Pushing past disruption
Entrepreneur Siriwat Vongjarukorn is taking a proactive approach to the digital sea change in Thailand.
Technology has evolved, the world has changed, and all must adapt. Having managed a local IT firm for two decades, Siriwat Vongjarukorn fears that Thailand is falling behind peers in IT competitiveness because of a lack of
R&D investment.
A computer engineering graduate from Chulalongkorn University (CU), Mr Siriwat started his career as an IT analyst at petrochemical giant Esso. He transferred to work in sales and marketing after discovering that what he’d studied could not be applied in his workplace.
In the space of 12 years, Mr Siriwat went from being an average employee to the founder of a large enterprise IT service company. He has led MFEC from a small unit to one that employs more than 1,600.
The firm became a publicly listed company on the Stock Exchange of Thailand and was among the SET’s three top financial performers in 2005.
For 21 years, MFEC has been a top-three systems integrator, implementing IT solutions across the country.
The company has weathered several upheavals in technology, and as a systems integrator it has, over the years, represented many global IT giant vendors.
Some, like Netscape and Sun Microsystems, are gone for good.
“[Thai people] are complete technology consumers, with no connections to Microsoft, IBM,
Cisco or any other IT companies,”
Mr Siriwat says. “We are 100% in deficit when it comes to IT products. The more
[MFEC] sells products, the more money is delivered to Silicon Valley. Robots, artificial intelligence — nothing belongs to Thai people because the technological know- how is not ours and there is no R&D investment here.”
Mr Siriwat says the business model for systems integrators is obsolete and will die within 3- 5 years as technology continues to advance. Innovation companies like Google and Facebook don’t need partners any more, as they are able to deal directly with end- users. The consequence is that local companies cannot carry on as they have traditionally.
“Thais are creative and are talented in arts and entertainment,” Mr Siriwat says. “We specialise in what creates a competitive advantage for the country.”
Last year, the MFEC boss broadened his horizons with two new partnerships.
One of the firms is GDH559, a film studio subsidiary under entertainment conglomerate GMM Grammy, which runs D’Luck Cinematic Theatre, the world’s first levitating theatre, located on the Eastern Seaboard in Pattaya.
A hybrid of live action and cinema, the theatre is home to a stage performance inspired by classical Thai literature called Kaan Show.
Businesses are in the process of transformation, as is MFEC. Apart from coping with new services and new customers, firms have to deal with customer demands that are a significant departure from those observed over the last two decades.
The concept of the traditional workplace is no longer applicable to younger workers, Mr Siriwat says. The environment, working process and conditions are all areas where conventional processes do not apply to younger workers.
“The younger demographic has passion and they need more freedom,” he says.
At the end of 2016, Mr Siriwat initiated an internal transformation at MFEC, changing its ERP (enterprise resource planning) system to make it less controlled and amending the budgeting format.
Along with these changes, MFEC has invested in upgrading resources over the past few years, creating new activities and work processes for staff.
We are 100% in deficit when it comes to IT products. The more [MFEC] sells products, the more money is delivered to Silicon Valley. SIRIWAT VONGJARUKORN MFEC CHIEF EXECUTIVE
The company also acts as a corporate venture capital firm, providing much-needed capital to startups and offering experienced staff who understand technology and how to implement it. This lets the startup company hit the ground running. In exchange, MFEC receives a 70% stake in the startup.
Last year, Playtorium Solutions was the first new company to be formed from MFEC’s workforce. The startup expects to turn a profit within 10 months.
While many sectors, including IT, are struggling with disruption, Mr Siriwat has found that cross-industry partnerships enable businesses to survive and become more profitable.
He is one of the key men behind the revitalisation of Matichon Group, the local publisher.
Mr Siriwat tried out data analytics applications with Matichon and Khao Sod, two of the group’s newspapers. The result enabled the papers to sell advertising to new business sectors that had never bought ads from the group before.
Merging the printing houses of Matichon and Siam Sport, a sports newspaper publisher, helped reduce costs for both by streamlining processes and eliminating unnecessary tasks.
Matichon Group was able to turn its nine-quarter streak of losses, with up to 50 billion baht in losses in each quarter, to a 15-million-baht profit.
Mr Siriwat attributes this success to the “data scientists’ manual” — setting new hypotheses that lead to new businesses.
Most important of all, businesses have to change their mindsets.
“Matichon adjusted at the right time, and the growth of the group is because of its management’s mindset,” Mr Siriwat says.
Last year, MFEC formed several joint-venture companies in cross-industry partnerships. Using its expertise in IT, the company is closely working with FlyNow, the ladies’ wear brand that operates with a social commerce model.
Along with supervising Kaan Show, Mr Siriwat entered a business arena disrupted by technology by helping companies understand the need to transform their own business models.
MFEC expanded investment by applying technology to develop and transform into a brand-new business, branching out into music studios, sports and retailing, coupled with the trend of marketing in the digital age.
Digital Savvy is a joint-venture company of MFEC and Siam Sports Syndicate for web applications, with shareholding of 36% and 51%, respectively. MFEC employees working at the operational level who have participated in the development of Digital Savvy hold 13%.
Music is another industry disrupted by digital advancement. Music companies can no longer make money by selling CD albums. Mr Siriwat believes that the most valuable asset for music companies is music fans.
MFEC teamed up with LoveIS, Thai singer-songwriter and producer Boyd Kosiyabong’s music company, to set up the joint venture Fanster. Mr Siriwat allowed his staff who are passionate about music companies to run Fanster.
Fanster applies data science technology to enable the company to better understand audiences.
Through “gamification”, the model connects audiences with artists, creating engagement via online-to-offline activities.
“This has led to a new business model creating income for artists and Fanster,” Mr Siriwat says.
The Chulalongkorn University alumnus has also encouraged the development and training of more data scientists in the country. Data Cafe, a joint venture of MFEC and the university’s Faculty of Engineering, is working on a mission to train 20 data scientists in the first phase.
Thousands of high-profile people applied for the courses offered by Data Cafe, but the company can only support the training of 20 people at one time.
The first batch of three-month world-class training courses was recently completed, aimed at bringing big data applications to a wide range of industries. The increase in data scientists is expected to be helpful to businesses as they attempt to adapt data usage to real sectors such as retail, real estate, publishing and entertainment.
“Cross-industry work is beneficial to every party,” Mr Siriwat says. “It revives our staff’s passion to own their own business. And this model has received a good response from our partners, after testing for one year, as it has been proven in terms of atmosphere and promising a sustainable business model. Along the line, however, everything must be harmonised into a rewards-system working style.”
MFEC today is in the process of turning itself into a learning organisation, forming a model that stokes the passions of employees.
Mr Siriwat says MFEC’s new policy is to build bridges, not barriers. The company wants to change the corporate culture and process, with the hope that the right culture and capability will make the business sustainable.
“I don’t want MFEC to be like other IT companies,” Mr Siriwat says. “Once a founder quits or retires, the company collapses. Few IT companies can sustain themselves when transferred from the first to the second generation. My challenge is to see how MFEC can be taken over by the second generation while continuing to grow sustainably.”