ICT & Nepali Corporates

While the world is shrinking due to the ever increasing use of information and communication technology (ICT), Nepali corporates too are facing the challenge of either using more of ICT in their business or lose out in the global competition. How are they facing this challenge? New Business Age takes the stock of the current situation.

Let’s begin with the review of what some experts say. For this, please refer to the three articles following this one in this issue of New Business Age. Some immediate conclusions one may draw up are: there is good prospect for the use of ICT use in the corporate sector of Nepal, and that there is an economic dividend (2 percentage point increase in the economic growth rate) to be derived by the economy as a whole if the country uses ICT in financial sector alone. But the lack of a cyber law is posing a formidable hurdle in the use of ICT, complain businesses.

The frustration is understandable, because it has been more than two years since the so-called Cyber Policy was announced with much fanfare and a lot of promise. The country still lacks the cyber law though it was drafted almost together with the Cyber Policy’s announcement. While this shows how Nepal is moving ahead to compete with the world in the cyber race, some analysts pin their hope on the fact that the ICT revolution is not like industrial revolution. While the industrial revolution was like a bandwagon which could be missed by some countries, ICT revolution is one which by nature must encompass the entire world. Even if you are late, you will be taken aboard, though belatedly. “Till date, this revolution benefited the developed countries … Now it is shifting to the other parts of the world”, said Lochan Lal Amatya, president of the Computer Association of Nepal (CAN) in an interview with NBA in its January 2003 issue. 

But a quick survey by NBA in February 2003 showed that the corporates are not going to have the patience to wait for the ICT revolution to creep into the country as they are already facing the compulsion to be competitive in the world level.

A cursory look at the table on the pages after this story should be enough to conclude that banks, hotels, airlines and I/NGOs are the major ICT users here.  Amatya had in the said interview listed international organizations, joint venture banks, communication service providers and business firms associated with tourism as the major consumers of ICT. The NBA survey focused on corporates and did not try to go deeper into the ICT use by I/NGOs and government.

What is widely used

After the wordprocessing and spreadsheets, accounting softwares seem to be the most widely used ICT products by the Nepali corporates. This is followed by other boarder management information system softwares.

Sector Differences

However, different sectors have different ICT product in wider use. For example, while accounting softwares are found to be the major ICT product being used in manufacturing and other companies, banks and big corporates are found using LAN, WAN and VSAT link as well. But, the VSAT use is limited to very few big companies.

Among the softwares in use in the banks are Pumori, Flexcube (universal banking solution), Globus, TeleRate (for forex rates), SWIFT (for fund transfer) and EBSW (eBanking software from Standard Chartered Bank). Standard Chartered Bank Nepal has recently acquired Basic Banking Software (BBS) from its principal standard Chartered Group. As the box in the corporate story about Laxmi Bank suggests, newer banks are not necessarily ICT savvy. Some joint venture banks have not yet started offering even ATM services.

Domestically developed softwares are found popular particularly among the airlines and the finance companies as the table suggests. However, in banking, one of the major users of ICT in the country, the use of softwares made in Nepal is found to be taking a reverse trend. For example, though 10 of the 19 banks surveyed reported using Nepal made banking software, but one of them is replacing it. While many of the rest say they would change it on the first next opportunity.

Pumori, the major made-in-Nepal banking software developed by Mercantile, is facing tough competition from foreign softwares such as Globus and Flexcube. Nepal Bank Ltd. is still using Pumori but the new international management team reported having complaints about the lack of maintenance support from the supplier while the company was complaining that it was not receiving the payments as agreed in the contract. Now the new management of the bank is said to have freshly negotiated for the support services. This means it is going to be a test case for not only Mercantile but also for the entire software industry of the country.

Among the finance companies, the trend seems to be to use varied softwares, mostly developed within the country. Interestingly, Pumori and its later version Pumori Plus are found fulfilling the requirements of these finance companies though some of them have been using softwares developed in-house (e.g. ACEPRO by Ace Finance).

The other areas of ICT use are quality control and inventory management. One company reported to be using DAISY for the quality assurance and LOGIHOLD for inventory management. One engineering sector company set up under foreign joint venture mentioned that it is using ICT also in designing the product, though it did not name the software.

Enterprise Resource Planning (ERP) software seems to be another very widely used ICT product by the Nepali corporates. One bank said it is in the process of selecting ATM/card switching software.

Why used

Almost all the companies contacted by NBA mentioned operational use, accuracy, speed and cheap cost of communication as the major reasons for the use of ICT in their business. Only one of them mentioned the compulsion to use ICT because of the insistence of the foreign principals. One respondent said his company is using ICT to remain competitive in the market place.

Problems

As expected, the corporates mention that the major problem faced by them in ICT use is associated with legality. “The central bank does not support import through ICT use”, says one. “(There is a) lack of legal infrastructure for online financial transactions”, says another.

The problem in expanded use of ICT is not limited to legal issues. “Lack of good market environment of technical equipment” is cited by one banking institution as the hurdle to the use of ICT. “No sound competition (exists among) the vendors and service providers”, it says. Another bank complains of “limited market resources for technology selection, implementation and support.”

Also hindering the ICT use is the lack of nationwide stable data link (e.g. optical fibre link, leased line). “NTC leaseline uptime and bandwidth is not up to the standard of the banking transaction requirement”, says one bank. “National infrastructure available to the public for basic data communications are of low capacity and have poor performance”, says another. It also complains of costly and limited private network communication infrastructure.

Major ICT Users

Banks

Finance Companies

Insurance Company

NGO/INGO's

Airlines

Hotels

Government

Manufacturing