International Trade/Offshore Manufacturing/Sourcing/Export/Import/Consulting Destination Asia-Pacific North American companies expanding into this region need to evaluate not only potential sales for their Asian offices but also the scope of their overseas IT infrastructure. By Ken Anderberg There is a high-tech tsunami washing over the Asia-Pacific region and North American companies are in a position to take advantage. As they formulate their expansion plans in the region, however, they best heed the particular network challenges and opportunities facing them. While the story of the Chinese economic juggernaut has been told countless times, Asia-Pacific offers more than just that one market–although it is a rather large market. Business opportunities present themselves in Thailand, Indonesia, South Korea, Taiwan and Thailand, as well as on the China mainland. While setting up offices in China to tap into that market certainly makes sense, trying to conduct business from China to other countries in the region may not be the best choice. Basically, North American companies establish offices in this region for one of two reasons: to sell their products or to manufacture them. Companies doing the former will need sales offices in virtually every country where markets for their products exist, necessitating a secure and robust network infrastructure, as well as flexible service provider provisioning. Those with manufacturing operations in the region still will need comprehensive local area networks and high-bandwidth service provider networks connecting back to their North American headquarters. In addition, the region serves as a stopping-off point for further ventures in India. High-bandwidth submarine cables connect India’s fast-growing economy and offshoring centers to hubs in Asia’s high-profile cities and then across the Pacific to North America. This ability to transfer voice and data streams at high speeds at any time of day is instrumental in transforming the Asia-Pacific region into the economic powerhouse it is becoming. The choice of where to locate and what technologies to use at those locations is of paramount concern for companies interested in expansion in the region. Set up a manufacturing operation in Shanghai, for example, and your intellectual property may be at risk. The same is true for Hong Kong (see “The Hong Kong choice”)–but doing business in China dictates having a Chinese address. Doing business, whether manufacturing or sales, in other Asian countries may mean establishing offices in those countries. So, where do you go? AIMLink.com recently visited Singapore as part of a group of journalists exploring the city-state as a potential site for manufacturing and/or sales operations. While we were interested in learning Singapore's unique selling point for inbound investment, we also talked with a number of international companies that have locations there, trying to learn what unique IT challenges they faced when setting up their operations initially, and on a day-to-day basis. Singapore currently finds itself in a battle with Taipei, Seoul, Hong Kong, Shanghai, Beijing and Mumbai, India, for foreign investment. While this island state of 4.3 million people crammed into 270 square miles is a geographic Lilliputian in population and resources compared to China and India, it has fashioned itself after Western business practices, and has a strong, government-controlled commitment to business interests. Singapore's political stability and Western-style business practices and safeguards provide it with an advantage when courting the minds of corporate CEOs. Intellectual property protections, for example, are strong, and the city is embarking on a major upgrade of its technology infrastructure, which is already impressive. A wireless mesh and WiMax network will be rolled out citywide next year, for example. In addition, a national broadband network will soon connect businesses and residents with access speeds of up to 1 Gbps. Most impressively, Singapore sits on the virtual nexis of the aforementioned submarine cable system that connects to more than 20 countries, with 9.8 Gbps capacity to the United States, 260 Mbps to Europe and 20 Gbps to the rest of the world. The cables carry a total of 27.6 Tbps transmission capacity, an attractive interconnect advantage when trying to lure business investment (see “Why Singapore?”). Those advantages have attracted an impressive list of foreign companies, such as Motorola, ESPN, Alcatel and LucasFilms. Dell, IBM and HP all have regional headquarters in Singapore, as do Microsoft, Oracle, Sybase and Symantec. AT&T and Verizon are among a dozen companies with data centers in the Lion City. The high-capacity WAN network available in Singapore was an important consideration for these companies before they set up shop on the island. Many of those same companies also have offices in other high-profile cities in the region. What those companies have learned in designing and implementing their LANs in each location, as well as their experiences with WAN service providers, can provide valuable information for companies considering Asia-Pacific expansion. Datacraft, for example, has had a Singapore office for 14 years, in addition to 50 other offices in 13 Asian countries. The systems integrator has extensive experience not only in setting up its own network, but also of those of dozens of customers, such as BMW, which needed its assistance in putting in a number of call centers. The IT environment in the region is challenging, according to William Padfield, CEO of Datacraft Asia, whose parent company is Dimension Data. The chief problem, he says, is finding and keeping qualified IT workers, not only in Singapore but across the region. "There's a tremendous demand for people with IT skills," he says. "Keeping people in the company is the biggest challenge, and salary increases are a big issue." Other challenges he confronts for his customers: regulatory issues spanning different business cultures, network security and getting the cost model right for customers. The company runs SAP R3 and a range of Web-enabled applications that constitute its standard operating environment, Padfield explains. "We are currently in the process of migrating the WAN to MPLS/IP VPN–with optimized bandwidth based on current and anticipated needs. The focus is on business-driven robustness/resilience, quality of service-level agreements and value for money. "We tend to think simple and tested solutions always work best–by being compliant, are scalable and help to minimize cultural issues," he says. "Simple IT solutions, however, also need to be secure, robust and resilient. By constantly considering the emerging technologies and issues, businesses will be able to take a proactive stance toward guarding against IT threats, as well as reaping the rewards of business-enabling technologies right from the beginning." Motorola’s core Asia-Pacific network is built on a multiprotocol label switched (MPLS) technology that provides connections anywhere around the world between Motorola offices, as well as business partners. The latter is built on a secure network to protect information integrity and privacy. "We have a mix of make and model in the routers and switches but largely it is Cisco based at the current time,” says G. Baloo, IT director, IT infrastructure services, Motorola Asia Pacific. "The bandwidth ranges from 2 Mbps to OC-3, depending on the criticality of the site, but between regions (North America, Asia, Europe/Middle East/Africa), they are a minimum of 45-Mbps pipes. As for the carriers, we are also a multivendor shop but the core network on MPLS is largely from Sprint and SingTel. The servers are mixed, too, but largely Sun, Dell, HP and IBM, and we host our servers mostly in large data centers in each region. "The initial challenges we faced when locating in the region were with the service providers in providing reliable end-to-end connections, understanding our business model, speed of execution, right pricing and managing multivendor setups," Baloo adds. "It took awhile to establish the right working relationship and for the providers to understand our needs in the country, as well as in the region. We were able to find the right service providers who could look beyond their territory and work with us with a great degree of flexibility and willingness to explore new ideas for continuous improvement." From Singapore, ESPN STAR Sports broadcasts 13 channels to 26 countries in the region, using a combination of carriers to provide its network connections to various offices and locations. "The use of multiple carriers gives us flexibility and commercial advantages," says Jamie Davis, managing director. "We use Cisco network equipment to provide the needed infrastructure, and have deployed a mixture of Wintel-based servers from IBM, Dell and HP Compaq to provide the company back-office services. We have an IBM AIX environment for the enterprise resource planning and financial systems." The company has 400 employees in Singapore and 600 in the region, including 40 offices in India. To connect those offices, it uses redundant and highly available networks so that users have reliable and timely access to data and applications. "This also gives us a dynamic, flexible and expandable network and storage infrastructure to support current requirements and future needs," Davis adds. Various security components, like firewalls, intrusion-detection systems, antivirus software, and antispamming solutions, also have been deployed in the ESPN STAR Sports network, as well as "the use of VPN, SSL and secure gateways to protect the network from malicious attacks, to control remote accesses and to protect the integrity, privacy and confidentiality of our critical data," Davis explains. "When we first established IT operations in Singapore, the cost of connectivity was very high," he adds. "Furthermore, there were regulatory hurdles that made it difficult in places like India to install international data connectivity. As we all know, there have been dramatic reductions in the cost of lines over time, as well as improvements in the ease of establishing regional networks all over Asia." Datacraft's Padfield cautions companies new to the region to understand the variations in each market. "Asia is characterized by a spread of countries with diverse culture, as well as different levels of IT resources and maturity," he says. "It is important to plan long term and execute with practical steps, while paying attention to both internal and external client needs, so that the network can be expanded in the most cost-effective manner as business grows. "Businesses also need to be aware of legal requirements to ensure compliance, spot trends and put in place measures to protect against emerging issues," he adds. "Compliance and privacy are not just tactical matters but strategic issues. "By protecting customers' privacy, businesses can enhance their reputations with customers and ultimately grow market share. This, plus the need to plan long term are fundamental reasons why the different depths of IT maturity in different countries need to be contemplated. Standardization and simplification go a long way to ensure effective and flexible implementation of IT projects of any scale." ESPN's Davis has different IT issues to address. "Currently, we are facing the challenge of integrating our IT network with the broadcast network," he explains. "In the broadcast industry, traditionally, the two networks served different purposes and were run separately. "This integration will be significant to how we operate in the future," he adds. "By integrating both broadcast and data traffic seamlessly into the operation workflow, it will simplify our work processes and allow for desktop editing and online browsing. To be successful, a task force has been formed from the engineering, operations and IT to work together in adopting a coherent solution. "In expanding into the region while having the base in Singapore," Davis continues, "it is important to understand the needs of the overseas operation and to plan for the necessary security, infrastructure and bandwidth for the remote offices to easily connect to the regional office, and to access all the crucial IT and broadcast-related applications and systems. "It is also essential to have well-trained staff capable of implementing and managing the security, local and wide area network infrastructure. And it is important for IT to keep abreast with emerging technologies to constantly evolve an IT infrastructure that supports the dynamic nature of business in the Asia/Pacific region." Carrier service in the region is a major issue for Motorola’s Baloo. "We are not 100% on MPLS as yet and we would like to make that happen, which is a challenge with the carriers in the region. We are hubbing on Singapore toward a converged network to be able to transport voice, data and video on our pipes with the appropriate quality of service. We are actively working with key service providers, such as SingTel, to drive price competitiveness in the region." For companies new to Asia-Pacific, he suggests first conducting a study of the capabilities of the service providers in the region, and map that with your business model. "Second," he says, "score the importance of your operation in terms of the country stability, economic, tax incentives, local government support for business and IT investments, skilled resources, total cost of ownership, and, more importantly, a highly reliable network infrastructure that keeps the loss of productivity to almost zero. "There is no one ideal solution that would work for every company," Baloo cautions. "The business or IT arm needs to invest time to learn and build along with your selected partner. The key is selecting the right partner who clearly understands your business. There are a few service providers who have learned over time and can be tapped to minimize mistakes." Additional link: Singapore Economic Development Board Advertise on this site Put your company on this site!