the iium journal of case studies in management

IIUM Journal ofCase Studies in Management

Vo l . 2 No. 1 J une 2 0 11

Contents

Lifeline: Where Technology Manages Crisis Support 1Sajid HassanNational Systems and Application Administrator, Lifeline Australia

HRM and KM Practices in ISTIQ: Lessons to Learn 13Anuar Omar, Azian Mohd Azlan, Samila Kadir & Siti Nur Hafizah HazaipahGraduate School of Management, International Islamic University Malaysia

Suhaimi Mhd SarifKulliyyah of Economics and Management SciencesInternational Islamic University Malaysia

Information Technology – Harbinger of Change in an Indian 23Private UniversityAnupama R & Sanjeev BansalAmity Business School, India

Sodhi JSAKC Data Systems Pvt. Ltd.

Choupal Sagar: Pioneering Organised Retailing in Rural India 31Prarthana BanerjeeIBS, Salt Lake City, Kolkatta 700091, India

Subhadip RoyIBS, IFHE Campus, Dontanapally, Hyderabad, India

Bank Rakyat Malaysia: Vision Remains while Mission is Revisited 41Khaliq AhmadInternational Islamic University Malaysia

Azhar KazmiKing Fahad University of Petroleum and Minerals (KFUPM), Saudi Arabia

Telekom Sales & Services Sdn. Bhd. 49Mohd Roslan HaronTelekom Malaysia Sdn. Bhd.

Mohd Ismail AhmadInternational Islamic University Malaysia

Teaching Notes of the Case Studies, published in this issue, are available ONLY to lectures andtrainers. Please send your request to the Chief Editor ([email protected]/[email protected])giving details of your job position and institutional affiliation using your institutional email address.

Editorial Team

• Chief Editor:Prof. Dr. Arif HassanDeputy DirectorManagement CentreInternational Islamic University Malaysia

• Co-Editors:Assoc Prof Dr Noor Hazilah Abd ManafManagement CentreInternational Islamic University Malaysia

Assoc Prof Dr Arif ZakaullahManagement CentreInternational Islamic University Malaysia

• Editorial Advisory Board:Prof Dr A SeetharamanFaculty of Business StrategyS.P. Jain Centre of Management, Singapore.

Prof Dr Faridah Hj HassanDirectorCentre of Business Excellence,Faculty of Business ManagementUniversity Technology MARA (UiTM)

Professor Dr Khaliq AhmadDeanKulliyyah of Economics and ManagementSciencesInternational Islamic University Malaysia

Prof Dr Mohd Ismail Sayyed AhmadDirectorManagement CentreInternational Islamic University Malaysia

Prof Dr Mukund DixitIndian Institute of ManagementVastrapur, Ahmedabad, India

Dr Muslim HarsaniDepartment of AccountingKulliyyah of Economics and ManagementSciencesInternational Islamic University Malaysia

IIUM Journal of Case Studies in ManagementISSN 2180-2327

Published byInternational Islamic University Malaysia

53100 Kuala Lumpur.

Dr Amir MahmoodDeputy Head of Faculty and AssistantDean InternationalFaculty of Business and LawUniversity of NewcastleNSW Australia

Assoc Prof Dr Nik Nazli Nik AhmadDeputy Dean (Postgraduate Studies)Kulliyyah of Economics and ManagementSciencesInternational Islamic University Malaysia

Prof Dr P M ShingiDean, School of BusinessFlame University, PuneIndia

Dr Sharifah Raihan Syed Mohd. ZainHead, DBA programManagement CentreKuliyyah of Economics and ManagementSciencesInternational Islamic University Malaysia

Aim and Scope of the JournalThe IIUM Journal of Case Studies in Managementis an internationally refereed journal publishedtwice yearly by the Management Centre,International Islamic University Malaysia. Thejournal is dedicated to the development andpromotion of case studies in the field ofmanagement and related disciplines for the purposeof enhancing our knowledge and understanding inthe areas. Cases selected for publication areexpected to deal with important issues related tothe discipline, which may be used, among others,by instructors of Master of Business Administrationand Master of Management programmes. Specialconsideration will be given to cases that deal withmanagement issues in the Asia-Pacific region. Both,cases based on field research and secondary sources,will be considered. Also, papers on case writing,case teaching and case analysis will be acceptedfor publication. Occasionally the journal willpublish empirical papers on current issues inmanagement.

Editor ’s Note

We are delighted to present the third issue of this journal. There are six cases in thisissue. They represent a good mix of Malaysian, Asian, and international companies.The issues highlighted provide a number of relevant management concepts andpractices. We are sure these cases will be useful to teachers and trainers who wouldlike to use them in their teaching.

Case 1 authored by Sajid Hassan provides a case study of Lifeline Australia—anNGO involved with counseling services. It explains how Information Technology isbeing used as a responsive support to people in need of help and distress. The caseidentifies the stakeholders, project management challenges in meeting the needs andexpectations of the stakeholders, issues and problems experienced during projectmanagement, and how the major operations are performed by a typical Service Deskaccording to ITILv3.

Case 2 co-authored by Anuar Omar, Azian Mohd Azlan, Samila Kadir, Siti NurHafizah Hazaipah and Suhaimi Mhd Sarif presents a case study of a Malaysian companyknown as ISTIQ involved in the noise control business. The case addresses issues ofhuman resource management and knowledge management practices and the kind ofemployee management challenges that this small enterprise had to face during differentphases of its operation.

Case 3 written by Anupma R, Sanjeev Bansal and Sodhi JS describes the case ofan Indian private university. This study traces the evolution of IT together with therapid expansion of the University across continents. It also outlines the difficultiesfaced and solutions worked out till a optimum level of performance was achieved.The case brings out the issues related to teaching-learning pedagogies and the impactIT-enabled processes had on the students. Both advantages and fallouts are discussedand the case study poses to the readers the question of an optimum mix of IT enabledand traditional teaching methods.

Case 4 written by Prarthana Banerjee and Subhadip Roy relates a story of a retailchain specialising in rural marketing. This paper traces the origin and development ofChoupal Sagar, the rural marketing initiative. Based on secondary research, the casedeals with issues, problems, and challenges in rural distribution, product managementand rural marketing as a whole.

Case 5 authored by Khaliq Ahmad and Azhar Kazmi presents the case of a Malaysianbank known as Bank Rakyat. The Bank evolved from a cooperative system ofmanagement to a highly creative market entity ready to face the very aggressivecompetitive market forces of the Islamic banking and finance industry. While maintainingthe vision of its founding fathers as a cooperative entity, it had to negotiate newchallenges emerging from a new mission. The readers have to analyse as to whatextent the bank has succeeded in its change management efforts.

Case 6 authored by Mohamed Roslan and Mohamed Ismail Ahmed is about aMalaysian Telephone service provider known as Telekom Malaysia. It makes anextensive analysis of the telecom industry in Malaysia and discusses the emergingissues and challenges faced by this company in the context of deregulation and marketcompetition. The case poses a number of marketing related questions before the readersin order to examine how the company should come up with some creative solutions.

We would like to record our thanks to all the contributors of this issue and ourcolleagues who are taking a keen interest in making this journal a good source ofknowledge. We hope that the readers will find the cases interesting and useful.

Arif Hassan, PhDChief Editor

Correspondence author: Sajid Hassan; Email: [email protected]

Sajid HassanNational Systems and Application Administrator, Lifeline Australia

Abstract: Lifeline is a not-for-profit organisation based in Australia providing crisis-support, mental health support and suicide prevention services to Australians. Ithas a large volunteer workforce across 65 Australian locations. Most of these servicesare delivered from the National Office of Lifeline Australia. The aim of this paper is topresent the challenges faced by Lifeline in effectively managing successful servicedelivery and how these challenges are being overcome by adapting well-known andproven frameworks. This paper also attempts to elaborate the concept of ICT ServiceManagement and its adaptation within Lifeline.

INTRODUCTION

“Good Evening, This is Lifeline Servicedesk and my name is Beau. How can I helpyou?”

“ I have pressed the Call Trace button and tried to follow the emergency interventionprocedure to trace a caller but it seems technology has got the better of me. Pleasehelp as I think the person whom I was talking to might just be on the brink of attemptinga suicide.”

This is usually a typical start of a conversation for a member of Lifeline Servicedeskteam, often in the middle of the night. Lifeline is a not-for-profit organisation thatprovides access to crisis-support, mental health support and suicide prevention toAustralians. It is a completely volunteer-based organisation working 24 hours a day,seven days a week and 365 days a year. There are more than 4500 telephone counsellorsproviding the services at 65 locations in Australia. This paper is an attempt to elaboratethe techniques, standards and frameworks that are being used by Lifeline and its ICTdepartment to successfully manage the service delivery in an organisation of thismagnitude.

This paper begins by clarifying the services provided by Lifeline. Then, it presentsthe challenges faced by Lifeline and the organisation’s ICT department. Finally, thepaper attempts to elaborate the techniques, standards, policies and procedures thathave been implemented by the organisation to assist in delivering these services.

Lifeline: Where Technology Manages Crisis

SupportC a s eStudy1

IIUM Journal of Case Studies in Management: Vol. 2 No.1: 1-11, 2011 ISSN 2180-2327

IIUM Journal of Case Studies in Management2

Sajid Hassan

ABOUT LIFELINE

Lifeline is an organisation which has been operating since 1963. It was founded by thelate Reverend Dr Sir Alan Walker when he took a call from a distressed caller inSydney who later took his own life. This incident made Sir Alan determined that hewould not let isolation and lack of support cause more deaths. He then launched a 24-hour crisis support line in Australia. This service, known as 13 11 14 service nowanswers more than 450,000 calls annually of which nearly 20,000 are related to suicideattempts(Figure 1). This service has been an integral part of the lives of Australiansand over the years Lifeline has become a national brand, winning a number of accoladesfrom various sectors of society. It has also been mentioned numerous times duringpolitical campaigns as a leading advocate of providing mental health and crisis supportacross the region.

In the last three years, Lifeline has taken more than 2.1 million calls from Australians.The breakdown of issues for each of these calls is shown in Table 1.

Technical Architecture

Lifeline currently serves 65 sites across Australia. Most of these sites are in remoteAustralian locations. Besides the obvious challenges of connecting these sites with thenational network, there are issues usually related to providing remote ‘hand and eyes’support to the users.

Figure 1: Lifeline National Call Summary

IIUM Journal of Case Studies in Management 3

Lifeline: Where Technology Manages Crisis Support

The sites are connected by the primary hub via WAN links which have beenprovisioned by the network service provider. The small ICT team at the NationalOffice manages the technical backend of the system.

Each of the sites currently has a desktop computer, CISCO IP phones, UPS anda NTU. In terms of software, the telephone counsellors utilise a CRM application builtto capture call interaction data and it is a legal record of the conversation, actions andfindings of a particular call. In addition, the telephone counsellors also use anotherweb-based application called Service Finder which contains a record of a number ofagencies who specialise in providing care and other type of services. During a counsellingsession, the counsellors often utilise the Service Finder to search for a particularagency and then provide the help seeker with the necessary referral details. The referralscould range from as simple as providing details of the nearest accommodation serviceor in some cases, agencies providing financial counselling.

Other than providing technical infrastructure support to the entire nation, Lifeline’sICT team also provides technical, project and programme management support to theNational Office staff. The support includes management, implementation andmaintenance of a number of applications including Emails, Financial Management andInformation System, Asset Management, Training, Application and Desktop Support,Security, Network Administration, IP Telephony services, hardware/softwareprocurement and vendor management. There are more than 67 different types ofservers running various operating systems. In addition, there are more than 7 types ofdatabase systems keeping a diverse genre of records which are often required to bepresented in court of law.

In addition to the counselling services that are provided by the volunteer workforce,Lifeline also has a significant web presence. The Lifeline website gets a very highnumber of hits every day, where members of the general public often seek valuableinformation using the online resources available on the website. To add to the services

Table 1: Breakdown of calls by issue received by 13 11 14 telephone counsellors

Issues Percentage

Abuse and Trauma 4.8%

Adjustment and Loss 5.6%

Family and Relationship 28.3%

Health and Disability 25.3%(Including Mental Health)

Practical Help 3.5%

Problem Behaviour 5.9%

Self and Community 22.6%

Suicide-related 4.0%


Sajid Hassan

that are being managed by Lifeline’s ICT team, the website is also managed in-houseby the ICT team.

The aim of this paper is to demonstrate how such a complex network of users,business, applications, data and technical infrastructure can be effectively and efficientlymanaged. In the following sections, this paper will attempt to demonstrate the use ofdifferent standards, frameworks, agreements and management to achieve the necessaryoutcomes.

CHALLENGES

When technology advances, it usually provides users with more features and ease ofuse. However, in most cases it also introduces another level of complexity which anyorganisation’s ICT team struggles to manage. The challenges become even greaterwhen the organisation is volunteer based. The task of introducing a new technologyto a user base which is constantly changing is a challenging task.

As mentioned in the earlier section of this paper, Lifeline is a not-for-profitorganisation. Hence, it does not have the luxury of a large enterprise with a huge ICTskills base with multiple level of redundancies. The team that manages the technologyat Lifeline comprises not more than ten individuals. This creates a number of problemsespecially when the organisation does not have a redundant skills set available. If anindividual is not available, then this usually leads to a system issue not being resolvedat Lifeline.

The skills shortage within the ICT team in the past had led to poor practice interms of knowledge transfer, system architecture and technical documentation. Awell-known fact in the industry is that ICT is a dynamic workforce. Hence, when anew group of ICT workforce comes to the organisation, there is a poor handover ofmost technical systems. However, such practices often result in very high operationalexpenditure and one of the objectives of this paper is to present the framework thathas been implemented at Lifeline to overcome this problem.

The total number of telephone counsellors across Australia is more than 4500 andmost of them work on a fortnightly shift. The unique nature of Lifeline introducesanother level of complexity. Usually, in an organisation of such a size, one can introducea new technology, infrastructure or a process with little or no change managementissue. However, the issue of change management is one of the most significantchallenges at Lifeline. Whenever the organisation introduces a new technology ormakes a decision on changing a process, the National Office has to prepare a completenew set of training material and make sure they are delivered, implemented andsupported for a very long period.

OVERCOMING THE CHALLENGES

The sheer size of the organisation together with its unique nature requires a uniquemanagement effort working at multiple levels within the network. The effort is notonly very exclusive at Lifeline, it is also extremely efficient. As a result the organisation



as a whole and the ICT department to be specific is able to meet the specified target,SLAs and objectives.

Though, most of the mentioned frameworks and techniques are still beingimplemented at Lifeline, the results of following a proven framework is already showing.As shown in Figure 1, Lifeline for the past three financial years has steadily beenanswering more calls than in the previous years. The organisation has worked hard toremove system level congestion and as a result more and more help seekers are able toget through the system.

Further, the operational expenditure on technologies has also dropped significantlyand Lifeline can manage to fund additional resources and services for help seekers.For an example, Lifeline recently embarked on providing Online Crisis support toAustralians who may not necessarily feel comfortable making a call and would preferan online presence. The service is currently being run on a trial basis.

There is a long list of achievements the organisation has made over the past fewyears. However, the aim of this paper is to highlight the framework that has beenadapted by the organisation which has resulted in these accomplishments.

Programme Management

Programme management is the process of managing several related projects. Theprogramme manager typically has oversight of the purpose and status of all projectsin a Programme. The programme manager can use this oversight information andknowledge to support project level activity to ensure the overall programme goals arelikely to be met (APM, 2007).

One such programme that is currently being managed at Lifeline is titled ‘131114Improvements Programme’ which is an umbrella cover to manage a list of projects toupgrade Lifeline’s contact centre capability. It includes management of the followingset of projects

• Upgrade Lifeline’s telephony infrastructure• Implement a new telecommunication service provider• Develop CRM application to assist Telephone counsellors for capturing help

seekers demographic information• Introduce and implement a National Workforce Management System

The framework that is being adapted to manage this programme is called ‘ManagingSuccessful Programmes (MSP)’. MSP defines programme management as “the actionof carrying out the coordinated organisation, direction and implementation of a dossieror projects and transformational activities to achieve outcomes and realise benefits ofstrategic importance to the business.”

Project Management

Project management is the discipline of planning, organising, securing and managingresources to bring about the successful completion of specific project goals and


Sajid Hassan

objectives. A project is deemed to be successful if all its deliverables are met within thespecified timeframe and do not exceed the cost (Nokes, 2007).

There are a number of frameworks that are available for use such as PMBOK,PRINCE2, Agile Project Management, Event Chain methodology, etc.

The framework that has been adapted within Lifeline is PRINCE2. It stands forPRojects INControlled Environments (PRINCE) (Office of Government Commerce,2009).

PRINCE2 is a process-driven project management method which defines 40separate activities and organises these into seven processes as shown in Figure 2.

Some of the advantages of adapting this framework are

• Provides a structured approach to project management.• Provides a method for managing projects within a clearly defined framework.• Describes procedures to coordinate people and activities in a project.• Describes procedures to design and supervise the project.• Actions to take if it doesn’t develop as planned and project has to be adjusted• Divided into manageable stages, the method enables an efficient control of

resources.

Information Technology Services Management

There is hardly any doubt that managing ICT department resources and providingappropriate services to its customers is a remarkably difficult task. Hence, a number

Figure 2: PRINCE2 Project Management Methodology



of management approaches are applied in various situations. One of the most successfulones comes from the government of UK’s IT infrastructure library model, popularlyknown as the ITIL framework (Ashley et al., 2009). This framework has beenadapted by Lifeline ICT Servicedesk team over the past two years.

ITIL offers a systematic approach to delivering quality IT services. ITIL wasdeveloped in the 1980s and 1990s under a contract with the UK government (Ashleyet al., 2009)

Under this framework, the operative procedure for providing quality and transparentIT services for Lifeline is perhaps best suited to this paper. ITIL framework recognisesthis as the ‘Service Operation’ lifecycle phase.

IT Service Operation involves coordinating and carrying out activities andprocesses required to provide and manage services for business users and customerswithin a specified Service Level Agreement (SLA). In Lifeline’s situation, customersare usually referred to as volunteers at the 65 centres (locations). Service Operation isalso responsible for management of the technology required to provide and supportthe services.

Service Operation is an essential phase of an ITIL based service lifecycle model.If the day-to-day operation of processes is not properly conducted, controlled, andmanaged, then well-designed and well-implemented processes will be of little value.In addition there will be no service improvements if day-to-day activities to monitorperformance, assess metrics and gather data are not systematically conducted duringService Operation (Ashley et al., 2009)

The basic concept of Service Operation revolves around ensuring that thecustomers achieve their goals. Additionally, it is responsible for the effective functioningof components supporting the service.

Achieving a balance in Service Operation implies the following:

• Handling a possible internal and external conflict between maintaining the currentsituations and reacting to changes in the business and technical environment.Service Operation must try to achieve a balance between conflicting priorities.

• Achieving an ICT organisation in which stability and response are in balance.On the one hand, Service Operation must ensure that the ICT infrastructure isstable and available. At the same time, Service Operation must recognise thebusiness needs changes and must embrace change as a normal activity.

• Achieving an optimal balance between costs and quality. This addresses ICT’schallenge to continually improve the quality of service while at the same timereducing or at the very least maintaining costs.

• Achieving a proper balance in reactive and proactive behaviour. A reactiveorganisation does nothing until an external stimulus forces it to act. A proactiveorganisation always looks for new opportunities to improve the current situation.Usually, proactive behaviour is viewed positively, because it enables theorganisation to keep a competitive advantage in a changing environment. Anover-proactive attitude can be very costly and can result in distracted staff.


Sajid Hassan

In order to achieve balance in Service Operations, communication is essential.ICT teams and other departments, as well as users, internal customers and ServiceOperation teams, have to communicate effectively with each other. Good communicationcan prevent problems. This has become evident since the establishment of an InternalCommunications Department at Lifeline. The results of a yearly climate survey haveled to satisfactory customer satisfaction.

There are some key Service Operation processes that must link together to providean effective overall IT support structure as shown in Figure 3.

Service Operation processes provided by Lifeline’s ICT servicedesk team include

• Event Management – Surveys all events that occur in the ICT infrastructure inorder to monitor the regular performance, and which can be automated inorder to trace and escalate unforeseen circumstances.

• Incident Management – Focuses on restoring failures of services as quickly aspossible for customers, so that it has a minimal impact on the business. Incidentscan, for example, be failures, questions or queries.

• Problem Management – Includes all activities needed for a diagnosis of theunderlying cause of incidents, and to determine a resolution for those problems.

• Request fulfilment – The process of dealing with service requests from theusers, providing a request channel, information and delivery of fulfilment ofthe request.

Figure 3: ITIL Service Operations (Ashley et al., 2009)



• Access management – The process of allowing authorised users access to usea service, while access by unauthorised users is prevented.

Service Operation activities undertaken at Lifeline include

• Monitoring and Control – This is based on a continual cycle of monitoring,reporting and undertaking action. This cycle is crucial to providing, supportingand improving services.

• ICT Operations – Fulfill the day-to-day operational activities that are needed tomanage the IT infrastructure.

• There are a number of IT operational activities which ensure that the technologymatches the service and process goals. For example, mainframe management,server management and support, network management, database management,directory service management, and middleware management.

• Facilities management – It refers to the management of the physical environmentof ICT operations, which is located in the server room and data centres. Maincomponents of facilities management are, for example, building management,equipment hosting, power management and procurement.

There are several ways to organise Service Operation functions, and eachorganisation will arrive at its own decisions based on size, geography, culture andbusiness environment. However, an organisation possessing an integrated IT Servicemanagement technology can categorically provide value-added service to its customers.

CONCLUSION AND WAY FORWARD

The objective of this paper to present the advantages that can be achieved by adaptingwell proven frameworks. As evident in the case of Lifeline, numerous aspects of theorganisation’s service delivery including reducing operations expenditure, deliveringsuccessful projects and maintaining customer expectation and satisfaction are someof the key benefits that can be realised.

The success of these frameworks can also be realised and optimised with theadaptation of an Enterprise Architecture framework.

The purpose of enterprise architecture is to optimise across the enterprise theoften fragmented legacy of processes (both manual and automated) into an integratedenvironment that is responsive to change and supportive of the delivery of the businessstrategy.

Fortunately, there is already a well know Enterprise Architecture framework,called TOGAF ‘The Open Group Architecture Framework’, available for organisationsto adapt. The beauty of this framework is its adaptability to other service deliverysystems, project and programme management frameworks already in place. Figure 4depicts the TOGAF architecture stages and its link to other frameworks.

The adaptation of the TOGAF framework together with other frameworks canenhance all the other benefits that have been realised by the organisation. A properlyarchitected enterprise can bring important business benefits that include the following:


Sajid Hassan

• A more efficient ICT operation• Better returns on existing investment, reduced risks for future investment• Faster, cheaper and simpler procurement (TOGAF 9, 2009).

DISCUSSION QUESTIONS

Q1. Identify some of the key stakeholders and their roles in the service deliverymodel as described in the case study.

Q2. Besides managing a wide range of stakeholders, what are the project managementrelated challenges experienced by the organisation?

Q3. Describe some of the major drawbacks of implementing the Project/Programmemanagement framework.

Q4. Describe the major operations performed by a typical Service Desk according toITILv3.

Figure 4: The TOGAF Architecture Stages and its Link to Other Frameworks



REFERENCES

Nokes, S. (2007). The Definitive Guide to Project Management. 2nd edn. London:Prentice Hall.

Office of Government Commerce. (2009). Managing Successful Projects with PRINCE2(5th ed.). The Stationery Office. Norwich, UK.

APM (2007). Introduction to Programme Management. APM Publishing, London,UK.

Ashley, H., Windebank, J., Adams, S., Sowerby, J., Rance, S. & Cartlidge, A. (2009).ITILv3 Foundation Handbook. The Stationery Office, Norwich, UK.

TOGAF 9 ( 2009). The Open Group Architecture Framework. The Open Group, London,UK.


HRM and KM Practices in ISTIQ: Lessons to Learn

Anuar Omar, Azian Mohd Azlan, Samila Kadir & Siti Nur Hafizah HazaipahGraduate School of Management, International Islamic University Malaysia

Suhaimi Mhd SarifKulliyyah of Economics and Management Sciences, International Islamic UniversityMalaysia

Abstract: This case study addresses issues of human resource management (HRM)and knowledge management (KM) practices at ISTIQ Sdn. Bhd. ISTIQ is a localcompany that has ventured into an interesting field - noise control engineering.ISTIQ began as an humble engineering company that discovered opportunities innoise control engineering and expanded to serve both regional and internationalmarkets. However, the employees of ISTIQ are neither vibrant and dynamic norsufficiently proficient in responding to the requirements of their customers. Effortsto address these deficiency problems include on-the-job and off-the-job trainingprogrammes, technical workshops and English courses. A topping up measure wasa recent review of its hiring practices to be in line with human resource and knowledgemanagement requirements.

INTRODUCTION

ISTIQ originates from the Arabic word ISTIQamah which means ‘persistence inpractising virtue.’ This concept prevails in the vision and mission of ISTIQ Sdn Bhd.In fact, ISTIQ has put this into practice in the business by persistently and consistentlyimproving its products and services. Since its establishment in 1995, the companyhas grown tremendously and has emerged as one of the leading companies in industrialand building acoustics. Its business activities range from product supply and design,fabrication and installation of assigned acoustics to noise control projects. In fact,ISTIQ is highly specialised and is well recognised in applications involving generatorsets, blowers, compressors, press machine and HVAC systems. All of its work andproducts on controlling noise on these applications either meet or exceed therequirements set by the Malaysian Department of Environment (DOE) and Departmentof Safety and Health (DOSH). Apart from this, they also provide services in noisemeasurement and in obtaining approvals from the DOE.

HRM and KM Practices in ISTIQ:Lessons to Learn

C a s eStudy2


Correspondence author: Dr Suhaimi Mhd Sarif; Email: [email protected]


Anuar Omar, Azian Mohd Azlan, Samila Kadir, Siti Nur Hafizah Hazaipah & Suhaimi Mhd Sarif

Two years later, realising bright opportunities in this industry, ISTIQ establisheda subsidiary to make headway in fabricating their own acoustic products. This approachis practical to sustain profitability and a competitive advantage. The Managing Directorcum Principal Engineer of this company believes that self-sustaining production wouldallow the company to acquire and implement the latest manufacturing technology,while maintaining cost effectiveness. But above all, this move was to ensure thatISTIQ products would be of the highest standard and quality that would meet therequirements demanded by local as well as foreign customers.

The quality of ISTIQ products has been proven to be competitive because customersare repeat buyers not only from Malaysia and Singapore but also from Hong Kong,Taiwan, Maldives and Angola. ISTIQ is naturally proud that it has gained recognitionfrom key customers such as Matsushita, Shell, Hewlett Packard, PETRONAS, Volvo,Tractors and Siemens. In fact, according to Razali, the Quality Control manager,ISTIQ’s commitment to providing their customers with premier service and supportis their top priority.

Vision and Mission

The vision of the company is to grow, innovate and venture into new inventionswithin the scope of their core expertise, which is noise control engineering. At thesame time, it is the company’s mission to elevate their staff’ s economic status bytraining and improving their skills in technical (hard) and people (soft) skills.

According to Anuar, Managing Director of ISTIQ, the company has successfullystayed one step ahead of their competitors by applying the latest InformationTechnology. Not only do they use the latest software in their operations but wouldalso access the most current information to update their knowledge on noise andsound engineering. In fact, they developed their own in-house software programmesto speed up their daily routine tasks.

The company recognises that industrial noise can cause ailments which aredetrimental to the health and safety of people. In fact, excessive noise can causeannoyance or loss of concentration, and productivity may fall. Non-compliance tonoise standards may also lead to defective products or corrupt data being obtained.There are several approaches towards creating noise-free environments. However,noise theory is a delicate subject matter which requires a thorough understanding ofthe subject. A lack of knowledge of noise theory may result in expensive pursuits ofnoise-free environments which could create even more problems in the process.

A recent review of various national and international standards states that manyspecialist areas require the environment and equipment to meet certain noise standards.These must be examined and engineered skillfully before these environments can bedeclared safe for everyone. The preference, therefore, is for a quieter environment.On the product line, this is often reflected by the selling advantage of the quiet productover the noisy competitor.



Even before ISTIQ came into the picture, the technical aspects of sound particularlythe noisy environment of businesses have been discussed and solutions sought.Admittedly, the task of diagnosing and correcting noise problems in the most effectiveway had received little formal attention in the past. But it is generally recognised thatintegration of modern measurement techniques such as active noise control withfundamentals of applied acoustics has been the most effective treatment to combatnoise problems.

THE MANAGEMENT TEAM

Mr Anuar Omar has headed ISTIQ since its establishment in 1995. He and hispartner, Felicia Lai, established the firm. Both of them had previously worked togetherin a company, KSM Engineering Sdn. Bhd. They started off with another two staffmembers giving a count of four when they began operations Currently, ISTIQ SdnBhd employs 30 staff which includes the employees of their manufacturing company,ISTIQ Fabrication. Both companies, ISTIQ and ISTIQ Fabrication, are accreditedby the quality management system of ISO 9001:2000.

As the major shareholder in the company, Anuar assumes the role of decisionmaker on critical matters related to finance and cash management, and human resourcemanagement (HRM). In short, he is the captain of the ship, while Felicia assists himwith the sales and administration aspects of the company.

Besides Anuar and Felicia, the management team also comprises Rosli Bassri, theGeneral Manager of ISTIQ Fabrication, Jaladi Muda, the Group Human Resource andAdministration Manager, Razali Z. Abidin the Group QA/QC Manager, and Ida Yulianis,the Finance and Account Manager.

STAFFING – SELECTION AND RECRUITMENT

Most of the personnel in this company who were hired at the time of establishmentwere mostly local graduates with a diploma or certificate in engineering-based subjectssuch as drafting. The majority of them are not proficient in writing and speakingEnglish, except for Anuar the only engineer in the company. In the early stages, theneed for manpower requirements for the company was for people with drafting skillsor other technical skills. However, when the business expanded and began producinghigh-end products, the manpower requirements expanded to include not only thosewith technical know-how but also those with a reasonable standard of Englishproficiency. In the mean time, the company felt that it could attempt to retrain existingstaff to acquire new skills and the English proficiency expected. Using this as a base,Anuar identified personnel who had the potential to be re-trained in other areas of thebusiness such as sales, project management, interior design and engineering support.From time to time, these selected personnel of ISTIQ were sent to attend trainingworkshops so as to enhance their individual competencies on job-related courses andsome among them were even supported in acquiring a diploma in the required fields.



The company, no doubt, was very supportive of the workers throughout the processof acquiring knowledge in all aspects, including finance.

However, what had been planned did not take place as envisaged. According toAnuar, the most memorable incident was when the staff, on whom he had pinned themost hopes, left the company to start a business of his own, and, turned out to be hisimmediate competitor. In another case, the staff whom he had groomed and trained ininterior design also left for another design company for better pay and career prospects.

Nevertheless, the incidents turned out to be a blessing in disguise. If the employeeshad stayed on with ISTIQ, they would not have been able to progress in their careersbecause of their lack of interest in furthering their study. In addition, some who arestill with the company do not bother to improve their English proficiency but arepersistently demanding a better salary every year. Anuar is of the opinion that thecompany cannot retain workers who are deficient in upgrading their work skills/knowledge or in improving their English proficiency. He has consistently urged themto work on improving themselves, if they want to keep their job. The nature of thework at ISTIQ requires staff to prepare reports on completion of jobs and projects.If Anuar has to do the reports for his staff, it is likely that he would eventually deviatefrom his role as the top management of the company.

During the period of 2007 until end of 2008, there was a massive turnover ofstaff, some of whom had been with the company for over ten years. The wave ofchange affected the morale of other employees who had chosen to remain with thecompany. It affected their emotional status and concentration at work for a certainperiod of time. Furthermore, the task of training new staff had to be done all overagain and it definitely impeded the company’s progress.

Taking what had happened as a lesson learned, the management of the companyis changing their strategy in hiring. Currently, the focus of staff recruitment is ontheir qualification merits, sales skills, a good command of English and a positiveattitude. For example, in the most recent year, the company hired two engineers whohad graduated from University of Tenaga Nasional (UNITEN) with a CGPA of wellabove 3.0. From their mid-term appraisal, their performance was good and theyappear to be progressing very well. They seem to acquire skills much faster and areself-motivated in their job performance. Their work has been segmented to promoteefficiency.

Anuar, in a regretful mood, states that the most probable reason for this staffturnover could have been the inaccurate criteria used to hire people. As an engineeringcompany, progress in research and development is extremely important but this hadbeen impeded by not having a sufficient number of competent staff. However, thecompany is hopeful of finding answers to the problem by hiring the right peoplethrough proper planning and definition of core competencies required of theworkforce. The process of selection and recruitment of new people needs to beimproved. This will be a challenge to Anuar, as the Managing Director, and his HumanResource Manager, Jaladi. They need to hire people who can contribute to the company,while staying loyal and eventually progressing with the company.



As for Anuar, throughout this crisis period, he acquired knowledge to bettermanage the company and the people through reading management books and attendingrelevant seminars. Feeling this approach to be rather ad-hoc and insufficient to makehim competent and proficient, he enrolled in a structured training programme inmanagement - a Master’s in Management - which he hopes could provide answers tohis quest for knowledge. He strongly believes that the course will enhance his knowledgein management and prepare him for the challenges of the next level of achievement -to become an internationally competent company in noise control technology.

THE LEARNING ORGANISATION

The management of ISTIQ truly believes that improving one’s knowledge is the mostimportant criteria needed to sustain and progress further in the market. They have aninherent belief that it is the people who actually make an impact on any organisation.Due to this notion, back in 2005, the management began to encourage staff membersto engage in learning and sharing of knowledge in their tasks so as to develop ISTIQinto a Learning Organisation.

Retracing the history of their staff development, ISTIQ had in actual fact adapteda knowledge learning culture since its inception as a business. Most staff had earnedtheir certificates, or diplomas while working at ISTIQ. The management also had senttheir employees for various types of training seminars and workshops now and then.Evidently, the training and development of the staff has become more structured sincereceiving their ISO 1900:2000 certification; this is one of the requirements for an ISOCertification Company.

Knowledge Management in Action

A typical week at ISTIQ starts with a Sales and Project meeting, every Monday at9.00 a.m. This could last until 10.00 to 10.30 a.m. During the meetings, previousquotations which have sent out will be discussed and reviewed, a move designed tomonitor the sales activities. All discussions will be recorded, compiled and distributedto the various parties concerned.

The compilation of project activities is also done in a similar manner. However,there is a slight difference in that the activities are recorded in a journal format. Therationale for this format is to allow for the history of project activities to be recordedand captured as much as possible. The project team is required to highlight problemsand describe how it has been solved. This format is envisaged to ensure that importantcorporate knowledge is retained for future reference and reuse.

Once a month, there will be a management meeting. Normally, this will beconducted on a Saturday in the first week of the month. The overall companyperformance of the previous month will be reviewed and discussed. During this meeting,all the Department heads are required to present their department’s performance,against the goals set.



The management of ISTIQ knows that every organisation needs to be clear aboutits knowledge requirements. They also need to be clear about the importance ofknowledge sharing. Therefore, besides the sales and project meeting, every Wednesday,a core leader will be assigned as a facilitator to conduct training to the staff memberson their core competency subject. For instance, Anuar will conduct training in Acousticsand Noise Control Engineering in the first week of the month; Jaladi will conducttraining on information technology (IT) in the second week; while Razali will providetraining on quality management in the third week. The last week of the month will beassigned to either Sales by Felicia or 3D drawing by Hajar. This method relies onknowledge chains and realising that this may not be the best way to impart knowledge,they are moving towards a central knowledge hub which is believed to be more effectivein coordinating and diffusing various knowledge sources to individual recipients.

As mentioned earlier, most support staff in the organisation lack communicationskills in English. Realising that this is an important skill for most of the employees toacquire and progress in their career, the ISTIQ management team has implementedseveral measures to enhance the skill. Wednesday has been declared an ‘English day’with everybody having to speak English on that day. However, this method did notshow any significant improvement after one year of implementation. According toJaladi who is responsible for the staff English Enhancement Programme (EEP), themain problems identified were the ‘feeling of being shy’ and a lack of confidence.

The strategy for the EEP has been changed. Since the beginning of 2009, afacilitator has been identified – Arif f who is the Assistant Sales Engineer and who hasa good command of English will facilitate the English forum. In this forum, Arif f willsuggest a topic of interest and the group will discuss the topic among themselves inEnglish. A self-managed knowledge team is being applied here.

From Anuar’s observation, this strategy seems to work better and has shown avery positive results. Most of the staff have gained confidence to communicate inEnglish and furthermore, they seem to be enjoying themselves during the forum.

In addition to these meetings, every Thursday morning, the company wouldmeet and read the translation of Al Quran. The reading would either go from chapterto chapter, or from one topic to another. The method, as mentioned by Razali, is oneof the most unique ways that ISTIQ is fulfilling the spiritual knowledge gap of thestaff. Very often, this meeting will be facilitated by either Jaladi or Anuar with theobjective being to read, understand and practice the command of Al Quran. Accordingto Jaladi,the management hopes it will lead to sustained practice as well as lead to thecompany doing business according to Islamic teachings.

The management encourages their employees to explore knowledge throughreading. They encourage their staff to acquire an interest in exploring knowledge.According to them, the world is an awesome place for those who like to exploreGod’s creation. In the Quran, it is stated:

“In the of the heaven and the earth, and the alteration of night and day, there areSigns for people of intelligence: those who remember Allah standing, sitting and lying



on their sides and reflect on the creation of the heavens and the earth”(Surah Ali Imran3:190-191).

PERFORMANCE MANAGEMENT

The ISTIQ management believes that goal setting is the foundation for personal andbusiness success. Goal setting enables an individual to achieve one’s dreams andsuccess while serving as the framework for management success. Therefore, everystaff is given five goals to achieve each year.

The more effectively the employee performance evaluation processes goalsaccomplishment, the more the additional benefits. Documented employee performanceevaluations are communication tools which ensure the supervisor and the reportingstaff members are clear about the requirements of each employee’s job specifications.The employee performance evaluation also communicates the desired outcomes, oroutputs needed from each employee and defines how they will be measured. Theseare the goals of an effective employee evaluation process. The employee and the Headof Department (HOD) are clear about the employee’s goals, required outcomes oroutputs, and how the success of the contributions will be assessed.

The goals of the best employee performance evaluations are employee developmentand organisational improvement. The employee performance evaluation helps employeesaccomplish both personal development and organisational goals. The act of writingdown the goals takes the employee one step closer to accomplishing them. Sincegoals, deliverables and measurements are negotiated in an effective employeeperformance evaluation, the employee and the supervisor are committed to achievingthem. The written personal development goals are a commitment from the organisationto assist the employee to grow in his or her career path.

Employee performance evaluation provides legal, ethical, and visible evidencethat employees are actively involved in understanding the requirements of their jobsand their performance. The accompanying goal setting, performance feedback, anddocumentation ensure that employees understand their required outputs.

In the event that an employee is not succeeding, or improving in his jobperformance, the performance evaluation documentation can be used to develop aPerformance Improvement Plan (PIP). This plan provides more detailed goals, withmore frequent feedback to an employee who is struggling to perform. The goal leadsto improvement but repeated non-performance can lead to disciplinary action, up toand including employment termination.

The employee performance evaluation provides evidence of non-discriminatorypromotion, pay, and recognition processes. This is an important consideration in trainingsupervisors to perform consistent, regular, non-discriminatory employee performanceevaluations. The documentation of success and failure to achieve goals is a criticalcomponent of the employee performance evaluation process.

While employee performance evaluation systems take many forms, depending onthe organisation, the components described earlier are likely to be included. Some are



more effective than others. However, it is to be noted that the goals for the employeeperformance evaluation system, or the appraisal process, or the performancemanagement process are similar. The differences appear in the approach and thedetails. This can make all the difference in how the system is perceived by, andcarried out by, employees.

The Role of Information Technology

Generally, top management at ISTIQ is very supportive of IT usage and development.They clearly believe that Information Technology is a critical component in learningand knowledge management. IT has been established as an enabler. Local area network(LAN), e-mail, access to the Internet, computer aided design (CAD) system and theInternet banking system are being used extensively. It is evident that one importantadvantage of the use of IT is that it is giving the organisation an expanded ability todevelop and maintain a much improved, structured corporate memory. Currently,they are moving to cloud computing, rather than relying on their internal server.

However, sadly, most of the core leaders at ISTIQ are not extensive IT users,which is eflected in their lack of knowledge on the subject. Largely as a result of this,the repository system is not systematic. Information retrieval can take hours andsometimes it could even take more than a day.

In order to overcome the problem, they are planning to hire an IT executive whowill be in charge of IT-related matters, with his responsibilities outlined s follows:

• Ensure the ICT system is intact at all times• To train core leaders and knowledge workers on more efficient use of ICT• To set up a systematic repository system• To explore the usage of cloud computing

The greatest challenge to implementing effective KM is the transformation ofemployees from knowledge hoarders to knowledge sharers. It is acknowledged thatthe lack of IT knowledge will further impede the sharing progress. Power and influencein an organisation arise from being a knowledge source. Historically, with limitedknowledge available, that power was carefully retained and cultivated by selectivedistribution of knowledge. However, today the problem is reversed. The excessiveinformation flow now points to the real value of those who can provide timely accessto accurate information knowledge.

KNOWLEDGE MANAGEMENT PRACTICES AT ISTIQ

It can be seen that ISTIQ wanted to put into practice knowledge management practicesas prescribed in knowledge management and human resource management textbooks,but faced a problem in terms of acquiring competent staff. The reality is that someISTIQ employees are still IT illiterate, very disorganised in keeping records, are unableto write a good report in English, and are not able to share knowledge with customersand other stakeholders due to their low competency in English proficiency. ISTIQ is



also facing other challenges of absenteeism and a massive staff turnover. Aconsequence of the latter is a brain drain problem.


Q1. You are invited by the ISTIQ Sdn Bhd to evaluate their KM programme. Basedon the case above, explain TWO ways in which ISTIQ can gather data for theevaluation and also discuss TWO ways in which you can evaluate their KMprogramme outcomes.

Q2. With regard to KM programmes, there are certain features of successful,sustainable knowledge communities. Based on the case above, describe threefeatures that ISTIQ possesses that will allow them to sustain their KM programme.

Q3. Explain three characteristics of an effective knowledge repository and twomaintenance issues that need to be considered in managing a repository at ISTIQ.

Q4. How does the knowledge service work at ISTIQ Sdn Bhd? Does ISTIQ reallyneed a knowledge service to support its KM initiatives?

Q5. Explain two reasons why learning is very important in a knowledge environmentand three organisational factors that are affecting learning with reference to ISTIQSdn Bhd

IIUM Journal of Case Studies in Management: Vol. 2 No.1: 23-30, 2011

Anupama R* & Sanjeev Bansal**Amity Business School, India

Sodhi, JS ***AKC Data Systems Pvt. Ltd.

Abstract: Indian University has grown from single location and a few hundredstudents to a multi-continent presence with more than 60,000 students and 2500faculty members. In the present scenario of globalisation and resultant intensecompetition, no organisation can be considered successful unless each of itsprocesses can boast of efficiency and efficacy. Information Technology is a greatdriver of change and re-engineering. With IT, unchartered territories can be coveredand new heights scaled. Increased communication, speed in transactions, accuracyin administrative tasks and collaboration amongst team members are the obviousadvantages. Some of the initiatives resulting from the implementation of IT are E-learning, virtual classrooms, IP-camera enabling archives of surveillance and globalconnectivity of classrooms for guest lectures. This study traces the evolution of ITwith the rapid expansion of the Indian University across continents. It also studiesthe difficulties faced and solutions worked out till optimum scenarios were reached.The study also emphasises the changing teaching-learning pedagogies and theimpact of IT-enabled processes on students. Both advantages and fallouts arediscussed and the case study poses to the readers the question of an optimum mix ofIT enabled and traditional academics. Security aspects were another area of concern,be it intellectual or copyright issues of professors when they upload their lectureson the intranet or integrity of databases. Change management is also explored –migration to computerised systems, compatibility issues of legacy systems with thenew ones and user acceptability issues.

THE PROBLEM

The founders of the Indian University had realised the gaps in availability and qualityof institutions of higher learning. Though they had schools running in Delhi, they

Information Technology – Harbinger of Change inan Indian Private University

C a s eStudy3

ISSN 2180-2327

* Corresponding author: Anupama R., Assistant Professor & Head of IT DepartmentAmity Business School, India: Email: [email protected],

** Professor Sanjeev Bansal, Director, Amity Business School, India*** Dr JS Sodhi, Assistant Vice President, AKC Data Systems Pvt. Ltd.


Ms. Anupama R, Prof (Dr) Sanjeev Bansal and Dr J. S. Sodhi

decided to venture into management education. Beginning with a Post Graduate Diplomain Management course (PGDBM), they evolved into a university and later into a‘universe’ with branches around the world. Several challenges were inherent to thisexponential growth. There is and was a need to have uniformity of systems andprocedures – hence the network needed to connect all local and global campuses tothe central headquarters. Again as thousands of students, faculty and managementwould access and be online especially during working hours, the network needed tobe robust to handle the volume. The university generated huge volumes of data whichhad both archival and operational importance. Again, this network as well as data hadto be accessible both locally as well as viewed and monitored at headquarters. Theimportance of technology as a tool for the teaching learning process as well as acatalyst for transparency and effectiveness of processes was felt from the verybeginning and hence all functions of the university was technology enabled. Copingwith exponential growth, ever increasing demands of stakeholders, changing technologyscenarios and global competition is not an easy task. Yet the story of a belief turninginto a story of success ensues.

EVOLUTION

Today, Indian University boasts of over 5000 desktop computers and about 5000laptops connected through the intranet at any point in time.

The beginnings of the Indian University more than a decade ago were humble butthe vision immense. It all began with a few class rooms and even fewer members offaculty. The need for any powerful computing was minimal and hence computerswere a rarity. The few that they had were with the management and heads ofdepartment, mainly serving as silos.

Around 2001 when the student number rose to a few thousand, the need to ‘link’the computers was felt – both as workgroups and to the outside world via the Internet.The computers used were Celerons. They were available in three computer labs andtotalled about 100 in all. There was the establishment of a very local kind of network– with a dial up connection available.

Soon the number of directors and management increased and a strong need wasfelt to network the computers. LAN wires were used to create workgroup-like topology.Ten mpbs hubs were used to connect LINUX based systems. Freeware was largelyused and firewalls were used to protect the systems. Gateways Co a subsidiary ofReliance provided the bandwidth needed. The Internet speed achieved was about 1mbps. Radio connectivity was largely used. There were no application servers butvarious domains such as ‘directors’ ‘management’ etc were created to facilitate intranetmanagement.

It was in the middle of 2003 that the domain structure was created on the IndianUniversity server -- indian.local. This enabled uniform policies of computer usage tobe installed in the Indian University. Security and privacy procedures were also clearlylaid out. This revised structure facilitated intra-office communication. Also, licensed


Information Technology – The Harbinger of Change in an Indian Private University

centralised software packages such as Prowess were installed at central servers forglobal access. Internet servers looked after the needs of net usage. Oracle was centrallyinstalled to handle the database available. The hubs were organised into racks. Intelligentswitches looked after the routing processes. CAT 5 cables were largely used whileoptic fibers were used to connect various blocks of the building to the server room.

The year 2004 saw the domains being configured into parent-child structure anddomains such as abs.Indian.edu (for Business School users) came into being. Thiswas done to remove the load off the parent server as the number of users had increasedphenomenally.

10/100 Mbps switches began to be used and Internet speeds reached 4 Mbps.Another Internet service provider was added to the list of vendors and for the firsttime uninterrupted Internet usage was guaranteed. The use of intelligent routers enabledInternet to flow through the shortest routes possible enabling faster access.

Initially individual offline UPS were used across all labs which provided about 15minutes of back up time. The inherent disadvantage of this provision was that theyrequired all systems to be shut down in case of power failure. With the advent of newonline UPS, all offline UPS were replaced at server levels, enabling more than 30minutes of back up time.

The RJ 47 cords were also replaced by new factory made ones. Though theywere high on initial costs, yet because of low maintenance, they justified their use.

THE PRESENT

The Indian University has institutes across the world and feels that the education ofthe students must be uniform regardless of location.

INDIAN UNIVERSITY



The Indian University has several ISPs on board. They are linked with the Universitythrough their own fibre optic networks and are connected to their respective racks.From there, they are linked to RADWARE which puts multiple bandwidths on onebandwidth to combat the ISP server or transmission lines failure. Having multipleISPs on board implies that the Internet is never ‘down’ for the Indian Universityusers. From there, a very unique firewall comes into play – not only does it controlany malicious traffic coming from the Internet cloud, it also puts into effect the Indianpolicies of usage and privacy. Two firewalls are being used in redundant mode forhigh level content and URL filtering.

Presently, 16 spoke locations are connected with the hub at University headquartersand thus are able to access centralised Firewall, policy implementation, applicationssoftware and the Indizone Interactive Portal. Even the databases of the contentgenerated from high resolution surveillance cameras found at all locations to monitorclassrooms, hostels, corridors, access areas and gates are maintained centrally.

CONNECTING THE INDIAN UNIVERSITY UNIVERSE

Various parts of the building blocks in a campus are connected via fibre optics andswitches. Then the campuses and other locations of the Indian University universeare interconnected through a highly secured virtual private network. WLAN links areused to connect other locations. Meanwhile WLAN links and VPN tunneling wereused to connect to Indian Global Varsity campuses spread across 33 locations includingLondon and Singapore. Radio towers and connectivity connect adjoining campuses.For this purpose several switches are used for routing functions.

CENTRALISED ACCESS

The Indian University has centralised blade servers on which multiple applications canbe loaded which are subsequently connected to EMC’s storage which are in terabytes.About 10 or so applications can be loaded in a single blade. These blade servers enablea virtual platform so that multiple interfaces can be provided to the users. Platformssuch as Oracle, Windows etc. are then centrally available for use by several usersand locations all over the world leading to optimum use of resources. Again manpowerto man these applications is centralised at headquarters’ server rooms. Over 37 high-end servers power the Indian University Domain Tree Network.

SECURITY

Security and privacy are matters of primary concern. Any data and network accessedwidely faces dangers of hacking, virus and other malicious content. Again unproductivesites need to be filtered to de-congest network traffic. Academic content must bedownloaded, viewed etc at extremely fast speeds. In the case of the Indian Universitynetworks, there are several levels of security to look into. These are as follows:



• Physical : Employee computers are physically locked and secured in rooms /cabins while server rooms are manned and monitored 24 hours, seven days aweek against any kind of unauthorised access.

• Personnel: For all personnel employed for system administration and datasecurity, thorough background checks are done before making hiring decisions.

• Technical : Storage, access, manipulation, and transmission of data aresafeguarded by technology that enforces Indian information control and Domainpolicies.

Gateway Security at the Indian University:

• Antivirus protection is also maintained at gateway level using UTM Firewall,IPS and IDS besides normal desktop controls

• Web Content Filtering - Non productive and non academic sites are blocked tocreate an appropriate environment for students

• All users have their authorisation and privileges as per their access rights.

UBIQUITOUS INDIAN UNIVERSITY

Two different solutions (e-learning & surveillance cameras) bring experts from differentfields and locations to students across the campuses. Minimum investment was requiredas existing IP cameras and e-learning suites were used. The video of the presenterwas captured via webcam and the surveillance cameras conveyed student images tothe presenter. Dedicated high bandwidth is required to transmit audio, video andpresentations simultaneously. The IP cameras transmitted the video and audio wastransmitted through the e-learning suites and then integrated. There are several costbenefits, as lots of time and travel is saved for guest lecturers. These lectures can alsobe used to benefit future students. A mobile phone version of the same is on the anvil.

INDIZONE

Indizone has been the wonder wand for the Indian University. All stakeholders havetheir share of this Indian intranet. It goes a long way in bringing transparency andaccountability to processes. As all candidates now have their own microsites, startingfrom the admission process which now can be tracked online, the candidate can nowselect suitable dates for the admission test, view displayed results and be guidedthrough all procedures to the teaching process which requires the teachers to uploadtheir session plans and course material ahead of the class, to administrative procedures,where the student can view timetables, attendance and other schedules. Even mid-term and assignment marks are available to the students so that they can keep track oftheir progress. Thus intranets automate most processes on campus. The University



also has one of the most advanced online counselling systems to facilitate quickresponses to queries.

CHANGE MANAGEMENT

Neither taking senior management members from their pens to keypads nor the taskof taking faculty members used to ‘chalk and talk’ to multimedia content was easy. Aserious initiative flowing from the top and percolating to all levels was required.

It had to be done in stages – all faculty members were first trained to use Indizone.They were allotted ‘buddy’ faculty members to help them in the initial stages, Thenthey were encouraged to transfer content to power point presentations which wereuploaded for students to view before scheduled classes. A dedicated training divisionensures that everyone at the Indian University is updated with the latest technologiesand trends.

THE CHALLENGES

• The Indian University student strength is increasing manifold resulting inincreased demands on IT and network infrastructure.

• The Indian University vision is to provide the latest technology i.e. multimediarich content but streaming video and video-on-demand continuously strainsthe present set ups.

• Installation of IP cameras across the campus has loaded the network further.• An increase in demand for new applications translated into new server

hardware. This has led to the challenge of physical space.

THE FUTURE

IT infrastructure expectations of the Indian University are ever increasing. There isa need to archive the lectures of great teachers which are being recorded on a dailybasis. They can constitute an invaluable resource, both for present as well as futurestudents.

Security demands that all camera recordings be saved for future references haveled to terabytes of data. A unified storage system which could provide dynamic additionof storage space on various servers is envisaged as there is also a need for personalstorage space of files by faculty and students, for example, the content uploaded byteachers. As the Indian University claims to be exceedingly environment conscious,students are encouraged to submit e-assignments, project reports and dissertations.Finally, it is an imperative that all systems are scalable to meet the growth plans of theUniversity in the near future.

The initiatives being worked for the future are the live transmission of universityfunctions and the creation of a digital repository for research and project work.

Towards this, the intranet portal, Indizone, is being strengthened and enabled toautomate canteens with cashless automated counters. Videoconferencing is being



extensively enabled with the help of communication servers and live meeting for theUnified Indian Communication System.

REFERENCES

Amity University (2010). Amity University, 15 June 2010. From www.amity.edu.Dhume, S. (2006). Perceptions of Business Education Students towards e-Learning:

An Empirical Study of North Karnataka region of India. The Fourth Pan-Commonwealth Forum on Open Learning (PCF4) Commonwealth of Learningand the Caribbean Consortium, Jamaica.

Pittman, J. (2007). Converging instructional technology and critical interculturalpedagogy in teacher education. Multicultural Education & Technology Journal,1(1): 200-221.

Doctor, G. (2008). Capturing intellectual capital with an institutional repository at abusiness school in India, Library Hi Tech, 26 (1): 110–125.

Saeed, N. & Yang, Y. (2008). Incorporating Blogs, Social Bookmarks and Podcastsinto Unit Teaching. Paper presented at Tenth Australasian Computing EducationConference (ACE2008), Wollogong, Australia, January 2008.

McGee, P.A. & Diaz, V.M. (2008). Finding the Good Fit: Faculty Members, Instruction,Evidence, and Technology, Paper presented at EDUCAUSE, Orlando, 28-31October.

Sodhi, J. S. (2009). Indian University Interactive Class Rooms. PCQUEST, July, pp.60-61.

Jha, N. (2010). Classes in your bedroom. The Times of India, 15 July, p. 23.Pushkarna, N. (2010). End of ‘talk and chalk’ regime. Times of India, 13 June, p. 3.Taylor, L. & Clark, S. (2010). Educational design of short, audio-only podcasts: the

teacher and student experience. Australasian Journal of Educational Technology,26 (3): 386-399.

Zhao, J. & Xu, F. (2010). The state of ICT education in China: a literature review.Front. Educ China, 5 (1): 50 - 73.




Q1.What do you mean by computerisation of an organisation?

Q2. Differentiate between intranet and extranet and how can they contribute to anorganisation’s growth?

Q3. What are switches, routers and ISP providers?

Q4. What are the basic requirements in analysing the scope of a network?

Q5. What are open source systems? Read about some examples.

Q6. Read about some examples of single and multi user operating systems.


Choupal Sagar: Pioneering Organized Retailing in Rural India

Prarthana Banerjee1

IBS, Salt Lake City, Kolkatta 700091, India

Subhadip RoyIBS, IFHE Campus, Dontanapally, Hyderabad, India

Abstract: With a major segment of the Indian population residing in villages, and asignificant number having purchasing power for their daily necessities, the FastMoving Consumer Goods (FMCG) companies have shifted their focus from urban torural India. Big industrial houses such as DCM, Mahindra, Godrej and corporategiants such as Hindustan Unilever and Imperial Tobacco Company of India Ltd(ITC) have ventured into organised rural retailing. This case study traces the originand development of Choupal Sagar, the rural marketing initiative of ITC. The casedeals with issues relating to rural distribution, product management and ruralmarketing based on secondary research. The case also discusses the problems andchallenges faced in rural retailing.

“The myths about the rural consumer class being an impoverished mass are slowlybeing dispelled.

S. Sivakumar, Head of International Business Division, ITC

“These malls make a lot of sense as it’s clear that rural consumers are becomingincreasingly brand-conscious and they are the ‘value-seekers’ who don’t mind payingmore if the quality is assured.”2

Guy Goves, General Manager (Agri-business), Tata Chemicals

INTRODUCTION

The two quotes above signify the potential of the rural markets in India. Indian businessgroups have realised the potential of an erstwhile untapped and ignored market, that

Choupal Sagar: Pioneering Organised Retailingin Rural India

1 Corresponding author: Prarthana Bannerjee, IBS, Kolkata, RDB Boulevard, 8th Floor,Plot #K1, Block #EP and GP, Sector V, Salt Lake City, Kolkata 700091, India.Email: [email protected]

2 Pasture Plazas: Corporate giants are making canny rural forays—out to tap a huge, latentmarket. Shuchi Srivastava(2006), Outlook, September, 2006.

C a s eStudy4

IIUM Journal of Case Studies in Management: Vol. 2 No 1: 31-39, 2011 ISSN 2180-2327


Prarthana Banerjee and Subhadip Roy

is, the rural markets of India. Surprisingly, the major retailing giants in urban retailinghave been left behind by the companies who are pioneering rural retailing. The reasonis relatively simple. Firms such as Imperial Tobacco Company of India Limited (ITC)(refer to Exhibit 1 for a brief profile of ITC) have been involved in agri-business sincethe 1990s. This gave them knowledge about the rural markets and the demand structurein rural areas. This saw the rise of ventures like ‘Choupal Sagar’, a rural retail mall byITC. The prospects in Indian rural markets have driven big corporations like FastMoving Consumer Goods (FMCG) giant Hindustan Unilever Limited (HUL), industrialconglomerates the Mahindras, the Godrejs, Delhi Cotton Mills (DCM) Shriram group,oil majors like Indian Oil and Bharat Petroleum, and even bankers like Industrial Creditand Investment Corporation of India (ICICI) towards the hinterlands of India. ChoupalSagar is one of the pioneers of organised rural retailing. However, with increasingcompetition, the rural markets are going to witness new players and new strategies togain a market share. In such a scenario, it would be interesting to observe the marketingstrategies of Choupal Sagar to retain its market position.

The ‘Imperial Tobacco Company of India Limited’(ITC) was incorporated on24 August 1910. It started operations in a leased office on Radha Bazar Lane,Kolkata, shifting to 37, Chowringhee, (now renamed J.L. Nehru Road) inKolkata on 24 August 1926. The Company’s ownership became more and moreIndianised, and the name was changed to I.T.C. Ltd in the year 1974. TheCompany has a diversified portfolio of businesses encompassing a wide rangesuch as cigarettes & tobacco, hotels, information technology, packaging,paperboards & specialty papers and agri-exports. In September 2001, the fullstops in the Company’s name were removed and the company name wasrenamed ‘ITC Limited’.

ITC is one of India’s leading private sector companies with a marketcapitalisation of about USD14 billion and a turnover of over USD 5 billion as on31st March 2009. ITC has been ranked among the World’s Best Big Companies,Asia’s ‘Fab 50’ and the World’s Most Reputable Companies by the Forbesmagazine. It has also been rated among India’s Most Respected Companies byBusinessWorld magazine and among India’s Most Valuable Companies by BusinessToday. ITC is one of India’s largest exporters of agricultural products. ITC isalso one of the biggest foreign exchange earners for India. ITC employs morethan 25,000 people in more than 60 locations across India. The all inclusivevision of the company is captured in its corporate positioning statement whichsays: ‘Enduring Value. For the Nation. For the Shareholder.’

Exhibit 1. Brief Profile of ITC

Source: Adapted from http://www.itcportal.com/sets/itc_frameset.htm



BACKGROUND

The idea behind the Choupal Sagar originated in a venture by ITC known as the ‘e-Choupal’. The e-Choupal was introduced by ITC in June 2000 so as to set up a directlink with rural farmers for procurement of products like soybeans, wheat, coffee,oilseeds etc. which it requires for its agro-based division. The agricultural sector ofIndia had been characterised by weak infrastructure and several intermediaries.Previously, most of the products were procured in the agricultural marketing centresknown as a ‘mandi’ resulting in high profits for the intermediaries. Generally in thissector, a farmer would sell his produce to a small trader called a kaccha adat, whowould then sell the produce to a larger trader called the pakka adat, who in turnwould take the produce to a local mandi, where a larger trader would buy the produce.The mandi traders then operated through brokers to negotiate sales to companiessuch as ITC. This long supply chain (Refer to Exhibit 2 for the Traditional SupplyChain in Agricultural Products) resulted in a high cost of procurement for ITC on onehand and also a very low profit opportunity for the farmers, on the other hand. Moreover,the entire process was too lengthy and complicated. Such a time consuming processalso resulted in the deterioration of the quality of the products.

Source: http://www.itcportal.com/agri_exports/images/value.gif

Exhibit 2. Traditional Supply Chain in Agricultural Products



Given the backdrop of these problems, ITC took the initiative to introduce e-Choupal through which the farmers could directly negotiate the sale of their producewith the company without further involvement of intermediaries. This provided manybenefits to the farmers. On one hand, they could sell their produce at reasonableprices and on the other, they could have access to PCs and the Internet which enabledthem to obtain useful information about the weather, fertilisers, seed quality, informationabout various types of seeds etc. They could also place orders for good quality seedsand fertilisers thereby improving the quality of produce. The farmers were also assuredabout correct tonnage since e-Choupal used automated weigh bridges to weigh theirproduce. As the farmers agreed to sell their produce, it was dispatched to the neareste-Choupal warehouse and they immediately received their sale income.

For operation of these e-Choupals, sanchalak (coordinators) were employed byITC. They were the literate people elected from among the farmers of the village andwere trained to run the Internet and access useful information from meteorologicalsites along with other agricultural information. The roles of the intermediaries wereredefined to samayojak (meaning agent) assisting the company in setting up new e-Choupals, collecting price data and maintaining records etc. They also receivedcommissions on produce processed. Though there was an initial reluctance by theagents to join, they soon began to see the benefits of a substantial earning opportunityin the form of increased commission as sales volumes began to increase.

The e-Choupal initiative was also beneficial to the company as it had easy anddirect access to agricultural produce without going through the process of negotiationwith the intermediaries. The cost of transportation of the goods from the local mandito ITC storehouses was reduced due to the setting up of their own warehouses aspart of this initiative. The initiative was successful in making the entire processtransparent and smooth. In early 2000, e-Choupal was serving over 4 million farmerscovering the states of Madhya Pradesh, Haryana, Uttar Pradesh, Rajasthan, Karnataka,Maharashtra, Kerala, Tamil Nadu and Andhra Pradesh.

INTRODUCTION OF CHOUPAL SAGAR

Following the success of the e-Choupal, the company launched Choupal Sagarcomprising collection and storage facilities and a unique rural hyper market offeringmultiple services under one roof. This was another unique initiative by the ITC to lurethe rural agricultural community by constructing a rural mall in the same warehouseused for storage of produce that it purchased through its e-Choupal. The first ruralmall on an eight-acre plot with a shopping area of 7,000 square feet was set up inAugust 2004 at Rafiqganj, about four kilometers from Sehore town in Madhya Pradesh.What had started as an experiment to use information technology tools to enablefarmers find the best price for their produce, now metamorphosed into this shoppingidea by providing multiple services under one roof, such as selling produce andbuying quality products for farm and household consumption. The additional servicesprovided were soil testing, banking, insurance from ICICI Prudential and LIC and



medical facilities and a restaurant. Thus Choupal Sagar had been successful in evolvinginto a universal platform for rural India with a basket of goods, services and mostimportant, information access.

The key factor for the success of Choupal Sagar is the fact the rural India hasmuch more potential than the urban marketplace, not only for agro-extension servicesbut also for organised retailing in the form of rural malls and supermarkets. RuralIndia accounts for over 50% of India’s GDP. There is tremendous potential in ruralIndia as the rate of disposable income is increasing. The rural markets have beengrowing at a much higher rate than the urban markets. Thus the rural retailingmarket is becoming significantly more attractive.

PRODUCTS AND LOCATION

With a dazzling array of clothes and consumer goods (from FMCG and others), theChoupal Sagar emerged as a one-stop shop for farmers (refer to Exhibit 3 for snapshotsof Choupal Sagar). Its 7,000 square feet area was stacked with brand names such asSonata (watches) and home appliances from brands such as Usha, Prestige andHawkins. Among the apparel brands there was Italio, Cosmo, Springwood and JohnPlayers. Philips (mainly light bulbs) and LG products were available in the consumerelectronics shelf. With an area of 7,000 square feet, the Choupal Sagar was too smallto be called a mall but its breadth of products could easily challenge a supermarket.Operating in self-service mode, the shelves stocked almost everything from toothpasteto televisions, hair oils, motorcycles, mixer-grinders, water pumps and fertilisers.The mall also had a Bharat Petroleum Corporation Limited (BPCL) outlet selling dieseland petrol, and an average farmer could purchase fuel for up to Indian Rupees (INR)3,000 (USD = 67.11).3 However, the majority of the brands for sale were local, e.g.Marico, Colgate, Eveready, TVS etc.

The rationale for setting up the mall next to a warehouse was also interesting.With its network of e-Choupals, ITC communicated its latest commodity prices tothe farmers. If the farmers found the offer attractive, they sold their produce to ITC.When the farmers came to deliver their products to the warehouse, they also visitedthe mall next to it. This ensured steady footfalls in the store since the Choupal Sagarswere mostly in those villages where the majority of the farmers dealt with ITC only.According to Mr. R. Nandkishore, director for marketing in Philips Lighting, “ITCrealised that the farmers had just got money, that they would spend it anyway, and thatthey had an empty vehicle with which they could lug the stuff back.”4 It was the useof this strategy that saw ITC achieving a two-way flow of products and services intothe rural economy.

Companies such as Philips which could not penetrate deep into the rural areas ofIndia greatly benefited because of Choupal Sagar. According to Nandkishore, the

3 USD 1 = INR 45 approximately as on 7 June 2011.4 Chaupal Sagar – “Unlocking rural markets”, Businessworld, 20 September 2004.



Exhibit 3. Snapshots of Choupal Sagar

Source: http://www.itcportal.com/sustainablity_report/page_57.htm



logic was simple. If we assume that a village needs 200 bulbs, given the MRP of INR10 (USD = 0.22) per bulb, the revenue was INR 2,000 (USD = 44.74) and the companywould make a gross margin of 5-7 % on it. However, to go deeper into the ruralmarkets and beyond to villages with a population of below 20,000, the companywould have to hire a van. Given the van cost of INR 50 (USD = 1.12), the entiremodel would fail to work. However, when Philips realised that ITC was sending avan to all its Sanchalaks once every 15 days to villages with population of 20,000 andbelow which supplied produce to them, Philips collaborated with ITC to have theirorders dropped off as well. This resulted in increasing coverage of up to 50-60 % inthese areas from 20% in 2002. Another advantage was that high cost energy savingproducts now began to be displayed in the Choupal Sagar (rather than in the villagekirana5 store where not only was there problems of space, the bulbs also had lesssales) thereby adding to further penetration of their products.

COMPETITION WARMING UP

Looking for new areas of growth, the corporate sector had realised the huge potentialof the untapped rural market. Along with ITC’s Choupal Sagar, several other companiestook initiatives in the same direction. These were Delhi Shriram’s Kissan HaryaliBazaar, Godrej’s Aadhaar etc. The rural market is accounting for over one-third of themarket for most durable and non-durable products. Even manufacturers are developingnew products with the rural consumer in mind besides using village-oriented marketingstrategies for brand promotions. DCM Shriram group launched a chain of rural businesscentres under the brand name Hariyali Kisaan Bazaar which has been in operationsince 2002. These stores are so planned that they cater to around 100 small villageswithin a radius of about 40 kilometers with a diverse product range from farmingproducts to household goods. At present DCM Shriram has a total of 302 stores ineight states of Uttar Pradesh(UP), Rajasthan, Punjab, Harayana, Chattisgarh,Maharashtra, Madhya Pradesh (MP) and Andhra Pradesh (AP), and are planning totake the total count of Hariyali Kisaan Bazaar outlets to 500 in the next three years, andmainly in the above-mentioned states. The Godrej group is another industrial powerhousethat has opened its rural mall under the brand name of Godrej Aadhaar Stores. Thefirst centre was set up at Manchar near Pune in December 2003. It plans to set up1,000 Aadhaar stores across rural India by 2010. The Mahindra group (Mahindra), thelargest farm equipment maker in the country is another competitor in this area. Itsbranded rural retailing foray is a chain of superstores called Mahindra ShubhLabhStores. The farm extension arm is called the Mahindra Krishi Vihar. ShubhLabh Storesbegan in 2002, and soon extended into 11 states of AP, MP, Tamil Nadu (TN),Maharashtra, Karnataka, Gujarat, Rajasthan, Orissa, Chattisgarh, Bengal and Delhi.Indian Oil Corporation (IOC), the Fortune 500 oil company in the public sector started

5 A kirana store is the name for a local provision store selling daily necessities. This is theIndian equivalent of ‘Mom and Pop’ stores in the Western World.



its rural retail venture in 2005 by setting up Kisan Seva Kendras (KSKs), which is arural petrol pump cum retail store. There have been more than 2000 of these ruralretail outlets across the country. Consumer products giant HUL started its new ruralventure, Project Shakti, in 50 villages of the Nalgonda district in Andhra in 2001. Thisproject is unique in that it empowers women through self-help groups to increaseawareness of HUL’s products to facilitate product reach into areas of low access andlow market potential. The project has now been extended to MP, Gujarat, Karnataka,TN, Chattisgarh, Uttar Pradesh and Orissa.

OUTLOOK

The prospects of rural retailing are very lucrative going by the report published byMcKinsey India on Rural Retail in 2007. According to the report, rural consumptiongrowth rate is likely to increase from around 4% in 2005 to more than 5% in the nextten years resulting in a rural market worth 16 trillion6 Indian rupees (USD = 357 billionapproximately). By 2017, the average rural household consumption would coincidewith the value of urban households of year 2005. This may have been the mostimportant reason leading to the increasing focus of large corporations into Indianvillages. However, though ITC has its expansion plans in rural retailing, it is not sittingidle on the prospects of urban retailing of consumer goods.

‘Choupal Fresh’ is the name given to the vegetable and fruits supermarket withthe first store being set up in Hyderabad in August 2006. The 2,500 square feet storehas combined retail with wholesale. The store has its own cold storage chain andoperates from 5 a.m. every day to supply to wholesale and retail clients. The successachieved by Choupal Fresh has subsequently let to outlets in Chandigarh, Pune andHyderabad and has provided the impetus to ITC to plan for opening up about 140stores in 54 Indian cities over the next three years. Meanwhile the focus on ChoupalSagar is expected to continue with plans for further expansion. Only time, competitionand the strategies adopted by ITC would decide the fate of Choupal Sagar!


Q1.What are the fundamental issues which deterred major retailing firms from enteringthe Indian rural markets for retailing?

Q2. The e-Choupal initiative of ITC helped it to establish its rural retailing unit, ChoupalSagar. But the company still has a long way to go to overcome the barriers in ruralretailing. How far do you support this argument? Critically argue your viewpoint.

Q3. The competition in the rural retailing scenario is warming up with giants likeHindustan Unilever and Godrej entering the foray. What sort of challenges doesChoupal Sagar face in such a scenario?

6 1 Trillion = 100,000 Crore



Q4. ITC, the parent brand of Choupal Sagar, is one of the most renowned firms inIndia. But will the experience be successful for Choupal Sagar in the long run orwill it need to develop a new model for success in the rural market?

REFERENCES

Anon. (2004, 20 September). ‘Choupal Sagar - Unlocking rural markets’,Businessworld. http://www.itcportal.com/newsroom/bwpress_oct07_04_.htm[Retrieved 6 July 2009].

Anon. (2006, 30 August). ‘ITC’s Choupal Fresh combines retail with wholesale.’http://www.moneycontrol.com/news/business/itcs-choupal-fresh-combines-retailwholesale_237261.html [Retrieved 6 July 2009].

Anon. (2006, 20 December). ITC to open 54 Choupal Fresh outlets in 3 years. BusinessLine. http://www.thehindubusinessline.com/2006/12/20/stories/20061220027

50500.htm [Retrieved 6 July 2009]Anon. (2007, 23 January). ITC plans big on retail; to open 140 Chaupal ‘Fresh’ &

over 50 ‘Sagar’ stores. http://indiaretailbiz.wordpress.com/2007/01/23/itc-plans-big-on-retail-front/ [Retrieved 6 July 2009].

Bennychan, K. J. The new rural rising: malls, hypermarts. Pitch. http://www.pitchonnet.com/feature.asp?id=14 on 06/07/09.

Kakatey, R. (2007, June 14). IOC rural malls script success story. Business Standard.http://www.ibef.org/artdisplay.aspx?cat_id=60&art_id=15871&refer=

n35 on 08/07/09McKinsey Global Institute. (2007). The ‘Bird of Gold’: The Rise of India’s Consumer

Market, Ch 4.Srivastava, S. (2006, 11 September). Pasture Plazas: Corporate giants are making

canny rural forays—out to tap a huge, latent market. Outlook. http://www.outlookindia.com/article.aspx?232470 on 06/07/09.


Bank Rakyat Malaysia: Vision Remains while Mission is Revisited

Khaliq Ahmad*International Islamic University Malaysia

Azhar Kazmi **King Fahad University of Petroleum and Minerals (KFUPM), Saudi Arabia

Abstract: The slogan, “of the people, for the people, by the people” comes home.Bank Rakyat Malaysia (BRM) offers a different kind of retail banking. Bank Rakyatunderwent a drastic evolution from a cooperative system of management to a highlycreative market entity ready to face the very aggressive competitive market forces ofthe Islamic banking and finance industry. The BRM was a cooperative bank beforeit entered the Islamic banking and finance industry. It needed to create a culture ofchange and flexibility to adapt to the changing external environments. The challengewas to remain consistent in its vision but revisit its mission. The consistency had tobe maintained as it was in line with the founding fathers’ idea of serving its members.Thus the vision of serving its members was maintained while a new structure wascreated to aid efficient decision making and communication with stakeholders. Thischange subsequently facilitated the implementation of its growth strategies andplanning activities, an imperative for its survival. All of this change was being effectedwhile sustaining its image as a responsive, transparent and honest corporate citizendespite a host of issues and challenges that lie ahead.

HISTORICAL BACKGROUND

The cooperative movement in Malaysia is quite well established and has a long history.The first credit cooperative registered was the Postal and Telecommunications Co-operative Thrift And Loan Society Limited in 1922. Syarikat Kampung Teluk HajiMusa Bekerjasama-sama Dengan Tanggungan Berhad, Parit Buntar Krian, Perak wasregistered in 1923.Starting with only a single activity such as credit or rice milling, thecooperative movement diversified into a range of business activities such as consumer,housing, transport, land development, and production that benefited the members.

Bank Rakyat Malaysia: Vision Remains whileMission is Revisited

* Professor and Dean, Kulliyyah of Economics & Management Sciences, InternationalIslamic University Malaysia (IIUM). Email: [email protected]

** Professor, King Fahad University of Petroleum and Minerals (KFUPM), Saudi Arabia

C a s eStudy5

IIUM Journal of Case Studies in Management: Vol. 2 No 1: 41-48, 2011 ISSN 2180-2327


Khaliq Ahmad and Azhar Kazmi

As a socio-economic movement, the cooperatives have grown steadily in terms ofparticipation in the economic activities of the country.1 Malaysia’s cooperative movementhas 4,553 cooperatives with 5.4 million members.2 The total number of cooperativesin 2004 stood at 4651 with a total membership of 5.391 million members and totalassets of RM 25.977 billion. The total shares (subscription) were worth RM6.664billion and during the same period, loans extended to 586,620 borrowers reached RM5.10 billion.3

Bank Rakyat was established in September 1954 under the Cooperative Ordinance1948, following an expansion of the cooperative movement in Peninsular Malaysia.To facilitate the expansion of the cooperative movement, the cooperatives set up theirrespective union banks to provide for financial needs of their members. On 28September 1954, 11 of these union banks decided to merge and form Bank Agong(Apex Bank). In 1967, Bank Kerjasama Malaysia Berhad replaced Bank Agong withthe membership being opened not only to the cooperatives, but also to individuals.Subsequent changes in the by-laws also resulted in the creation of subsidiary companiesand opening of branches to serve customers as well as members. On 6 January 1973,the bank saw a name change to Bank Kerjsama Rakyat Malaysia Berhad or betterknown as Bank Rakyat (BRM). BRM is governed by its by-laws and Bank KerjasamaRakyat (M) Berhad Act 1978 (Special Provision 202), which allows the Bank to providefinancing to non-members. In 1989 Bank Rakyat was placed under the Ministry ofLand and Cooperative Development and the Ministry of Finance. In 1993, theCooperative Act was reviewed allowing the Bank to operate in Sabah and Sarawak.On 8 May 1993, BRM took a giant step towards becoming a Syariah-compliantcooperative bank by introducing Islamic banking products at four of its branches.BRM became a full-fledged Islamic cooperative bank in 2002. Hence, with this majordecision, BRM marked another milestone in its history where it became the third bankto offer a total range of Islamic banking products in Malaysia. On 15 February 2002,the Bank, together with six other financial and development institutions, was placeddirectly under the supervision of Bank Negara Malaysia (Central Bank of Malaysia)under the Development of Financial Institutions Act (DFIA). On 27 March 2004,BRM was placed under the supervision of the Ministry of Entrepreneurship andCooperative Development. At present, the BRM has a total of 111 branches offeringIslamic banking facilities to its customers.

BRM is among a family of organisations under the Ministry of Entrepreneurshipand Cooperative Development as shown in Exhibit-1. As a full-fledged Islamic

1 Website of Cooperative Development Department of Malaysia at http://www.jpk.gov.my/default%20page%202.htm [Retrieved 22 April 2005.

2 ‘Cooperative Bank Interests Iranians,’ says Khaled. Bernama, 7 March 2005.3 ‘Focus on the cooperatives: New commission to tighten operations.’ New Straits Times,

Kuala Lumpur, 6 March 2005.



cooperative bank, the BRM has an eminent Board of Directors and a Shariah AdvisoryCouncil comprising learned Islamic scholars. Besides, it has the mandatory AuditCommittee reporting to the Board.

THE VISION AND THE MISSION

The BRM’s vision statement of ‘Your Choice Bank’ explains its Mission as follows:“To raise the economic well-being of our members by providing financing facilities atreasonable rates for agriculture, production, marketing, industrial, fishery, transportation,housing, business, and other beneficial activities.”

The objective of the bank is: To ensure a satisfactory profit towards meetingdividend payments to its members while charging reasonable profit rates which arenot a burden to its members.

MINISTR Y OF ENTREPRENEUR AND COOPERATIVE DEVELOPMENT

Entrepreneur DevelopmentAgencies

Cooperative DevelopmentAgencies

Bank Kerjasama Rakyat Malaysia Berhad

Malaysian Cooperative Development Department

Cooperative College of Malaysia

Exhibit 1. Organisations under the Ministry of Entrepreneur and CooperativeDevelopment



The functions that the Bank assigned its branches are: “to provide financing andaccept deposits as well as producing satisfactory dividend returns for the bettermentof its members.”

The strategies that the Bank has outlined so as to operate efficiently are as follows:• Market: Widen and penetrate the market through effective marketing

efforts.• Product: Determine a unique product and ensure a simple and timely

delivery.• Customer: Provide valuable offerings through a service that is sensitive

to customer needs.• Social responsibilities: Increase contribution towards social development

and members’ needs.• Product range: Explore business opportunities beyond retail banking.

MARKETING MANAGEMENT

The typical profile of Bank Rakyat’s customer is the retired person who has savedmoney for a comfortable post-retirement life and therefore needs a safe and soundavenue for his or her hard-earned money. In early 2006, the Bank had almost 45,000such customers and therefore the focus of marketing efforts had been towardsconsumer financing products as nearly 95% of its loans portfolio constituted retailingincluding housing, personal, and car loans. In 2006, the Bank targeted a loan growthof 25% to reach RM18 billion. It signed a memorandum of understanding with TakafulIkhlas (a Malaysian company offering Islamic insurance services) to offer a newproduct - Personal Financing-i - that offers insurance to customers at nominal premiumrates.4 The bank aimed to disburse RM50 million worth of Personal Financing-i loansin the first year, beginning with the bank’s existing 10,000 customers who are civilservants. Bank Rakyat’s customers include over 700,000 individuals and 1,200cooperatives.5

The BRM financial statements and range of products and services being extensivelymarketed are presented in Exhibits 2 and 3 respectively.

PUTTING INFORMA TION TECHNOLOGY TO WORK

The BRM operated directly under the supervision of the Central Bank of Malaysia(Bank Negara Malaysia) under the Development of Financial Institutions Act (DFIA).In order to comply with this Act, financial institutions must have the highest levels ofnetwork security. Though an old and established institution, Bank Rakyat started facingincreasing pressure to deliver high volumes of transactional and operational data,securely and in real-time. By 2002, BRM’s existing network had reached maximum

4 “Bank Rakyat expects to give out RM18bil loans this year.” The Star , 9 February 2006.5 “Bank Rakyat expects loans to rise 25%.” The Edge Daily. 8 February 2006.



Year Ended Change

31 December %

Items 2007 Million 2006 Million

1.Profit & Loss Account

i. Total Income 2,387.21 1,961.21 21.72

ii. Profit before Tax & Zakat 828.83 626.63 32.27

2.Balance Sheet

• Total Assets Including 34,900.15 27,491.93 26.95

Commitments and Contingencies

• Dealing and Investment Securities 6,825.55 3,910.96 74.52

• Financing and Advance 22,936.31 19,022.26 20.58

• Deposits and Savings 27,253.58 22,710.81 20.00

• Deposits and Placements with 2,296.02 2,511.39 (8.58)

Financial Institutions

• Shareholders’ Funds 3,964.09 3,634.01 9.08

3.Financial Ratio Percentage Percentage

i. Returns Before Tax and Zakat 21.82 17.19 26.90

on Average of Shareholders’

Funds

ii. Returns Before Tax and Zakat 2.66 2.43 9.12

on Average of Total Assets

iii. Financing and Advances 84.16 83.76 0.48

on Total Deposit

iv. Risk Weighted Capital Ratio 19.19 21.53 (10.88)

v. General Provision 2.90 2.85 1.75

vi. Coverage on Non- Performing 107.58 101.43 6.07

Financing

vii. Non-Performing Financial Ratio 2.37 2.75 (13.82)

Exhibit 2. Financial Highlights

Source: Bank Rakyat’s website at:http://www.bankrakyat.com.my/web/guest/profil?p_p_id=56_INSTANCE_RETP&p_p_li f e c y c l e = 0 & p _ p _ s t a t e = n o r m a l & p _ p _ m o d e = v i e w & p _ p _ c o l _ i d = c o l u m n -5&p_p_col_count=1&page=2/[Retrieved 7 April, 2009]



capacity and would not have been able to support new services to be implemented inthe near future. As a result, its branches decided to upgrade the existing network aspart of their five-year strategy to be a leading Islamic Cooperative Bank, respectedboth domestically and internationally. In line with this, the Bank installed a CISCOnetwork system particularly to augment the organisation’s capacity to install andmanage the vast amounts of data that its day-do-day operations generated.6

BRM signed MOUs with Microlink Systems Sdn. Bhd. and Sun MicrosystemsInc. to upgrade its Microlink Banking Solutions system in 2004 for RM2.8 million.With Internet banking facility, the goal of the bank was to be able to pre-approve loanapplications online. “This feature reduces the time required for a loan to be approvedand helps increase the bank’s share of the retail loans market”.7

BRM was the first non-commercial bank in the Malaysian Electronic PaymentSystem Sdn Bhd (MEPS) network that operated as a shared automated teller machine

6 http://www.cisco.com/asiapac/channels/f i les/a_sound_investment_aug04.pdf[Retrieved 15March 2006].

7 ‘Bank Rakyat targets RM6b loans.’ The Edge Daily, 6 July 2004.

Investment/ Savings Financing

Qiradh Investment Account – 1 Aslah Personal Financing – 1Bank Rakyat’s Financing Certificate – 1 Mudarris Personal Financing – 1Warge Emas Investment Account – 1 Shifa’ Personal Financing – 1Tilmiz Savings Account – 1 Manzili Home Financing –1Shabab Savings Account – 1 Manzili 2 Home FinancingTaufir Savings Account - 1 Manzili 3 Home Financing

Aitab Car Hire Purchase FinancingAl Falah Education FinancingAr Rahnu Pawn BrokingAz Zahb Pawn BrokingTijari Contact FinancingPersonal Financing

Insurance Services

Takaful Rakyat-I-Hayati Scheme Kad RakyatOne-stop Bill Payment CentreElectronic Banking CentreBankcard ATM Services

Exhibit-3. Products and Services of Bank Rakyat

Source: Bank Rakyat’s website at: http://www.bankrakyat.com.my/index.php?idx=main&lang=en [Retrieved 16 April 2005]



(ATM) network in South-east Asia. Its purpose was to enable member banks’cardholders to use ATM services for withdrawal, fund transfer and other transactionsin the participating countries. The MEPS system is a part of the e-Asean initiative, aframework agreement first proposed in 2000 to establish information infrastructureand to promote electronic commerce. In Malaysia, there are 14 financial institutionsincluding Public Bank Bhd and Malayan Banking Bhd. that jointly set up MEPS. Itcovers 10 anchor banks and two Islamic banks with 12 million ATM cardholders.8

FUTURE PLANS AND PROSPECTS

In a press conference on the occasion of the official launch of the bank’s call centre,Tele-Rakyat, in Kuala Lumpur on January 12, 2006, the acting managing director ofBRM, Kamaruzaman Che Mat said: “We aim to achieve this (i.e. increase loan disbursalsfrom 15 to 25%) through our current and new market share in our niche products aswell introducing new ones.” He also said the bank would continue to focus on theretail segment with greater emphasis on personal loans, car and housing financing andmaintain a pre-tax and pre-zakat profit annual growth target of 15% (The Edge Daily,6 July 2004).

The Bank’s personal loans accounted for 60%, car financing 10%, housing 25%and corporate financing 5%. In line with the bank’s existing financing and portfolios’management, BRM is aiming to increase car financing from an existing level of 10%to 25% in the future. The Bank plans to work in collaboration with the SME Bank toidentify areas in which it could facilitate loans to small and medium enterprises, as theSME Bank might not be able to cater to all loan applications.

Future plans include the setting up of several new branches in addition to the 107already in the pipeline with four of the proposed branches being expected to beoperational soon. The bank submitted its application to Bank Negara to launch Internetbanking while repackaging some of its existing products.9 Bank Rakyat has a total of126 branches after the launch of its branch in Kuala Nerang, Kedah on 23rd November,2010. The branch is offering Islamic banking facilities to customers. To date the BRMhas 127 branches with the addition of a Sarawak branch in 2011 offering Islamicbanking facilities to customers (members). This branch offers one of the highestreturns compared to any other commercial bank. This has enabled Bank Rakyat tomarch toward achieving its vision (Vision: Bank Rakyat is its members’ Choice Bankas all its products and service offerings are the best compared with those provided byother competing financial institutions. Since membership in Bank Rakyat is verysignificant, there is no reason for them to look at others. This vision generates thetagline: “Bank Rakyat Your Choice Bank” by revisiting its business Mission which is

8 “MEPS to go regional” The Edge Daily, 8 July 20049 “Bank Rakyat targets 25% loan growth in 2006. The Edge Daily, 12 January 2006



to help improve the economic well-being of members by providing financing facilitiesat an affordable rate for agriculture, production, marketing, fishing, transportation,housing and business activities that are deemed beneficial to members and to alsopromote thrift and savings. All these will be achieved through Article 5(i) which hasallowed Bank Rakyat to successfully embrace the character of an Islamic Bank whilemaintaining the cooperative nature of the bank.


Q1. Why did Bank Rakyat Malaysia make a shift from the conventional cooperativesystem (as envisioned by its founders) to an Islamic banking system?

Q2. By evaluating and assessing the future direction of the banking industry, suggestthe course of action for Bank Rakyat.

Q3. Discuss the appropriateness of BRM’s decision to adopt a technological componenttowards achieving its goals as a financial organisation vis-a vis other commercialbanks operating in the Malaysian environment.


Telekom Sales & Services Sdn Bhd

Mohd Roslan Haron1

Telekom Malaysia Sdn. Bhd.

Mohd Ismail Ahmad2

International Islamic University Malaysia

Abstract: Telekom Malaysia (TM) is the largest integrated communications solutionsprovider in Malaysia, and one of Asia’s leading communications companies, with amarket capitalisation of RM11 billion. Serving 1.43 million customers as at end 2009,TM today is also Malaysia’s leading broadband service provider. Telekom Sales &Services Sdn. Bhd. (TSSSB ), 100% wholly-owned subsidiary of Telekom Malaysia,is a customer service organisation which provides a one-stop solution for TMGroup’s products and services. Currently, TSSSB has more than 100 ISO Certifiedoutlets nationwide known as TMpoint. It has undertaken several streams of activitiesin recent years, in order to ensure that the company objectives are achieved within aspecified timeline. Among the strategies adopted are to be ‘best in customer services’and also to be the ‘best in retail sales.’ In order to meet top management concerns,there is an urgent need for TSSSB to develop strategies and plans towards solvingthe immediate problems facing the company. In recent years challenges have includedsevere competition from rival companies, such as MAXIS, especially in thebroadband field. These challenges must be addressed with appropriate TSSSBstrategies.

INTRODUCTION

Ms Haniza Baharom, General Manager of Telekom Sales & Services Sdn, Bhd.(TSSSB), looked out of the window in her office situated on the high-rise Telekombuilding and took in the beautiful view of the Kuala Lumpur skyline. But her mind wasnot quite on the scenery. In a few minutes she would be meeting with senior offices


1 General Manager, Planning & Development Division, TSSSB Telekom Malaysia, Sdn.Bhd.

2 Professor & Director, Graduate School of Management, International Islamic UniversityMalaysia.E-mail: [email protected]

C a s eStudy6



Mohd Roslan Haron and Mohd Ismail Ahmad

and executives of TSSSB. Top management of Telekom had been getting all divisions,particularly hers to achieve higher levels of performance in the coming year. MsHaniza was going over the meeting’s main points in her mind. There must be motivationof the staff but emphasis on productivity increases in measurable values must bediscussed too. And then there was customer services. This was even more challenging.Both strategies and practices with respect to improved services were needed. Withthese thoughts in mind she headed towards the meeting room.

CURRENT SITUATION OF THE TELECOMMUNICA TION INDUSTR Y

The telecommunication industry has evolved from fixed line to mobile phone, fromFirst Generation to Fourth Generation (4G). The High Speed Broadband (HSBB) projectis really changing the landscape of the telecommunication industry in Malaysia andplaying a significant role in achieving a national broadband penetration rate of 50% by2010. Although the trend now is moving towards mobility, as far as telephone usage isconcerned, the importance of the fixed line cannot be neglected. There are manyorganisations and individuals who are still using the fixed line because of its speed,stability and reliability. The need for this capability is crucial for those serious userswho often have both mobile access and the fixed line at home. More and more operatorsare now moving towards Internet Protocol (IP) in their voice offering to customers,instead of the Public Switched Telephone Network (PSTN). The compressiontechnology is so advanced that the user is unable to tell the difference between usingthe IP network and the PSTN. With the introduction of Unifi, the brand name ofTM’s Broadband, the home user is now enjoying triple play technology. With a singleinstallation, they can view television programmes, access the Internet and make callsfrom their fixed line simultaneously. They are no longer required to have separate linesfor these services.

TELEKOM MALA YSIA BERHAD

Telekom Malaysia (TM) is the largest integrated communications solutions providerin Malaysia, and one of Asia’s leading communications companies. It has a marketcapitalisation of RM11 billion and an employee force of 24,744. Established as theTelecommunications Department of Malaya in 1946, it was privatised in 1987, andlisted on Bursa Securities in 1990. In April 2008, strategies were adopted to allow TMto focus more intently on its core business of providing communication services andsolutions in Internet and multimedia, data as well as the fixed line. TM was one of thepioneering companies that facilitated Malaysia’s entry into the Internet age withStreamyx, its broadband service introduced in 2001. Serving 1.43 million customersas at end 2009, TM today is Malaysia’s leading broadband service provider. TM’slatest nation-building endeavour involves rolling out the most excitingtelecommunications service to date: High Speed Broadband (HSBB). In September2008, it signed a Public-Private Partnership (PPP) to develop an HSBB network andservices that will deliver speeds of 10Mbps (Megabits per second) and beyond via



fibre optic infrastructure, to high economic impact areas. Under this initiative, 1.3million premises are to have high speed broadband access by 2012. The infrastructureneeded will be developed over 10 years, with the Government co-investing RM2.4billion and TM, RM8.9 billion.

HSBB is an end-to-end project encompassing access, core and internationalinfrastructure network. The initial roll-out was in March 2010. HSBB will offer tripleplay service of video, high speed Internet and voice. With HSBB as an enabler, thereare many potential high bandwidth next-generation applications such as video-on-demand, online gaming, interactive shopping, Internet Protocol Television (IPTV),etc., that can be made available which would make the overall experience engagingfor consumers. It heralds a digital revolution enabling people to work together andcollaborate more effectively than ever before.

Committed to universal service excellence, TM has adopted a business model thatis tuned to the marketplace. Operationally, it is aligned to six principal customer segments:Consumer, Small Medium Enterprise (SME), Enterprise, Government, Wholesale andGlobal. Wholesale focuses on bandwidth and other infrastructure to telcos, ISPs,managed network service providers, application service providers, global operatorsand data centre providers; while Global provides satellite, terrestrial and submarinefibre optic connectivity across Asia, Europe, the Americas, Oceania, the Middle Eastand Africa.

The new business model creates greater synergies between the various divisions,and allows TM to target its product and service offerings more specifically to theneeds of the different niches. To further enhance the customer experience, TM focuseson accessibility, simplicity and convenience of transactions via its extensive networkof TM points and the secure, customised self-service portal, TM Online.

TELEKOM SALES & SER VICES SDN BHD

Telekom Sales & Services Sdn. Bhd. (TSSSB ), 100% wholly-owned subsidiary ofTelekom Malaysia, is a customer service organisation which provides a one-stopsolution for TM Group products and services. With the Vision, “To be a one-stopcentre for TM Group products and services”, TSSSB is determined to provide excellentservices for TM Group’s customers and to offer competitive ICT products and services.Currently, TSSSB has more than 100 ISO Certified TMpoint outlets nationwide. TSSSBis determined to provide excellent services for TM Group’s customers as it looksforward to future growth in the coming years. The most commonly used touch pointsbetween the customer and TM are its 105 TMpoint outlets nationwide. To improvecustomer experience and enhance customer service, TM has improved on the servicesand facilities available. It has installed 30 e-Kiosks at 27 TMpoint outlets nationwidefor easier access by customers and greater convenience for bill payments, either bycash or cheque.

In April 2009, TM launched TMpoint-on-Wheels (TMOW) to better servecustomers in remote locations where there are no TMpoint outlets. TM has deployed



15 TMOW units nationwide, with one unit for each state. More units will be introducedto cover widely dispersed geographical areas in rural regions like Sabah and Sarawak.Access to TMpoint can also be achieved online. Using the technology available, TSSSBlaunched TMpoint Virtual in 2010. Being one of the touch points of TM’s customers,the main business of Telekom Sales & Services Sdn. Bhd. is focused on providingexcellent customer service. To run the business well, TSSSB is designed with twoimportant Centres i.e. the profit centre and the support centre.

TSSSB’s PROFIT CENTRES

The Outlet Sales & Services Division (OSS) is the core division in TSSSB. All 105TMpoints are under the management of OSS, headed by Haniza Baharum. She isassisted by a team of support centre staff carrying out various functions. All TMpointsat each state are managed by the State Business Manager. The main function of OSSis to monitor the operation of TMpoints, which is the touch point between TM and itscustomers. The division has support service units at headquarters to assist all outletswith various services. About 60 to 70% of TSSSB’s revenue comes from transactionscarried out at TMpoint. Therefore, it is important that the services rendered at TMpointare of the highest quality. This is where the customer comes to subscribe services,pay bills and lodge complaints.

The Marketing Division’s main role is to plan the activities at TMpoint. This isdone by planning the service activities and product development aspects in order toensure full support is given to TMpoint’s success. There are several units in Marketingthat carry out specific functions, including the Business Support Unit which compilesand prepares monthly sales report. This report is for analysis and future marketing.Marketing Communication Unit conducts marketing and brand promotion. They alsodisseminate the latest information on products and promotions to all staff and customers.Business Development & Cards Mobile Unit is responsible for developing new businessopportunities for the company besides focusing on calling card business. BusinessServices Unit focuses on telecommunication services and products like Key TelephoneSystem (KTS), Private Automated Branch Exchange (PABX) and IT – Local AccessNetwork (LAN). The Retail Services Unit is responsible for telephony products likeCPEO, CDMA, cellular and fixed lines. These products under the consumer segmentcontribute to the largest source of revenue for TM. The IT Broadband Services Unitplans the marketing activities of IT retail business and broadband services.

SUPPORT CENTRES OF TSSSB

The Planning and Development Division is involved in strategies development to manageexisting businesses in terms of performance as well as plans for potential new revenuestreams. There are two key units: the Business Planning Unit manages the existingbusinesses by monitoring performance via the Balanced Scorecard and KeyPerformance Indicators (KPI). The Business Development Unit looks for new



businesses opportunities for the company. The Financial Controller’s Division is acritical support unit in TSSSB. It manages the financial aspects of the company and isorganised into several units that undertake specific financial functions.

The Human Resource/Corporate Administration Division is the core support unitin TSSSB. It is involved in the strategic management of human resources as well asthe efficient administration of HRM. It has several units to assist the operation of thedivision. Among them are the Planning and Operation Unit which is responsible forpreparing the HR policies and procedures, including salaries and incentives. TheDevelopment and Industrial Relations Unit prepares the industrial relations (IR) policiesand procedures, collective agreements with the union and also manages disciplinaryaction. The Corporate Administration Unit manages rental agreement, registrationwith various agencies including the Ministry of Finance (MOF), National ICTAssociation of Malaysia (PIKOM), Malaysian Employers Federation (MEF) andMalaysian Institute of Human Resource Malaysia (MIHRM)).

The IT Services Division manages the Information Technology (IT) requirementsof the company by offering systems development and IT support services. It hasseveral units that execute specific functions. TThe Quality Management Division isresponsible for planning quality activities which include Risk Management, QualityManagement Systems and ISO compliance.

Last but not least, the The Corporate Communications Division manages allinterfaces between the public and the TM company. It is also responsible for allcorporate events that involve the public and media.

SOME RECENT COMPANY STRATEGIES

In order to achieve its aspirations, TSSSB has undertaken several streams of activitiesin recent years, in order to ensure that company objectives are achieved within aspecified timeline. The aspiration of TSSSB is to be the best in Customer Service andthe best in Retail Sales.

To be the best in Customer Service, several key points needed to be addressed.Among them are to: (a) have in place an excellent customer service through fullvisibility of end-to-end customer service fulfilment; (b) have a zero complaint statuson TMpoint; (c) improve on the recruitment policy and to have a Trained-Tested-Certified (TTC) workforce; (d) be a zero-fraud TMpoint by improving the existingprocesses and systems; (e) ensure compliance to the process and accountability; and(f) enforce internal control via a check and balance system.

The next TSSSB objective is to be the best in Retail Sales. To achieve this, anumber of key points need to be addressed. They are to: (a) focus on retail sales andto relocate business sales to SMEs; (b) cultivate a sales-oriented culture; (c) havemore effective sales by improving performance driven compensation plans; (d) convertselected TMpoints into a Lifestyle store; (e) collaborate with major ICT partners soas to offer customers with HSBB experience at selected TMpoints; and (f) provideStreamyx facilities at all TMpoints.



Being a customer service organisation, TM and TSSSB have put in place CustomerSatisfaction measures that are to be carried out at each TMpoint. These measures areto be undertaken on a monthly/yearly basis to identify customer’s satisfaction level tothe services. This is done by the following:

(1) Measuring the level of services provided by CSR at the TMpoint. Assessorswill pose as a genuine customer and real time assessment will be carried out.

(2) Measuring customer’s retention/commitment which is calculated as a single-number format/index. Agencies/assessors call or interview customers andask for ratings on the services. Customer selection is based on those havingexperience dealing with TMpoint in the past 6 months.

(3) Customer selection is based on those having experience dealing with TMpointin the past 6 months.

These initiatives have put TSSSB on its toes in providing high quality customerservice. The Mystery Shopper Index (MSI) and TRI*M Index are included in the KeyPerformance Indicators (KPI) for all heads of TMpoint. At the end of the year, allstaff will be evaluated in their Annual Appraisal exercise and these measurements aresome of the major criteria for the offer of incentives.

PERFORMANCE OF THE COMPANY

In its 10-year history, TSSSB has moved from a full customer service organisation toa more diversified business including retail and credit sales. TSSSB has become amore business-like organisation with the emphasis on the bottom line becomingmore apparent. This is so especially when compared to earlier years when TM was a‘government department’. This is further manifested in its financial statements ofrecent years. Except for 2002, where there were few allowances for bad debt, stockand clearing accounts that contributed to a loss, the other years were profitable (Figure1).

Figure 1. Profit after Tax (1999 – 2009)



FUTURE STRATEGIES

The General Manager of TSSB, Ms Haniza Baharom, emerged from the 2-hour meetingwith the staff feeling happy with the discussions but yet feeling disappointed that nofirm strategies had been forthcoming from the discussions. In order to meet topmanagement concerns, there was an urgent need for TSSSB to develop strategiesand plans in order to the solve the problems facing the company. TSSSB’s next majortask would be to develop those strategies in the immediate future.


Q1. In recent years, challenges from competing companies such as MAXIS haveintensified. This is making it difficult for TM to gain additional market share,especially in the broadband field. What further creative marketing strategies arerequired by Telekom to meet the competition effectively?

Q2. It is suspected that competing companies may be attracting away some of TM’sexisting customers. What types of marketing research and what other innovativestrategies are needed to meet this challenge?

Q3. The Planning and Development Division has used various measures and methodsfor some time now, including the use of the Balanced Scorecard and KeyPerformance Indicators (KPI) for company improvement, Would it be fruitfulfor TM & TSSSB to extend this further to include comparisons in terms ofperformance with other competitor companies. Discuss the pros & cons.

Q4. TM & TSSSB take pride in their HR policies and staff incentive schemes. Whilstit is good to have proper HR policies and initiatives, such policies and programmescan be costly. More intensive cost & benefit studies may need to be undertakenby the HR Division. Such studies will reveal if the development of more cost-effective HR policies and strategies are required. Carry out a suitable analysis inorder to give your views on this issue.

Q5. It is generally recognised that TM Customer Services have improved in the pastfew years and the company takes pride in the current excellent customer servicesaccorded to the clients. Whilst this is laudable, the same argument in (Q4) aboveapplies. Do you feel it is necessary for Telekom to carry out cost-benefit studieson ‘customer services’ as well or should it continue its current practices. Whatdo you recommend and give reasons for your preference.

REFERENCES

TM Annual Reports – various issues, including 2008

the iium journal of case studies in management

Documents

iium journal ofcase

azian mohd azlan

indiabank rakyat malaysia

refereed journal publishedtwi

editorial team chief

jain centre of management

institutional affiliation

institutional email