is driving Sunway Group's edge

AvantiKumar | June 12, 2014
The Malaysian conglomerate Sunway Group's IT SSC Director Kevin Khoo said the practice of IT shared services is increasingly important in fuelling the group's overall productivity and business growth.

Photo - Kevin Khoo, Director of Sunway IT SSC modified 

Photo - Kevin Khoo, Director of Sunway IT SSC

 

The use of IT shared services is gaining momentum across the board at Malaysian conglomerate Sunway Group and is responsible for helping to drive the Group's overall business growth, said Sunway Group's IT SSC director Kevin Khoo.

The practice of IT shared services is becoming more significant in supporting the organisation's operations via improved productivity for sustainable business growth, Khoo said.

He said the Group made the decision to adopt the practice of IT shared services to support the business in 2003 with the formation of Sunway IT Shared Services Centre [IT SSC] as a special division with two objectives:

a) To achieve operational efficiency via standardisation and;

b) Consolidation and optimisation of the usage of IT resources across the Group's subsidiaries.

"[After 10 years of upgrades and development] Sunway IT SSC today is well-equipped with next generation IT solutions including Oracle JD Edwards' enterprise resource planning (ERP) system, Hitachi Data Systems' storage systems solution, virtualisation and other enterprise IT solutions to support and drive the Group's diverse business operations and ventures," said Khoo, adding that all of the infrastructures and technologies are provisioned from the Group's technology arm - Hitachi Sunway Information Systems (Hitachi Sunway).

  Costs and complexities

Khoo said the main challenges for IT SSC included tackling the organisation's operational costs and complexities in data administration. "Prior to IT Transformation, Sunway did not have a single platform that could capture all the information residing in multiple server systems."

"Data was siloed across different locations and resulted in the spending of hundreds of thousands of dollars over the years to manage the under-utilised servers placed everywhere in different divisions and subsidiaries, while being managed by a number of employees," he said.

In addition, as the business expanded regionally, Sunway also encountered significant challenges to source for and to manage suppliers, labour, customers and channels across mixed geographies and demographics, Khoo said.

"Often, the Group found itself insufficiently flexible to adapt to the dynamic business environment, and had to work within their rigid and siloed legacy business structures," he said.

"We needed to restructure the fragmented business functions to better support the Group's business goals in a more collaborative manner," Khoo said. "This includes streamlining and synchronising of customer information amongst subsidiaries, building data sharing models between finance, human resources and procurement offices, capturing and automating point-of-sales transactions and so forth."  

 Flexible IT support

Hitachi Sunway's group chief executive officer/director Cheah Kok Hoong said that IT services can be one of the hardest business areas to get 'right' in terms of delivering the expected return on investment.  "For Sunway Group, we went through many rounds of detailed evaluations and used a top-down 'services-based' approach to build Sunway IT SSC in managing the multi-faceted business processes of all the subsidiaries."

This exercise included benchmarking against other IT competitors so that Hitachi Sunway could set cost reduction goals and operational efficiency targets across the board."

He said that Sunway Group's IT transformation started by determining the necessary levels of services required by the business users; and then structuring the cost-cutting measures around the business functionalities that allow users to work effectively.

"To support the Group's diverse businesses, the Sunway IT SSC achieved consolidation of business processes and rationalisation of all IT applications. It has also taken advantage of the existing ERP capabilities instead of relying on legacy systems," said Cheah.

"Cost savings was also derived from lower maintenance and licensing costs, as well as a lesser need for data storage and server space to run multiple applications - all of which also translated into fewer hardware purchases and upgrades," he said.

"We found out that streamlining the IT portfolio and installing the necessary operational discipline to keep it this way - is one of the most effective ways for Sunway IT SSC to deliver the right technologies to support the business needs and at the right price," said Cheah.

 Business returns

Sunway IT SSC's Khoo said, "The Group's journey to this point had been lengthy, but Hitachi Sunway made it easy for us. Today, Hitachi Sunway has helped IT SSC eliminate the need for additional hires to operate the unnecessary IT infrastructures which resulted in staffing cost savings of close to RM400,000 [almost US$125,000] per year.

"Now, the Group's subsidiaries can produce daily reports such as financial reports for property investments, 30 percent faster than before," he said.

"Also, in line with Sunway Group's vision towards achieving green living for the community that we build for, this IT transformation by Hitachi Sunway has made us more environmentally friendly through the significant reduction of our carbon footprint in the IT SSC-based data centre via energy savings on cooling equipment usage," Khoo said.   

"It is unlikely that any company can move directly and easily from having no experience of shared services at all to a multifunctional approach," he added.  "As businesses continue to transform themselves, there will be more challenges along the way and therefore selecting the right IT partner to walk through the path of IT transformation is imperative to success."

A household name in Malaysia, Sunway Group, which started as a tin-mining company in 1974, expanded into become a property-construction powerhouse with multiple established businesses including retail, hospitality, leisure, healthcare, education, trading and manufacturing, commercial, building materials, quarry and REIT. Listed on the Main Board of Bursa Malaysia, Sunway Group is now a conglomerate with a 13,000-strong employee base operating in more than 40 locations worldwide.

 

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