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Digital transformation isn’t just about deploying technologies such as artificial intelligence (AI) and the internet of things (IoT). To many enterprises in the Asia-Pacific (APAC) region, there is just as much work to be done in transforming IT operations and improving datacentre efficiency.
That was the view of Andrew Clarke, chief technology officer (CTO) for Asia at DXC Technology, a systems integrator and technology services provider created by the merger of CSC and the enterprise services business of Hewlett Packard Enterprise (HPE).
Many of DXC’s clients are not putting all their money into cloud infrastructure and edge computing. That has shaped the company’s business strategy in the region, zooming in markets and areas where it plays best while walking away from projects when the risk of failure was deemed too high.
In an interview with Computer Weekly at DXC’s digital innovation lab in Singapore, Clarke offers insights on DXC’s traction in APAC, the market dynamics in Southeast Asia, China and Japan, as well as his observations on the state of digital transformation across the region.
Can you give us a sense of how DXC Technology is doing in the Asia-Pacific region?
Andrew Clarke: We run our business across four subregions in Asia-Pacific – Japan, Greater China, ASEAN and India. Australia and New Zealand is being run as a separate region. Within each of those four subregions, we have a slightly different business profile, but one of the commonalities we have is what we call top accounts, with 40 or so companies making up about 60% of our revenues.
Then, there’s a longer tail of smaller accounts, many of which are multi-year clients. Some of them are more transactional, as you would expect. I manage our top accounts programme, which is essentially driving our growth planning and aligning our strategy to our clients’ strategy so that we bring in the right technology to help support their business.
What sort of technology trends are you seeing in the region and what is DXC doing in those areas?
Clarke: If you look across our traditional offerings, from traditional infrastructure, managing datacentres, managed services, right through to analytics, machine learning, and associated things such as IoT – all those areas are growing. That’s reflected, to some degree, everywhere around the world for us.
But with change in our leadership, our new CEO Mike Salvino has shifted the way we’re positioning ourselves in the market. Our business is healthy and generally very strong, but what he’s done is to de-emphasise the horizontal platforms and to emphasise an industry approach. To support that, we’re removing some of the internal barriers, which we might have inadvertently created, to make ourselves more frictionless.
So, we will bring whatever is in the technology stack, whether they’re seen as traditional or futuristic, that’s right for our clients. Our list of top clients is demanding exactly that. They’re not spending all their money on cloud infrastructure, edge technology and so on. They’re still running big datacentres and they often have an on-premise concept or a hybrid cloud solution at best.
Andrew Clarke, DXC Technology
While most of our clients have got something innovative and digital, that’s still a bit of a playground. We have large clients that are doing their very first agile development project. But their attention has been: how do I go to market? How do I serve my customers? How do I manufacture and get a product to them on time before they buy from my competitor?
As we go to market in this region, we can’t be all things to all people. In certain markets, we are big in applications and less so in infrastructure. In other markets, we’re significant in security while other areas are still a growing business for us. We also have a critical mass in data science in some markets, not just analytics as an infrastructure platform, but the data science that goes around it. We’re selectively going to market in a way so that we can be successful according to the needs of our clients.
Could you provide some perspective why you are stronger in some areas but less so in others across different markets?
Clarke: Consider Japan, for example. It’s an economy that has been stagnant for 20 years. A company like Sony is no longer the same innovative market leader that it was two decades ago. While Japan is very traditional in many ways, it is still our biggest market in in our region.
That said, we’re competing with very big local companies. The top five technology services companies in Japan are an order of magnitude bigger than the number six player down the list. A lot of clients we want to work with are very big, multibillion-dollar companies that rely heavily on the Japanese tech heavyweights.
So, we tend to be in a very specific space, such as running the foreign exchange systems for a banking client, for example. We have done that for 20 years, and it’s unlikely we will ever lose that business because we built the systems and we maintain and manage them and no one else understands them.
But likewise, our chance of expanding into core retail banking systems that one of our competitors has built is very limited, just like the threat to our space is limited. So, you have this very static kind of market and a lot of that is due to the dynamics and the way Japanese companies have evolved.
Contrast that with mainland China – it’s incredibly energised, with a set of issues around the way a local company works with a foreign business. We’re a US company when you scratch the surface, so how would you deal with a company like us versus someone like Tencent? Who do you turn to for certain services?
Still, we play very well in China, but we target certain types of clients such as Chinese multinationals that are expanding overseas and want to tap our expertise to help them do that. So, market dynamics really dictates how we go to market.
Singapore is a small country next to Malaysia, but we do as much business in Singapore as we do in Malaysia. It’s just the nature of our relationships in Singapore, where our investment is, our work with the public sector and our commercial operations here.
Based on your interactions with customers, how would you assess the state of digital transformation in Asia? Is it a case of putting on digital lipstick or do you see transformation happening from the inside out?
Clarke: We are teaching some clients how to do their first agile development project and we have others that we bring to our digital innovation lab to do a design thinking workshop. But some companies are just not in that transformation mindset. I can tell you, candidly, that we have one or two horribly failed projects because of that.
We’ve also walked away from a couple of projects where the risk of failure was too high. We do see companies that are dipping their toes in the water, and what they say publicly doesn’t necessarily reflect what’s really happening in the business.
We also have a banking client that is launching their digital bank, and 80% of their IT spend is on mainframe systems. But what they’ve done is to find a way of treading through an open API environment with a microservices strategy to deliver a customer experience that feels much more modern, engaging and is still fit for purpose in a very heavily regulated environment.
We have another client in this region, a fast food company, that we’re working with to do lots of innovative stuff. We’ve been talking about using IoT to manage cold storage in the supply chain and ensure food quality, as well as for customer engagement in a store. It might include things like facial recognition, so when you walk into the store, the camera picks you up and the screen immediately says this is Aaron and the company can offer high-touch customer service based on your persona.
Is that economical for a fast food chain? We don’t know, but all of that was planned. Then, there was an outbreak of swine flu in Asia, so the client put everything on hold for a year because they had a more important traditional problem to solve.
Ultimately, they’re still running a business where they buy chicken and pork, chop up the meat, cook it, prepare it, send it to a store and fry it before serving it to you. They take your cash and you walk out. That’s not going to change, probably for another 10 years. So being digital almost didn’t even make sense in their business. The fact they were about to try it was really cool, but that things were put on hold for something more important was not at all surprising.
As a systems integrator, your clients would expect you to be vendor and technology agnostic. What is your relationship then with HPE when it comes to the technology solutions that you deploy for your clients?
Clarke: HPE is an important partner, but that’s all it is. In our partner structure, we have what we call tier one global partners and HPE is one of those.
If you take storage, for example, Dell is a key partner as well. Internally, we have no specific rule that says: that’s your first choice and this is a backup just in case. That’s not the way we make technology decisions. Now, there are natural fits in certain situations, and we have clients that have a preference.
Andrew Clarke, DXC Technology
Among the cloud providers, we work closely with Microsoft Azure, Amazon Web Services, Alibaba Cloud and Google Cloud. Right now, we have a situation in South Korea where a local company is about to replace one of those cloud providers with another that is stronger in the local market.
We’re working on whether the move makes sense economically – and the risk profile that goes with it. That’s a decision outside of the norm for those partners, so we do have true independence in that regard.
So, you’re not like what Avanade is to Microsoft?
Clarke: Absolutely not. Let me just say that there’s nowhere in our sales cycle where we have a question on why we’re not using a certain technology. You may have that from a peer review when someone might say: Look, I don’t think this is the right technology; and in this instance this is what I would use and why. You have those sorts of discussions.
But it’s not based on some secret commercial arrangement. We have complete openness. What I always say to our partners is, if you want to be part of the solution set, then sell your technology to the decision-makers in the solution team. Because I, as a senior person, will not override them. If the team is going with Red Hat and explains why, I’m fine. That’s the way the decision is made. It’s entrusted to people who are technologists first and foremost, and not, if you like, commercially driven in some way.
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