MDeC employs ‘stacking’ approach to create greater value
By Karamjit Singh August 16, 2012
- Approach leads to more intelligent conversations, it says
- Buyers do not have to talk to too many MSC companies
"OUR bread and butter" is how Datuk Badlisham Ghazali, chief executive officer of the Multimedia Development Corporation (MDeC) describes the Information Technology Cluster (InfoTech) cluster of MSC Malaysia.
It is a sector that encompasses the various software verticals within the tech ecosystem and makes up one of the three clusters MDeC categorizes for MSC companies. The other two are Creative Multimedia and Global Sourcing.
With 2011 revenue for InfoTech at RM15.36 billion (US$4.91 billion), it was the top revenue generator for MSC Malaysia with 48% of the total revenue of RM31.7 billion (US$10.1 billion). Global Sourcing contributed RM9.1 billion (US$2.9 billion) and Creative Multimedia RM6.07 billion (US$1.94 billion).
This led Badlisham to hail 2011 as a great year for MSC Malaysia but an even better one for the InfoTech cluster with “exciting times ahead.”
Part of these exciting times is the fact that consumption of digital devices is rising strongly and even though no Malaysian company is a player in this space, the consumerization of IT has caused a positive ripple effect through the value chain, benefiting MSC companies.
A key strategy for MDeC pushing forward which has Badlisham (pic, left) and Dinesh Nair (right), director of the InfoTech cluster, excited is the stacking strategy that MDeC has begun employing for its MSC companies.
It is a strategy that Badlisham says was created out of changing market needs and to address two key issues companies faced when MDeC tried to help them with market access.
Firstly, none of the buyers were apparently keen to meet with so many small companies. The other challenge was when MDeC tried to cobble solutions together from different companies into a comprehensive vertical.
“But we did not know what the demand was and that [customer] demand was the glue for our companies to work together,” he says.
What he means is that MDeC is now working closely with large local customers to identify their needs and to then create a stack of MSC companies which have a suite of solutions that can address the current and future needs of these companies.
Under this stacking approach, one large company takes the lead and works with a number of smaller companies which have complementary solutions that address the customer’s needs. This approach creates a stronger value proposition for customers too (click slide to enlarge).
It already has had some success with AirAsia, Celcom, Majlis Amanah Rakyat (Mara) and Faber Group already employing solutions from MSC companies using this stack approach. Two more companies are lined up to be the next to buy solutions from MSC companies under this strategy.
Badlisham notes that the stacking strategy also raises the awareness of what local solutions are available.
“This has always been an issue both with customers who simply cannot afford to talk to so many players, and with our MSC companies who complain that customers do not want to buy local solutions. The stacking strategy helps to close this gap,” he believes.
It also leads to “more intelligent conversations with customers” Badlisham notes. Mainly because MDeC will now address the problem statement of customers by matching it with a stack of solutions from MSC companies and letting both parties work out an arrangement that creates a win-win situation.
It is now taking the stacking strategy overseas too. Hence, part of the strategy also includes intensifying promotional activities within key emerging markets in synergy with government agencies, with South-East Asia and the Middle East as the key markets.
“Anything within a two-hour flight is a market that we want to target,” says Dinesh, who points out that in the past a lot of emphasis was on the United States as a market while ignoring high-growth markets in neighboring countries.
“And, let’s not forget that we have a lot of cultural and business similarities with these countries too,” he says.
Indeed Badlisham chips in that South-East Asia and some developing markets are still in the infancy stages of their digital economies, which he says, “is good for our MSC companies.”