Formulating Digital Business Strategy for Data Center Ecosystem Sustainable Growth
Wieke Widowati1*
1 School of Business Management, Bandung Institute of Technology, Bandung, Indonesia
*Corresponding Author: [email protected] Accepted: 15 February 2023 | Published: 1 March 2023
DOI:https://doi.org/10.55057/ajrbm.2023.5.1.5
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Abstract: Digitization is used by almost all nations, including Indonesia, to speed up economic growth. Since the COVID-19 pandemic began, there have been an additional 21 million digital users, which has accelerated the growth of the nation's digital economy. Considering growing patterns in the digital economy, access to data centers, and wide international bandwidth, Indonesia Network (Innet) aims to strengthen data center ecosystem through Digital Ecosystem (DE) as a consolidated company. Initially, three subsidiaries were running this business, namely Digital Ecosystem (DE), Debian, and Mobile Cell. However, the unaligned business strategy at Innet Group turned competition among those subsidiaries and contributed to the underperformed revenue target. As a result, Digital Ecosystem (DE) needs to focus on creating a great digital strategy as the fundamental of digitized solutions. DE needs to have a unique value proposition related to digital technologies as a part of the strategy to be a distinguished company from the competitors. This study uses in-depth interviews with seven key people who run the strategy portfolio, policymakers, and marketing. A new proposed of digital strategies using TOWS analysis based on QSPM and Business Model Canvas (BMC) have been created based on PESTEL for macro-environment analysis and SWOT for micro-environment analysis as the fundamental strategies. By having a background business legacy in voice and connectivity in Innet Group, data center will be the new key business stream to unlocking the asset's potential for high performance for valuation and multiple EBITDA.
Keywords: data center, digital business strategy, ecosystem, consolidation, digital economy ___________________________________________________________________________
1. Introduction
Almost all countries, including Indonesia, use digitization as an accelerator of economic growth. Nowadays, the increase of 21 million digital users since the COVID-19 pandemic started to lead the acceleration of the country's digital economy. In 2021, the number of Indonesia's internet users reached significantly, and it was USD 70 billion, or an increase of 49% since 2020. Digital economy growth trends, data center access, and broad international bandwidth are supporting tools for computing, data storage, data security, and network, which enterprises in the industrial business need. Based IDC Data Center Survey, 2021 total data center colocation market in Indonesia was expected to reach IDR 4.5 trillion in 2023, with enterprise and hyperscale segments expected to grow at 22% and 20% CAGR from 2020 to 2025, respectively. According to this data, Indonesia has great potential to be developed an Indonesian industrial data center.
Figure 1: The Estimated Growth of Data Center Potential Market (Source: IDC, 2021)
Indonesia Network (Innet) provides data center products at more than one subsidiary. Three subsidiaries are running this portfolio: Beta Sadaya (BTS), Debian, and Mobile Cell. Beta Sadaya (BTS), with the new brand name Digital Ecosystem (DE) has a responsibility to manage all Indonesia Network’s data center, namely Neutral Cloud and Internet Exchange (Neucloud), DE’s owned data center at Serpong, Sentul, and Surabaya (3S) and Hyperscale Data center (HDC) at Cikarang. Besides, Debian maintains data center in Singapore, Hongkong, and Timor Leste, while Mobile Cell manages its own data center to fulfil internal usage data center for supporting mobile infrastructure. By having the same business portfolio, Debian and DE did not meet the optimum revenue, which is already targeted, although they have different customer segmentations. While Debian focuses on tech giant companies, DE focuses on enterprise and government. Each subsidiary focuses on its own resources to achieve its goals, and there was no alignment among those companies. Therefore, to achieve cost efficiency, focus on talent service, and talent network, and achieve multiple EBITDA, the data center business portfolio will be merged into one subsidiary (Digital Ecosystem) and need to have a new formula for digital business strategy.
The underperforming of those subsidiaries triggered some actions from boards, and corporate- level managers tried to find the appropriate way to formulate a digital business strategy for the data center. CEO of Indonesia Network, Bambang Prasojo, stated that by unlocking data center business through Data Center Company (DC Co), it has to achieve a consolidated revenue target from 2022, which is IDR 1.5 trillion at the end of 2023 compared to IDR 1 trillion at the end of 2022 (50%). To realize that mission, Andrea Thaulin, as the CEO of Digital Ecosystem (DE) has to optimize data center business portfolio at Indonesia Network Group through DE as a vehicle. Andrea mentioned that the rapid rise of the post-pandemic digital economy driven by digital transformation and transactions is causing a huge demand for lower latency data storage and processing. This condition will increase the usage of data center as an accelerator of the digital economy.
Before Indonesia Network had acquisition PT Beta Sadaya (BTS) from PT Beta Caraka, for equity participation in the form of cash and other forms (inbreng) with a total amount of IDR 2.1 trillion at the end of 2021, among the subsidiaries were independent one to another although they are running at the same business portfolio. Since there was no alignment and synergy, the results underperformed revenue. Debian achieved revenue in 2019 was IDR 373.26 billion, in 2020 was IDR 613.05 billion, and in 2021 was IDR 754.99 billion, with the revenue target were IDR 500 billion, IDR 650 billion, and IDR 800 billion in 2019, 2020, and 2021 respectively. While BTS could achieve IDR 577.7 billion in 2019, IDR 553.7 billion in 2020, and IDR 801.3 billion in 2021 with the revenue target being IDR 650 billion, IDR 750 billion, and IDR 1 trillion in 2019, 2020, and 2021, respectively.
Figure 1: Data Center Achievement and Revenue Target 2019, 2020 and 2021
Besides revenue target, the other concerned parameter is market share. DE has 19% of the total data center market share. Compared to the competitors, such as DCI Indonesia and Lintasnetwork, which has 22% and 21% respectively higher than DE. Regarding this market share, DE has immense potential to grab a higher market share.
Figure 3: Data Center Market Share 2020 (Source: IDC, 2021)
Based on Figure 3 above, the underperformed of revenue target and data center potential market share to achieve are the ultimate reasons why DE, as the data center consolidation company, needs to implement a new digital business strategy.
Besides, a lack of synergy among the subsidiaries turned the underperformed of sales achievement. Also, it may indicate that Innet Group did not focus on data center business portfolio. Data center can be considered an attractive business since the pandemic Covid-19.
CEO of Indonesia Network, Bambang Prasojo, stated that data center could be regarded as a new business growth engine since our legacy business focused on connectivity and voice. The Post COVID-19 pandemic has triggered some requests from enterprises market such as government, SOE, or private for data center requirements. That’s why it is necessary to strengthen data center because Innet has a full-package network, edges Neucloud, and has a giant eyeball at customers; thus, it will reinforce to address customer based.
Therefore, by having DE as a consolidated data center company, Innet Group has to formulate a suitable digital business strategy to achieve the ultimate target: having revenue IDR 1.5 trillion by the end of 2023. Having a big concern to achieve the target, which is already stated by the CEO of Indonesia Network, Andrea Thaulin as CEO of DE revealed that the new structure of organization between the subsidiaries which are running in data center business portfolio and new digital business strategy is mandatory points to have unique value creation for sustainable growth for DE.
There are three research questions related to this study as follows:
1) Why did Innet’s data center underperform in revenue target?
2) How to formulate a digital business strategy at DE to achieve revenue targets?
3) What is the most effective approach to optimizing the strategy?
This research aims to provide some recommendations for a proposed digital business strategy to achieve revenue targets.
2. Literature Review
2.1 Conceptual of Digital Business Strategy
In the past, digital strategy implementation belongs to the Chief Technology Officer’s (CTO) responsibility for the plan and implementation. Considering the multiple challenges and negative consequences brought on by digital technology disruption, businesses are starting to recognize the necessity of an effective digital business plan. The company needs to search out the best possible strategic positioning to achieve optimum performance. Hence, the digital strategy can’t be born to CTO only; it has to be the stakeholders' responsibility (Nasution, 2022). This statement was also emphasized by Bharadwaj et al. (2013), who stated that digital business strategy is trans-functional, not just cross-functional. It implies that the company's whole business functions are targeted and identified by the digital business strategy, with no more divisions between departments or silos. The corporation's business operations and plans are inextricably linked to digital technology.
The digital business strategy goes beyond simply implementing technology in businesses to boost productivity or reacting to rivals' moves (Nadeem et al., 2018). Nasution (2022) stated that there are six aspects to designing a digital business strategy, namely:
1) Digital Value Proposition
The digital value proposition is a fundamental component of creating a digital product or channel. According to the user's level of digital maturity and the creation of additional benefits, the digital value proposition tries to provide the best and most appropriate solution. It also aims to help businesses run more profitably by using best technology (Ziaie, Shamizanjani & Manian, 2021).
2) Digital Business Model
The digital business model is a framework for understanding how a firm operates, incorporating features of consumers, consumer value, model income sources, and the delivery of value in goods or services (Weill & Woerner, 2013). Traditional business models are no longer sufficient in the age of the digital economy, which is greatly influenced by the IoT ecosystem and requires businesses to work with rivals and across industries. Business models appropriate for the digital economy go beyond simple strategies for producing, delivering, and acquiring value from goods and services to provide consumers with advantages and create profitable and long-lasting revenue streams for the company; that is the model's focus.
3) Digital Capability
The ability to adapt, create, or develop various digital solutions to improve the consumer experience, increase marketing and sales, add value to products and services, integrate operational processes, make operating decisions, and establish innovative businesses are all examples of having strong digital capabilities (Nasution et al., 2020). Several digital drivers can impact digital capabilities (Nasution et al., 2018; Marchenko et al., 2020).
This digital driver consists of dynamic, networking, and digital innovation abilities.
4) Digital Business Architecture
Many researchers believe that a company's digital technology architecture should follow The Open Group Architecture (TOGAF) in order to survive in the digital era (Desfray &
Raymond, 2014). Enterprise information architecture is designed, planned, implemented, and governed using a comprehensive methodology called TOGAF. The TOGAF framework's simplicity, flexibility, and open-source nature are some of its advantages.
The Business Architecture, Architecture Information, and Technology Architecture layers comprise this framework's three different architecture levels. Organization, governance, and critical business processes are defined by business architecture.
Sequence diagrams and application architecture are the two sub-layers of information architecture. Organizational logical and physical data assets, as well as data management resources, are described by data architecture. The application architecture outlines the utilization of separate application systems, their interconnections, and their connections to the primary business operations of a company. The technological implementation of the solution architecture is described in the technology architecture. This architecture also defines the logical hardware and software capabilities required to support business services, data, and applications deployment.
5) Digital Ecosystem Design
The architecture of digital ecosystems is dynamic and synergistic, with a digital community made up of actors, or "digital species," that are interconnected, related, and dependent on each other. These actors live in a digital environment and interact as functional units, and these interactions are made possible by actions, information, and transactions that bring value to all actors (Hadzic & Chang, 2010).
6) Digital Transformation
Utilizing new technologies and business models to increase performance, digital transformation is an organizational shift that affects people, processes, strategy, and the company's structure (Westerman, Bonnet, & McAfee, 2014). A digital business strategy explains how the organization plans the internal events that come from implementing a digital business strategy, and digital transformation is a component of that strategy. By incorporating numerous innovations, the firm will become more productive and efficient (Westerman, Bonnet, & McAfee, 2014).
2.2 Developing a Great Digital Strategy
The company needs a unique value proposition to develop a great digital strategy that relates to digital technologies as a part of the strategy to the distinguished company from its competitors. By having a great digital strategy, it will lead and decide to provide the direction to focus on digital initiatives, measure the progress, and redirect some efforts to boost the ultimate goals (Ross, Sebastian, and Beath, 2017). Ross et al. (2016) stated that there are two digital strategies that define how companies seek to combine their existing capabilities with the new digital technologies to create new value propositions as follows:
1) Customer Engagement
A digital customer engagement strategy transforms a company’s go-to-market approach.
The customer engagement strategy is developing customer loyalty and trust; hence company needs to approach the customer through seamless, omnichannel, quick responses to new customer demands and having personalized to get customer insights.
Delivering digital channels to interact with the customer, applying data analytics to
identify customer needs, and leveraging social media to develop community are part of the action to enhance customer engagement strategy.
2) Digitized Solutions
A digitized solutions strategy transforms a company’s business model by reformulating what the company is selling. Digitized solutions strategy tries to integrate diversified products and services into a solution with information and expertise to solve the problem and add value throughout the services, i.e., using the internet of things (IoT), data-driven and Artificial Intelligent (AI) can be considered as part of digitized solutions strategy.
Businesses that use digitized solution strategies may eventually transform into service businesses, with their products serving merely a tiny portion of the entire offering. Digital solutions gradually alter business models by shifting the revenue stream from the sale of a product to continual recurring revenue (Porter et al. 2014; Porter et al. 2015).
2.3 Data Center Value Proposition
To synchronize with customer demands and needs, data center must be equipped with several services to meet and exceed the customers’ expectations as follows (Value Proposition for Data Center, 2022):
1) Bandwidth
The various types and sizes of enterprises employing colocation services have different bandwidth requirements. To accommodate small businesses that want 1Gbps connectivity and enormous organizations that need 10Gbps access, data centers must be established. To draw clients, data centers must provide this combination of bandwidth connections at competitive prices.
2) Security
Data center security refers to the physical techniques and virtual technology used to safeguard a data center and its clients' data from internal and external threats. Data Center security standardization refers to ISO 27001, ISO 20000-1, SSAE 18 SOC 1 Type II, SOC Type II and SOC 3, HIPAA, and PCI DSS 3.2.
3) Redundancy
Having protection and redundancy capability is very important to meet customer requirements. Some data center providers use electrical switching and optical switching to protect their networks.
4) Power
For data center, redundancy power providers may be designed to meet the power requirements of all data center, keeping the electricity expense low. The units may supply two power suppliers, AC and DC, which can be mixed AC and DC, or all AC or DC for the specifications.
5) Disaster Recovery (DR) Options
Data safety, data availability, and seamless 24/7 availability have become top concerns for data center providers as firms' reliance on their digital data and knowledge of dangers develops. Adding to this is the requirement to adhere to a new global rule that calls for establishing remote Disaster Recovery (DR) sites.
6) Online Monitoring
Providing online configuration and monitoring will be an advanced service to the customer. The monitoring system can be independently or remotely manageable on each port for all units from one location.
2.4 Conceptual Framework
Concerning the business issue, the underperformed revenue target, and data center potential market share to achieve are the ultimate reasons why DE, as the data center consolidation company, needs to implement the new digital business strategy. This conceptual framework is designed to achieve the goal of increasing revenue.
Figure 3: Conceptual Framework
The components to reach the ultimate goal are as follows:
1) Situational Dimensions
There are some variables related to situational dimensions, namely Customer Situation, Digital Ecosystem, Value Proposition, and Business Model.
a. Customer Situation
The Authors categorize three the data center customer segmentations Enterprise, Government, and SME/Digital Native. This segmentation is used to identify the needs of each segment.
b. Digital Ecosystem
Data Center Ecosystem is a digital service providing direct access to multiple network infrastructures, cloud providers, and large-scale storage spaces. For businesses with the trend of digital economy growth, data center access and wide international bandwidth will be critical to support almost all computing, data storage, data security, and network and business applications for enterprises. In addition, national digitalization is one of the main factors driving the economy, which can be started with the development of a local digital industry which will activate the digitization of various vertical industries.
c. Value Proposition
Having a data center value proposition will create a competitive advantage compared to the competitors to win the market share. Digital Ecosystem has to define the most valuable proposition which they have to be the distinguished provider.
d. Business Model
Some data center business models need to be synchronized with customers’ demands, the number of providers’ capital and goals. Provider may choose to have specific data
center like hyperscale or hybrid players. The selected of strategy may concern for the long-term period.
2) Structure & Process
Modernizing data center infrastructure considers having digitized solutions to create an excellent digital strategy. Data center infrastructure has typically been concerned with getting data and applications to end users, which are at the heart of the dispersed company. Data and applications are being used and consumed in a variety of ways, using a variety of models and in a variety of places, making it more challenging to develop and choose an adequate digital infrastructure to serve them. As a result, the provider must choose the appropriate vendors, workload placement models, processes, and technology.
These essential facets of supporting the distributed enterprise are the focus of the data center infrastructure endeavour (Forest and Vogel, 2022).
Figure 4: Data Center Infrastructure
(Source: Data Center Infrastructure Primer for 2022, Gartner 2022)
3) Ultimate Goal
After having the new structure of organization between the subsidiaries which are running in data center business portfolio and new digital business strategy on infrastructure modernization in data center, the ultimate goal expected to be achieved is increasing the revenue.
3. Research Methodology
Focusing on how to develop a great digital strategy, a company needs to have a unique value proposition that relates to digital technologies as a part of strategy to be a distinguished company from the competitors; that is the reason why Digital Ecosystem (DE) as the data center consolidation company needs to implement the new digital business strategy.
Emphasizing by having infrastructure modernization is expected to meet the ultimate goals, which is increasing revenue. For this purpose, this study will conduct a qualitative method.
This study uses in-depth interviews of the stakeholders in data center business line. The stakeholders consist of top-level management in Indonesian Network (Innet) who run the strategy portfolio, policy makers, and marketing, Digital Ecosystem (DE) who lead the data center strategic ecosystem in Innet Group and as consolidation company which has a target to achieve the ultimate goals, and Debian data center who run data center business line internationally with the representative from Singapore and Hongkong.
The interview is semi-structured in that the interviewer to ask a few essential questions and encourages respondents to react as freely as they can. If more research of the subject is required, several follow-up questions might be raised. It takes thirty minutes to an hour to complete each interview. Each respondent received an email invitation to participate in the discussions at least one week before the allotted time.
4. Result and Discussion
4.1 PESTEL for Macro-environment Analysis Political Factors
1) To acquire fiscal efficiencies and “Satu Data," the Government Cloud conducts initiatives by replacing the current 2,700 Data Center and managing 24,700 that it sees as ineffective.
2) The government’s Data Center concept concerns solutions regarding backup data center for data recovery in case of natural disasters or cyberattacks.
Some respondents discussed their assessment based on the current conditions in Indonesia as follows:
“The government is undertaking initiatives to build the Government Cloud (PDN Pusat Data Nasional) to replace the 2700 data centers and management of 24.700, which are viewed as ineffective because only 3% of them met the global standard of a government cloud. This is done to achieve financial efficiencies and "Satu Data" As the primary location for data centers, PDN is to be established in four regions: Bekasi, Penajam/Kutai, Labuan Bajo, and Batam.”
Economic Factors
1) Demand for data center services is high, although the number of providers in Indonesia is low; therefore the price Data Center services is relatively higher.
2) The majority the user of Data Center services are Banking and Financial sectors.
3) The growth of the digital economy, i.e., e-commerce, SMEs, and startups, most of them still house their IT server; it will be an opportunity for colocation services by changing customer behavior and supporting by internet penetration.
Some respondents discussed their assessment based on the current conditions in Indonesia and supported by IDC assessment 2021 as follows:
“Although there are few providers, there is a considerable need for data center services from a commercial standpoint. As a result, data center services in Indonesia are more expensive than they are in other nations. Most data center service users and clients are from the banking and finance industries. To achieve digital economic growth, Indonesia set a national goal to capture at least 40% of ASEAN's digital economy by 2025. With the nation's digital economy expanding thanks to the expansion of e-commerce, SMEs, and startups, which still house their IT servers primarily in-house, there will be more demand for colocation services. Supported by the shift in consumer behavior brought on by the epidemic and increased internet use.”
Social-cultural Factor
1) High customer and market expectations in Data Center relates the speed, security, and latency when assessing data center.
2) Data center will be treated as utility necessities, they can be used for analyzing reliability and efficiency as the key to decision-making.
3) Data center as a competitive advantage that providers have as a part of resiliency and agility for sustainable business.
Some respondent discussed their assessment based on the current conditions in Indonesia as follows:
“High market and customer expectations for data center service capacity. Digitalization has advanced significantly during the pandemic. This influences how various markets behave and view data centers, and it raises expectations for speed, security, and latency when evaluating data center capabilities.”
Technological Factor
It will be an opportunity to collaboration among the Data Center providers, e.g., having an Edge Computing Data Center as an effective and affordable solution to fulfill the demand in terms of low-latency data and drive-down bandwidth cost or having a Hybrid Cloud as the emerging trend to utilize either private or public (multi-cloud outsourcing).
Some respondent discussed their assessment based on the current conditions in Indonesia as follows:
“Competitive environment for industry participants or stakeholders introducing different approaches to data center services, such as: Edge (Computing) Data Center to have a cost- effective way to serve customers who have high bandwidth management requirements for low- latency data and Hybrid Cloud means using either private or public cloud, not just for large- scale clients but also to support the Indonesian government, e.g., multi-cloud outsourcing.”
Environment Factor
1) The increasing number of edge devices which affected triggered investment on renewable energy and green resource energy.
2) Data Center is still concentrated in Jabodetabek, other big locations such as Surabaya, Pekanbaru, Bali and Bandung are still considered due to the inconsistent of
infrastructure quality of electricity and network.
Some respondent discussed their assessment based on the current conditions in Indonesia as follows:
“As a sustainability strategy to achieve a shift towards green data centers, there will be larger investments on renewable energy (e.g., power and water consumption, waste management).
Despite the increased demand in places like Surabaya, Pekanbaru, Bali, and Bandung, Jabodetabek continues to be the primary location for data centers due to the inconsistency of the infrastructure's durability and network and electricity quality in other areas.”
Legal Factor
Peraturan Pemerintah (PP) Indonesia Government Regulation No.71/2019 related to electronic systems and transaction implementations. It is mentioned that public operators are required to conduct management, process, and store data in Indonesia, e.g., POJK No.18/2016, POJK No.13/POJK.03/2020, and POJK No.4/POJK.5.2021, POJK No.5/POJK.04/2021, and POJK No.6/POJK.04/2-21 are examples of the implementation of Financial Regulation and Law of Data Security (Cyber Security) awareness.
Some respondent discussed their assessment based on the current conditions in Indonesia as follows:
“The Indonesian (PP) Government Regulation No. 71/ 2019 covers all relevant implementations of electronic systems and transactions, including data center services developments. Public operators must handle, process, and keep data within Indonesian territory, in contrast to private domain electronic system operators. In addition, financial services should consult OJK for any applicable regulations.”
4.2 SWOT for Micro-environment Analysis Strengths
1) Innet Group has Digital Ecosystem (DE) as a data center consolidated company.
2) DE has a strong data center ecosystem.
3) DE has complex connectivity, including terrestrial, submarine, and satellite.
4) Innet Group has a lot of Regional and data center branches in Indonesia.
5) DE has a strong value proposition to capture customers’ demands and needs.
The top value proposition which DC Provider can offer is also important to meet and exceed the customer requirements and expectations. Respondents from the strategy portfolio have an opinion as follows:
“The goals to have DC consolidated company for the short-term are to talent pool at one business, efficiency since there are sharing costs, talents and facilities, and the number of DC business valuation. DC has a higher valuation than Telco, for DC can reach 20 to 25 times while Telco 6 to 7 times. While, for the long-term, DC is considered a new engine growth and increasing the valuation for Innet Group.”
Weaknesses
1) Unclear end-to-end procedure for data center (sales, configuration, maintenance/entering location)
2) The marketing team has a lack of experience in selling data center products.
3) The limited internal resource to establish an excellent the data center
Some respondent discussed their assessment based on the current conditions in Indonesia as follows:
“There were some conflicts when AM marketed DC products. To whom it should be acquired, it should be Enterprise or Wholesale. This issue is related to the Go To Market (GTM) strategy.
Who will manage those customers.”
Opportunities
1) Indonesian government regulation strengthens the position of a data center as an opportunity business for the local provider.
2) Internet penetration and the COVID-19 pandemic have bold the critical function of data center to increase market share.
3) Collaboration with strategic partners can add value to the customers.
Some respondents expressed their opinion as follows:
“By having DC consolidated company will create opportunities and challenges, as well as pros and cons. The opportunities include creating a stronger branding image, accessing more market potential, and simplifying packaging for attractiveness & competitiveness. The challenges include managing operational excellence, resource streamlining, and cost efficiency. While Pros of this case are maximum occupancy or utilization through cross-site selling/bundling, potential cost saving when dealing with partners/suppliers, and better service value/competitiveness from the customer’s perspective. The Cons are more invested in the beginning, complexity in the consolidation process and complexity in asset transfer related to legal.”
Threats
Competitor’s pricing, reliability, and flexibility.
The opinion from one of the respondents as follows:
“Another concern we should consider is competitor’s competency. Not only the capacity as their asset but also the price they offer. Flexibility in choosing the network also become one factor that we should pay attention to. Because data center should be neutral, that’s why we bundle our products with connectivity to be the distinguished DC provider.”
4.3 TOWS Matrix Analysis and Quantitative Strategic Planning Matrix (QSPM)
Figure 5: TOWS Matrix Analysis
Based on the TOWS matrix above and QSPM matrix analysis, which is calculated as the list of top priority of the four big digital business strategies as follows:
2) Collaborate with strategic partners to enhance the capability, capacity, and customers attractiveness.
3) Build up seamless data center ecosystem connectivity.
4) Improve global talent competitiveness.
To have effectiveness of the strategies implementation, the several program needs attached for the each item. The first strategy which is to highlight data center value proposition as a digital ecosystem, consists of three steps, namely expand all types of DC (Domestic through Neucloud and Hyperscale) and DC international to strengthen the Ecosystem and increase capacity and capability, collaborate all DC asset into Digital Ecosystem to strengthen of DC capability and integrate all the operation at DC Ecosystem to have cost leadership. This strategy is aimed at recognizing customers need and demands and then emphasizing the implementation.
The second strategy is to collaborate with strategic partners to enhance the capability, capacity and customer attractiveness which consists of three steps namely, level up hyperscale business capacity and capability by creating a strategic business partnership, enrich DC Services by improving the contents, and invite investors for having collaboration. This strategy is purposed to enrich the DC service through content by collaborating with global players.
The third strategy is to build up seamless data center ecosystem connectivity. This strategy has three steps also, namely, building DC as a marketplace through enhancing the Platform as a Service (PaaS) and Software as a Service (SaaS), integrating and building all DC Infrastructure digitization to have seamless connectivity and strengthening Infrastructure as a Service (IaaS) as a mandatory service. Considering Digital Ecosystem strengthens connectivity; hence it is essential to maintain and enrich content.
The last strategy is to improve global talent competitiveness. This strategy also consists of three steps, namely developing a global talent program, creating a global partnership program, and creating a benchmark to other DC companies. This strategy is aimed to have global mindset and capability to catch up the latest technology at data center.
Figure 6: QSPM Matrix Scoring Analysis
4.4 Business Model Canvas Analysis
This Business Model Canvas (BMC) Analysis is aimed as a proposed of the new BMC based on the PESTEL, SWOT, TOWS, and QSPM analysis above.
Figure 7: Digital Ecosystem Business Model Canvas Analysis
5. Conclusion and Recommendation
5.1 Conclusion
The purpose of this research is to formulate a suitable digital business solution for data center business line at Digital Ecosystem as a consolidated company of Innet Group to increase revenue. By using special attention, which was mentioned by Nasution (2022) there are six aspects to designing digital business strategy, namely Digital Value Proposition, Digital
and Digital Transformation. Besides, another literature for developing a great digital strategy which is stated by Ross, et al. (2016) that there are two digital strategies that define how companies seek to combine their existing capabilities with new digital technologies to create new value propositions, namely Customer Engagement and Digitized Solutions. This research focuses on how the Digital Ecosystem using digitize solutions as a digital business strategy.
This study uses qualitative analysis to get comprehensive data for determining the conditions of the data center business line and try to figure out the best solution as a digital business strategy solution. The type of data analysis was divided into two parts, the first is the assessment of macro-environment analysis and the second is the assessment of micro-environment analysis.
For the big three research question, which is mentioned at Chapter 1, it can be concluded as follows:
1) Why did Innet’s data center underperform in revenue target?
The main reason for this case is data center was performed at more than one subsidiary.
This condition was followed by the unaligned business strategy at Innet Group. Other reasons which contributed to this result are the Account Manager's lack of experience on how to market DC in a great way to customers, and the issue Go To Market (GTM) strategy between Enterprise and Wholesale, and the long bureaucracy to entering the DC area also contributes the underperformed of revenue target.
2) How to formulate a digital business strategy at DE to achieve revenue targets?
By having the TOWS matrix and QSPM Scoring Analysis of suitable formulation of digital business strategy at Digital Ecosystem can be determined as follows:
a. Highlight data center value proposition as a digital ecosystem
b. Collaborate with strategic partners to enhance capability, capacity, and customers attractiveness
c. Build-up seamless data center ecosystem connectivity d. Improve global talent competitiveness
Among those strategies is using digitized solutions as a fundamental, having Digital Ecosystem (DE) as a consolidated company means merging all data center components under one roof. By sharing the asset, especially the connectivity, will strengthen Digital Ecosystem as a distinguished DC provider.
3) What is the most effective approach to optimizing the strategy?
The most effective strategy is highlighting the data center value proposition as a digital ecosystem. DE has to focus on the scale-up of hyperscale by considering that hyperscale has long-term contract fast Return of Investment (ROI). Also, having a great strategic partnership will make customers more attractive. Besides, improving the DC products through having strategic partnerships to enhance the capability, capital, and customer attractiveness will boost the revenue.
5.2 Recommendation
Based on this research, it may develop with the suitable composition between DC hyperscale, DC domestic (Neucloud), and DC International based on the customer segment requirement to get match spending on capital expenditure. Besides, the speed-up of DC integration between
DC at Innet Group, scaling up the DC Hyperscale, have great strategic partners will be the keys to unlocking the asset to have an excellent performance for valuation and multiple EBITDA.
Considering DC is a new form of a business stream at Innet Group compared to the legacy business at voice and connectivity; therefore, it suggests for the next future study to compare DC market at domestic and internationally to get a more comprehensive analysis.
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