BCM 2019 April Monthly Meeting Recap

MONTHLY MEETING RECAP 02 April 2019 Hits: 3179

The Business Council of Mongolia’s (BCM) April Monthly Meeting was held on April 17 at the Shangri-La Hotel, with Chairman B.Byambasaikhan hosting for an audience of around 110 members and invited guests. Chairman and CEO of MobiCom Corporation and Chair of the BCM’s Growth and Innovation Working Group Tatsuya Hamada led this meeting on the topic of“Digital Transformation – Experience and Outlook.”

The meeting was opened with the signing ceremony of a Memorandum of Understanding between the BCM and the National Development Association (NDA). This cooperative endeavor between the BCM and NDA is an effort to enhance protection of the legal interests of investors, improve the investment climate, exchange information between the organizations, introduce international experience, as well as create a handbook for investors.

In addition, the BCM has taken on the role of Coordinator for the Public-Private Dialogue Council established under the Investment Protection Council, and will facilitate discussion of pending proposals by government and parliament. The BCM will actively represent the interests of the private sector and raise issues faced by investors to government organizations. Thus, Chairman Byambasaikhan urges members of the BCM to reach out and relay their messages and concerns concerning business and investment in Mongolia.

BCM Chairman B.Byambasaikhan (left) and Director-General of the National Development Agency B.Bayarsaikhan (right) upon signing the MoU. (Photo by GoGo News)

New and renewing members also received their Certificate of Membership after the presentations and panel:

Erel Group - (website)
Espresso Italiano - (Facebook)
DBM Asset Management - (website)
Sant School - (Facebook)
Sfeco Consulting - (website)
Specialized Career Consulting - (website)

SPEECH BY TATSUYA HAMADA: “SETTING THE SCENE – LESSONS FROM MONGOLIA”

Photo by GoGo News

Mr. Tatsuya Hamada is the Chairman and CEO of MobiCom Corporation, and also serves as the Chair of the BCM’s Growth and Innovation Working Group.

Nowadays, there is no business management and no business executive who is not interested in digital technology and digital transformation. “Digital transformation” is often shortened as “DX.”

Even in Mongolia, digital transformation is not something we anticipate for the future – it is something that is in progress right now. Historically, DX was greatly accelerated in 2008, spurred by the Lehman shock. Many start-up companies sprung up, such as in IT and fintech, especially on the West Coast of the US. This occurred not only in finance, but a variety of areas. DX is the transformation of traditional business by harnessing IT to achieve lower costs and higher performance, efficiency, and productivity. It does not simply mean “a transition from analogue to digital.”

One reason why corporate executives are paying increasingly greater attention to DX is to boost competitiveness. For example, Company A operates at a large scale, with many employees and lots of paperwork, which is expensive. Company B, although smaller, utilizes automation, smart technology, and digital transformation and augmentation. Company B is the company of the future.

Digital disruptors such as Uber and Amazon started business with limited resources. However, these players today are dominant, and changing the market. Power balance and positioning in the market are shifting drastically.

In China, every day fewer and fewer people use physical cash. Even debit and credit cards are becoming less common. Everyone simply uses their smartphone for payments and transactions.

However, the speed of technological development is too fast for regulators to keep up with. Therefore, these and such other topics will be discussed in Mr. Hamada’s Growth and Innovation Working Group's meetings to come.

PRESENTATION BY B.TSEESUREN: “DATA DRIVEN ORGANIZATION”

Click here for full presentation (English-Mongolian mix)

Photo by GoGo News

B.Tseesuren, PDEng, is the Senior Vice President of IT Zone, which joined the BCM as member this earlier this year.

The most important aspect of DX is data. Data is the foundation of all DX, and there is no DX without data. Today, data and DX is something the business sphere must delve into comprehensively. It is no longer a concern of only IT engineers and computer scientists, but every company and manager.

Mr. Tseesuren gave the example of DBS Bank, which was named the world’s “Best Digital Bank” by Euromoney in 2016 and 2018, beating giants such as Citi, BBVA, and ING. The goal of a business should not be to become a large company just for the sake of being big, but to operate like a start-up, despite employing 22,000 people. A “22,000-employee start-up” must be customer-obsessed, data-driven, take risks and experiment, be agile, and be an adaptive and learning organization.

DBS engaged in innovation programs such as idea vaults and hackathons, enabling easy access to data for experimentation and testing of new ideas

“Can your people conduct such experiments? Does your business have easy access to data?” he asked.

The speaker continued on to elaborate on the Gartner Maturity Model for Data and Analytics. What level is your business?

Source: Gartner.com

The majority of Mongolian companies have yet to reach Level 3 of the model. Companies must invest in D&A systems and instill the culture in their workplaces as soon as possible, he said.

In traditional business, sifting through data was a question of weeks or longer, such as when producing a report. Modern organizations must transition to a unified data and IT infrastructure, such that vital information can be produced within minutes, even seconds, or in real-time.

Note: IT Zone has expressed willingness to cooperate with BCM members who are interested. In addition, the company is organizing Data Forum 2019 on May 15, 2019. More information will be published soon.

PRESENTATION BY B.MUNKHZORIG: “DIGITAL TRANSFORMATION: A NOVEL USE OF DIGITAL TECHNOLOGY TO SOLVE TRADITIONAL PROBLEMS”

Click here for full presentation (English)

Photo by GoGo News

B.Munkhzorig is the Director of MobiCom’s IT Division.

Using the first real image of a black hole published last week, Mr. Munkhzorig explained just at what level of digital technology the world has reached. Something which has only been in the minds of physicists and drawn from imagination for a hundred years has been captured in real life by an array of telescopes comprising a global network of radio telescopes.

Before delving into the topic of DX and the Fourth Industrial Revolution, Munkhzorig explained what is not DX:

is NOT analytics. DX is using quality data to question your assumptions and challenging the status-quo.
is NOT about data capture and storage. DX is about data consumption to improve decision making, compliance, and operations.
is NOT an IT initiative. DX is focusing on the business goals and outcomes and not the technology.
is NOT an outsourcing initiative. DX is having a simple, scalable, and flexible digital infrastructure to serve the business effectively.

According to Forbes, 84% of DX initiatives in business enterprises fail.

One misunderstanding many people have is that technological advancement itself puts companies or industries out of business, but that is not the case. It is more because of the inflexibility of businesses – a lagging behind the times, or perhaps even a refusal to adapt to new realities – that entire industries begin losing out.

The presentation features many concepts described through easy-to-understand illustrations, such as the agile scrum, design sprint, digital capability vs. leadership capability, and more.

PRESENTATION BY U.KHOSJARGAL: “BUSINESS PROCESS RE-ENGINGEERING”

Presentation not available to the public

Photo by GoGo News

U.Khosjargal is a Project Director at Golomt Bank.

The first question you should ask yourself is “why do we do business?” And the type of digital transformation you implement will depend on the answer. Some would say for profits, to create a new products, to feed our family, etc.

After you answer the question of why, ask yourself how? The path is different for each company, and the answer to how is your company strategy to realize its vision and mission.

“If you can’t measure it, you cannot improve it,” he said. You can have great goals, such as cornering this percentage of the market, or this amount of profit, and other objectives; however, without harmonization of your business process and improvements based on KPIs, this is not possible.

"Reengineering is the innovation based fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service, and speed," according to Michael Hammer.

Regardless of the role of the actor, the other actors in a relationship must consider the interests of the others. The company may think of its profits, productivity, and being the best. The employee is concerned more about salary and benefits, personal fulfillment, or their reputation. Speed, prices, and quality are the most important things to a customer. Business partners care most about reliability, adhering to standards, and satisfaction with a partnership. As with many in things, the key is balance.

In addition, business process re-engineering is not a linear process, but a circular, continual process. After a business initiates a change and implements a redesign, there must be monitoring and improvements, which in due time should result in the envisioning of a new process.

Source: Consultus.hr

PANEL DISCUSSION: “OPPORTUNITIES TO TRANSFORM YOUR BUSINESS”

After the presentations, a panel discussion was held, moderated by U.Unenburen, Chairman of Bitmonex, a cryptocurrency exchange. On the panel were:

U.Khosjargal, Project Director at Golomt Bank
B.Munkhzorig, Director of the IT Division at MobiCom
B.Solongoo, Co-Founder and Partner at Avinex Partners LLP
B. Tseesuren, PDEng, Senior Vice President at IT Zone

Question for Munkhzorig: Are there ways to accelerate your pace of digital transformation? I went to a Starbucks in South Korea and they told me, “Sorry, we don’t accept cash.” Is this possible in Mongolia?
Regarding MobiCom’s “Candy” program, what were its goals, and what were some challenges?

Munkhzorig: It may be difficult right at this moment, but I don't see why this can't happen here in Mongolia. All the soums in the aimags are connected to the internet. There's really nothing hindering a transition into digital payments.

Regarding the MobiCom’s Candy program, MobiCom first introduced a digital payment scheme in 2010, called MobiExpress. Back then, people really were not ready for such a thing. Perhaps they did not trust it; perhaps they didn’t understand why they should make transactions through their phones. That was nine years ago.

Today things are much different. People see how the world is changing. Banks have introduced mobile payments, and for people it makes sense that a bank would introduce such applications.

As for our Candy scheme, it began as a loyalty program in 2014, and in 2017, it became a digital currency. Last year, we received licensing from the Bank of Mongolia for it to become a formal digital currency.

But to answer your question, it has not reached the levels that we had hoped for when we first initiated it. There are various reasons, which are working on. In any case, I certainly believe the time has come for Mongolia to transition to digital payments and gradually do away with physical cash.

Question for Solongoo: I want to ask you about the legal environment related to digital transformation. Also, last year the EU introduced the General Data Protection Regulation (GDPR). Where is Mongolia in comparison?

Solongoo: The core foundation of digital transformation is definitely data. In Mongolia’s case, we give away our data to companies. However, our privacy laws are quite outdated. The 1995 Law on Personal Secrecy is the main law governing data provision and usage. Understandably, today this law is inadequate when it comes to the various issues related to personal privacy and data. Questions such as what data can be used, how it is to be stored, what data can be transferred, to whom, by whom, and other such legal questions are rather vague. The recent law that entered force in the EU, perhaps you received many emails around December regarding changes to various companies’ privacy policies, is in my opinion the most comprehensive modern regulation that seeks to protect the interests of individuals.

There is the need for improved regulatory schemes for data privacy in Mongolia. For example, everyone uses the personal Registration Number for everything, and we provide this unique identifier to anyone and everyone without thinking twice. We must be able to register individuals at the state and government level and prevent fraud, while at the same time protecting their private, personal details.

Question for Tseesuren: Today we talk about this data, that data, big data, and all types of data. We talk about AI. Is there AI in Mongolia? What advice would you give to effectively harness data and make prudent decisions?

Tseesuren: AI is still not common, not just in Mongolia, but in the world in general.

People say “we don’t have data” or that they have too little data. Yet, they conduct numerous transactions. At the very least, you need to have data to submit necessary financial and tax reports. What they lack is not data, but experience. Any business or operation has data to be observed. The culture of data capture and observation has not been instilled in the business culture.

Question for Khosjargal: We frequently see organizations and departments run in an unprofessional manner. We see mistakes that were easily preventable, or taking too long on something needlessly. Is business process re-engineering something that is only for large companies? Can BPR be implemented in SMEs?

Khosjargal: Size does not matter when it comes to process re-engineering. Something that has become more common internationally is the joint venture structure, especially among SMEs. They form a shared space among one another.

Let me use a small dental clinic as an example. The operator is a capable dentist, has good customers, and runs a stable business. Yet, the dentist spends 30% of his or her time actually performing dentistry, and the other 70% on other things. The dentist is not a lawyer, not an accountant, or a specialized inspector, so he or she spends much more time on those issues, which detracts from the core business. However, there are technological, cloud-based solutions to such problems. You can utilize external legal counsel, or have external accountants draw up your finances. This is something we are looking into for Mongolia. Many of the 50,000 legal entities operating in Mongolia stand to benefit.

BPR is not necessarily something that a large company implements by spending lots of money. Whatever business you operate, you have customers or clients. In order to improve your operations, any company in any industry can implement the principles. So something SMEs who are members of the BCM can do is create a shared space to resolve issues such as the one mentioned in my example.

QUESTION AND ANSWER

After the panel discussion, a brief audience Q&A was held.

Question from Khosjargal (audience member with the same as the panelist): A visa for South Korea is taking up to 70 days to be processed on occasion. They explain that many applicants submit falsified documents. Is this a satisfactory explanation? What are your thoughts?

Khosjargal: As a banker, people often ask me in dismay why the exchange rate is depreciating. Basically, it is a reflection of how the world values us. Part of the answer is related to this, when it comes to visa issuance wait periods for South Korea. Perhaps there could be procedural or bureaucratic aspects related to the internal operations of their Embassy; however, South Korea is a very developed country, and data usage and analysis is highly developed there. I don't think the problem is so much related to processing or data analysis at the Embassy of South Korea. Contrarily, it is more related to Mongolia's international standing. Of course, there may be some operational areas that could be improved.

Munkhzorig: Even in this situation concerning falsified documents, there are potential tech solutions. In future, blockchain technology will make it so it is virtually impossible to submit falsified documents. The technology is there. However, this is easier said than done. The regulatory framework is not there yet.

On an unrelated note, the moderator asked a few moments ago about AI. It is not something brand new in our time. It goes all the way back to the 1950s. Perhaps you know about an IBM computer beating chess master Gary Kasparov. AI just means an analysis of a situation based on an algorithm written by humans and acting accordingly. It seems like every company is talking about pursuing AI in these past 2 or 3 years. The reason why is because of big data. There is simply a lot more data for even simple algorithms to process. Even in our network operations, we employ what could be called AI. It analyzes signals and makes adjustments accordingly based on the situational reading. It's not some incomprehensible, overly technical thing.

Question from Wayne Thompson: Do you think the general public of Mongolia will perceive DX as a threat to labor, and general worker roles, careers, and so forth? How should we avoid that with the language and rhetoric we use as tech leaders?

Tseesuren: Whenever a new change is coming, people get worried. The main leadership should be the private sector. When people get better service and more options from the private sector, that would help. However, the government should also play a role, such as with e-government initiatives. That would help the public to understand the benefits.

A lot of people have they fear that they will be replaced by robots or by software. How do we avoid that, and keep the message clear that this is service improvement?

For example, a hundred years ago, people were worried about mass production - that mass we would be cast out on the street. I think it is a similar situation here. The whole of society has been improved. Digital Transformation and the Fourth Industrial Revolution will significantly improve our lives. In 50 years, we will live in a completely different society. There may be some misperceptions along the way, but we can just go, and I think we will see the positives.