To celebrate its 30th Anniversary, SAP is presenting the Asian Leadership Series comprised of interviews with captains of industry speaking on key business issues for the 21st Century. Each interview highlights one of three themes -- vision, innovation or experience -- concepts that have driven SAP's success over the past three decades. Lee Kum Kee Hero Honda Tenaga Nasional Berhad Quanta Computer Singapore Airlines Legend Computer LG Chem

30 Years of SAP 1972 • SAP is founded as "Systems Analysis & Program Development" in Mannheim, Germany • Number of employees at year end: 9 • Total revenues: DM 620,000 • SAP R/1 solutions launched 1974 • Two local companies -- Rothhändle and Knoll -- select the newly developed SAP Financial Accounting (RF) System 1976 • SAP organizes as a limited liability corporation with the name of "Systems, Applications and Products in Data Processing" 1977 • SAP moves its headquarters from Mannheim to Walldorf 1979 • SAP R/2 solutions launched • Total revenues: DM 4 Million 1980 • 50 of the 100 largest industrial companies in Germany are SAP clients 1982 • SAP revenues increase to DM 24 million for the year and more than 250 companies in Germany, Austria and Switzerland are using SAP-developed programs 1985 • Headquarters in Walldorf expand by 10,000 square meters • Sales increased by another 45% • SAP system is used throughout Europe as well as South Africa, Kuwait, Trinidad, Canada and the United States • The first headquarters in the United States is established in Wayne, Pennsylvania 1988 • Subscribed capital stock increases from DM 5 Million to DM 60 Million, company goes public (Frankfurt and Stuttgart) • SAP gains its 1000th Customer, Dow Chemical 1989 • SAP stock is traded on the Zurich stock exchange • 1st SAPPHIRE Conference • 1st Stockholder Meeting • Established Asia Pacific presence with offices in Australia and Singapore • Number of employees: Over 1000 • SAP enters Russian market and begins development of a Russian version of the R/2 system 1992 • SAP enters Malaysian market • SAP R/3 solutions launched • Revenue increases to DM 831 million of which almost 50% derives from international operations 1993 • Customer base grows to 3,500 companies • SAP introduces an R/3 version for the Japanese market 1995 • Customer base grows to 6,000 • SAP share included in the German stock index (DAX) 1996 • SAP R/3 Release 3.1 is Internet-enabled • SAP enters Indian market 1997 • SAP begins developing industry-specific solutions 1998 • Company is listed on the New York Stock Exchange • Company launches new solutions for Business Information Warehouse, Business-to-Business Procurement and Supply Chain Management 1999 • SAP delivers mySAP.com • SAP receives "Best Managed Companies" Award by Industry Week 2000 • Named "Most Successful Company Over the Long-term in the 90's" (Jury of 40 CEO's: Wiesbaden 3/10/2000) 2001 • SAP acquires Top Tier and forms SAP Portals • Revenues for SAP in 2001 top EUR 7.3 Billion 2002 • SAP acquires TopManage Software Solutions for its SMB offering • SAP customer base grows to 18,000 • SAP has over 27,800 employees • SAP celebrates its 30th Anniversary! Q1. Tell us how TNB's vision of becoming a leader in the energy business came about. A1. Well, the company has a long history, stretching back to our establishment in 1949. In the early '50s, after Malaysian independence, we introduced a Malaysianization policy with the goal of having Malaysians run the business, because until then it had been managed by expatriates. Then we entered a development phase where we worked to bring electricity to the mass population. In the '90s we began moving beyond Malaysia to markets in South East Asia and Pakistan. So you can see that we are moving in stages towards achieving our vision of becoming a global leader in the field. Q2. What kind of a transition did you have from being a nationalized corporation into a private enterprise? A2. We were incorporated in 1990 and privatized in 1992. Then the government brought competition into the industry in the form of Independent Power Producers. To prepare ourselves, we introduced in-house training and familiarization sessions to get our employees to understand the changes we would face. We also had a very good transition program for employees that included staff stock options and employment guarantees for the first five years. So privatization turned out to be one of the most successful efforts so far seen. Q3. What sources of energy do you use to generate electricity? A3. Around the time of the Oil Crises of the '70s we were dependent on oil and hydro. After that, we diversified and began using gas, coal, oil and hydro. Now we're aiming to get a good balance between them, though at the moment we are a little bit too reliant on gas.

In this interview, Pian Sukro, President and CEO of Kuala Lumpur-based Tenaga Nasional Berhad (TNB), explains how the company's vision has helped in its transformation from a nationalized electricity provider into one of Malaysia's foremost private corporations. Now that same corporate vision is playing a role in spurring the company on to become a leading energy supplier in the ASEAN region.

Corporate Vision Keeps Tenaga Nasional Berhad on Track to Become an Asian Energy Leader
As the largest electricity utility in Malaysia, Tenaga Nasional Berhad accounts for over 60 percent of the country's generated electricity and serves over 5.5 million customers throughout the Malaysian Peninsular. Currently, it is working with utilities in neighboring countries, as it moves full steam ahead in its quest to become a leading energy supplier in the region.

Yet only last year, the future of this once-nationalized entity, which runs its own generation, transmission and distribution systems, looked uncertain. In the government's efforts to further liberalize industries previously under its control, it was favoring a plan to allow more independent power producers to enter the field, possibly divesting TNB of some of its assets in the process. Hopes of the company achieving its vision of becoming "A leading global corporation in the energy business," seemed to be fading.

The situation reversed dramatically early last year. News broke that California (the world's seventh largest economy) was facing a crisis in supplying electricity, as rotating blackouts hit industry and homes alike. Worse, the two largest State electric utilities, which have been required to sell off their generating facilities, were facing bankruptcy, while overall estimates for the cost of energy deregulation by the State were spiraling upwards towards US$40 billion.

As the world watched the crises unfold in the United States, TNB management moved into high gear. They proposed to the Malaysian government an alternative plan to liberalize the industry-D one that left the integrity of TNB as the country's only unified generator, transmitter and distributor of electricity intact, and therefore did not put the nation's stable supply of electricity at risk. After some deliberation, the government accepted the new plan, agreeing that in light of the California energy crisis, it was necessary to balance the roles of the public and private sectors.

"We've seen from what's happened in California and in other parts of the world, that competition should not take priority over the security of the supply," says company president and CEO Pian Sukro. "Certainly this is the case when it comes to a strategic product like electricity, and particularly so in a country where the economy is still developing."

Double-Digit Growth Again?
Now that TNB is once more focused on meeting the needs of the market, and with signs that the economy is picking up again after the impact of the Asian Monetary Crisis, the company is once more optimistically looking for double-digit growth in electricity demand. In May, daily demand for power soared to a record 10,700 megawatts during peak usage, indicating the economy is indeed on the move again.

But to meet this growth in demand, TNB not only has to retain investor confidence, it must continue to attract new investors in what is a highly capital-intensive industry. This is why, says Sukro, it is essential the energy market does not become overly competitive, with no one making a profit, and thereby scaring off investors. "If investors do not come into the industry, this will also affect the stability of the supply," he says.

Sukro, 53, married with three children, speaks from long experience. He was educated in Malaysia and the United Kingdom, and has collected several degrees in science and engineering. He joined TNB in 1969 as an electrical engineer, subsequently rising through the managerial ranks in the company's various sectors, finally assuming the president and CEO titles in 2001.

Now he is putting that experience to good stead, having just overseen a restructuring of the company into nine divisions: generation, transmission, distribution, finance, human resources, corporate services, engineering services, logistics and repairs, and education and research. The streamlining aims to bring about clear lines of reporting, greater reliability and more efficiencies in the group-D steps necessary if it is to pursue the next phase of its corporate vision and become a leader in the region.

To this end TNB is collaborating with other ASEAN utilities in carrying out the ASEAN Interconnection Master Plan, which seeks to facilitate cross-border power transfer of electricity. On an individual basis, TNB has taken over a joint venture scheme responsible for building and running a power plant in Pakistan, and it has formed relationships with utilities in neighboring countries.

"Regionally we're doing business with our neighbors in Thailand and Singapore," says Sukro. "We've joined our grid with the grids in Thailand and Singapore, so we are able to export and import electricity as needed. Now we're aiming to extend this to Indonesia. It's in ways like these that we are working to become a leader in the region."

Educating the Nation
But leadership carries with it a sense of corporate responsibility to the community. In response to a government request that large companies become involved in the nation's education, TNB has taken up the call in exemplary fashion, by establishing the Universiti Tenaga Nasional. Offering degrees in engineering, information technology, business management, and languages and education, the institute is regarded as one of Malaysia's leading private universities, graduating some 7,000 students annually.

"Some of those graduates come to TNB and we sponsor some of our people to go there," explains Sukro. "The country spends too much on overseas education, so we want to help Malaysia become a center for education."

Such endeavors at home and the company's push to become a leading energy supplier in the region have helped raise the company's standing with overseas investors. This January TNB stunned the financial world by becoming the first ever non-U.S. company to issue a 100-year bond, after successful negotiations with several Wall Street investment banks. The US$150 million Century Bond has a coupon interest rate of 7.5 percent per annum. Only eight other 100-year bonds in the history of the international debt market had been issued previous to the TNB announcement. Empowered with this kind of investment and now free from government restraints to turn its vision into a reality, Sukro says, "In the next two to three years, we will be able to venture into any market we want."

TNB's IT Strategy
TNB was one of the first companies in Malaysia to electronically process its billing system when it implemented an SAP billing software in 1991. "So we recognized early on how IT could help us become more efficient and speed up our processes," says Sukro. But at the same time, different departments and divisions were implementing systems to suit their individual needs over the years. This has made retrieving information a tedious matter today and sometimes it is difficult to correlate the information when data is taken from different systems. So with the company seeking to become a leading corporation in the ASEAN region, it is now planning to integrate a number of its legacy systems using mySAP.com.

"The 'I' of IT is critical to our business," says Sukro. "So we need information that can be integrated seamlessly. Otherwise you duplicate your efforts." At the same time, he emphasizes that introducing new technology must never become a goal in itself. "The goal of IT is to drive our business forward and to improve our efficiencies by reducing bureaucracy, by reducing paper, because you can do more things electronically, automatically," Sukro explains.

As for implementation of new technology, he says that it is important to study the existing business processes that it will impact. "So now we're in the process of revamping many of our older IT systems, and at the same time we are reviewing the associated business processes Ð and if necessary we will change these, as we change the technology. If changes in the process are required, then they simply have to be done. That may be a challenge, but it must be done and is being done."

In upcoming issues of the SAP 30th Anniversary Leadership Interview series, we learn how experience, innovation and vision are driving other major Asian corporations to be leaders in their fields.



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