Listen to leading transformation stories

Julie Devoll: Welcome to the HBR Quick Take. I'm Julie Devoll, editor for special projects and webinars,   and today I'm joined by Herman Widjaja, the CTO of Tokopedia who's with us today to offer insight into how Tokopedia leverages its digital infrastructureHerman, thank you so much for joining us today.

Herman Widjaja: Hi, Julie. Thank you for inviting me.

Julie Devoll: So, Herman, tell us about Tokopedia and how it is driving innovation in Indonesia.

Herman Widjaja: Tokopedia is an Indonesian technology company founded in 2009 by William Tanuwijaya and Leontinus Alpha Edison. Both of them started from a very humble beginning and they were raised and born in the remote areas of Indonesia. A bit about Tokopedia itself, the company's name combines two acronyms actually – “toko”, which is the Indonesian for “shop”, and “encyclopedia”.  So we are hoping that Tokopedia can be the encyclopedia for shops in Indonesia. A little background - seeing how Indonesians, who live in the world’s largest archipelago, are hindered by distance and technology despite having equal opportunities, Tokopedia made it its mission to democratize commerce in the country through technology. The lack of trust towards online transactions and unequal access to goods and services were what Tokopedia sought to address when it was co-founded in 2019.

Naturally, merchants move to big cities for better markets while consumers have had troubles in actually finding access to goods. So, assume that social networks and forums were there, were very popular, but they were not really fixing the problem. There were a lot of issues like no proper inventory management systems, payment processing; no clear payment processing services which end up causing online fraud. Many people ended up sending money or transferring money, but the item was never sent. The goods has reached the buyer, or maybe the other way around, the goods has reached the buyer, but the payment had never been completed. So, cutting through the fog, William Tanuwijaya and Leontinus Alpha Edison realized that there was a need for a trusted intermediary between sellers and buyers to breach their transaction. So, on August 17th, 2009, by the way August 17th is Indonesian Independence Day. So, on August 17th, 2009, Tokopedia was launched and become that intermediary.

Through the Tokopedia marketplace, the company offers a free C2C business platform for merchant and buyers. It also offers fintech payment and logistics services. As for today, Tokopedia is the largest marketplace in Indonesia. We are serving more than 11 million merchants in our platform in which most of them are brand new entrepreneurs. We are able to reach 99% of districts in Indonesia. We are able to serve more than 550 million products with transparent pricing. And what's cool about this is we have contributed more than 1% of Indonesian GDP. So that's a bit about Tokopedia and where we are.

Julie Devoll: What were some of the IT and business challenges that Tokopedia needed to overcome to accelerate digitalization and become a digital leader?

Herman Widjaja: Tokopedia was founded not as an e-commerce company, we were founded as a technology company with a mission to democratize commerce through technology. So, technology becomes a very, very core critical component that actually served the accelerations. So, we have five core pillars in the technology team that becomes our guiding principle in our day-to-day.

So, the first one is that we believe in strengthening the platform. For us, platform stability, quality, and reliability remain to be our core mandate to sustain the Tokopedia business. Being able to run 24/7 is not only important, but very critical and crucial to the growing customer, merchants and partners in our ecosystem. The balance between moving fast and high quality needs to become a cultural transformation within the technology team.

The second one, we call it strengthening the security and privacy posture. Cultural transformation of security first and privacy by design is crucial and critical especially within the Indonesian market. It is never too early or is never too late to embark on this journey. So, we just created a new office called data protection and privacy office, and also security office. We are aiming for Tokopedia to have world class standard in security and privacy.

Number three, focus on consumer innovation. Focus on consumer technology innovation. So, what is innovation? For me, specifically, innovation is a byproduct of a strong understanding of our customers - in this case our buyers, our merchants, our partners, and our employees. It also is our willingness and empathy and passion to put our growth mindset to solve their problem in our agility and ownership to make it happen.

The fourth things is AI-first and data-driven transformation. Data-driven transformation is the key to unlock AI-first vision. In data office, they play a very crucial role in being the champion and catalyst for data-driven cultural changes at Tokopedia. We need to leverage data to make informed business product operation and technology decision. Access to high quality, secure and mature pre-processed data is very important for growth mindset analytics to happen. And finally, number five, one of my favorite is financially optimized execution. As digital leader, we don't only focus on launching the coolest feature or launching the latest and greatest product. Those are great, but we also need to focus on adapting a good financial sustainability model. We need to identify the unique economics of our platform and ensure financial sustainability and growth.

So let me just recap the five things that becomes our guiding principle in the technology teams at Tokopedia. Number one is strengthening the platform. Number two, strengthening the security and privacy posture. Number three, focus on consumer innovation. Number four, AI-first and data-driven transformation, and finally number five, financially optimized execution.

Julie Devoll: Tell us about the key elements of the digital infrastructure you built to enable this kind of growth and then sustain it going forward.

Herman Widjaja: We at Tokopedia we are committed to giving our customer peace of mind, and specifically, in terms of reliability, scalability, security and trust while using our platform. So, let's talk one by one. To ensure security, we invest in reliable monitoring, advance sensor, and necessary security measures. To ensure reliability, we built and maintain a powerful, robust infrastructure capable of handling an ever-increasing number of transactions while ensuring a favorable customer experience. To ensure scalability, we built a flexible digital infrastructure that can scale on demand where businesses requires. So, I think this is - we continue believing in the make it better and a growth mindset in terms of our platform, so that at the end of the day, our customers, merchants, and partner, can feel secure, they can feel we are reliable, they can feel that they can trust our system while scaling and growing at Tokopedia.

Julie Devoll: What role did Equinix play in bringing together and interconnecting your digital infrastructure?

Herman Widjaja: Equinix enabled us to connect our multi-cloud digital infrastructure and services via secure, reliable, and scalable interconnection. This allows us at Tokopedia to scale hybrid deployments easily to achieve network agility while directly connecting partners and provider easily, securely, and reliably. This means our customer experience zero disruption during their online transaction, while new technology like AI enables us to understand buying patterns and needs. We also leverage Equinix platform to avail a virtual network services. These virtual network services run on a modular infrastructure platform, which allows instant deployment and interconnection of network services.

Julie Devoll: Herman, what will Tokopedia look like in five years?

Herman Widjaja: As a homegrown Indonesian company, we will continue to focus on Indonesia, serving the largest archipelago in the world. Just to give some perspective for everyone, Indonesia is the fourth largest population in the world. The first to the third countries - U.S., China and India - their market are already fully digitalized. So now, Indonesia is quite an exciting market where we need to be the next digitalized market. This means that we will continue bringing customer experience of intra-city sales in tier two and tier three cities to the same level as those in big cities like Jakarta, Surabaya, Semarang and those areas, with a hope to enable people to get anything they want locally at a cheap price with faster delivery times.

Julie Devoll: Herman, this has been a great discussion. I want to thank you so much for joining us today.

Herman Widjaja: Thank you, Julie.

Julie Devoll: For more information about how to create your digital advantage, visit equinix.com.

Equinix is the world’s digital infrastructure company. Digital leaders harness its trusted platform to bring together and interconnect the foundational infrastructure that powers their success.

Julie Devoll, HBR: Welcome to the HBR Audio Quick Take. I’m Julie Devoll, Editor of Special Projects and Webinars at HBR. In this Digital Leaders Series, sponsored by Equinix, we ask technology executives about the strategies their companies have adopted to create a digital advantage.

In our first episode, we’re joined by Rakesh Inamdar, Senior Director of Core Infrastructure Services at Aon, to discuss everything from the strategic drivers of their technology investments to the key principles that underpin their infrastructure. Rakesh, thank you so much for joining us today.

Rakesh Inamdar, Aon: Thank you, Julie. I’m excited to be here.

Julie Devoll, HBR: Rakesh, to kick us off, tell us about Aon.

Rakesh Inamdar, Aon: Besides the Aon logos that you see on Manchester United jerseys across the globe, we are the world’s leading professional services firm in risk, retirement and health, mainly underpinned by our data and analytics platform. The combination of our proprietary data technologies and advisory services creates meaningful insights that help our clients reduce volatility and improve performance. So we are in the business of managing risk.

Julie Devoll, HBR: What were the business objectives that drove your C-suite to make the commitments and investments needed to become a leading digital business?

Rakesh Inamdar, Aon: For Aon, a risk mitigation business is ultimately based on its success at predicting the future. Investment in digital technology — such as big data analytics, elastic compute and AI — and in advanced network capabilities to connect them all is a priority to drive success for Aon.

Julie Devoll, HBR: As a digital leader, what business advantages does Aon have against competitors who may not be as far along in their digital transformation?

Rakesh Inamdar, Aon: There are a couple of different factors, Julie. The first one would be speed to market. Aon technology and platforms allow our business to move from ideation to market in the shortest time possible. Cost advantage, savings and run rate reductions allow our business to remain cost competitive. Innovation — the global on-demand footprint of capabilities that we have enabled — allows our business to continue to develop newer solutions and stay ahead of the competition. Even if the concept does not work, we are not hampered by fear of sunk costs. This drives a culture of innovation, and we believe in failing fast and trying more things.

Julie Devoll, HBR: What are the key features of the digital infrastructure Aon built to enable this leadership?

Rakesh Inamdar, Aon: I would say one of the key building blocks for the digital infrastructure was the core infrastructure services that power the underlying network of connected offices, data centers and services. It’s key design principles: It has to be resilient and provide a high degree of availability; have the ability to scale dynamically up and down as and when needed; and have a global reach, not only to the major centers, but also to long-tail emerging markets, such as LATAM and sub-Saharan Africa. It should not be cost prohibitive. It sounds cliche, but it’s very key. Anything can be built if cost is not a factor.

There were solutions that met singular needs. For example, we could use AWS, Azure or GCP to meet the dynamic compute needs, then we had telecom providers — the major ones, globally, that could provide cloud connectivity — but it still felt very disjointed. And at the end of the day, our business does not care about the how; it cares about the when and at what cost.

So as part of a multiyear strategic program called Core to Edge, we set out to transform our core infrastructure services and developed the architecture, working with partners like Equinix to build Aon’s network performance hubs. We call them the NPHs, globally, that brought all these components of core infrastructure services together to provide a fabric of compute and connectivity in a highly secure and cost-effective manner for our business to build its platforms on.

I’ll use an example. When Covid-19 hit, not that we were surprised, but we were able to pivot from 50,000 colleagues working in offices to having them all working 100% remotely over the course of a weekend, without any drop in capabilities or services. Everything that they could do in the office, they could do remotely. And all of this was possible because we had built NPHs that had more than enough capacity and bandwidth to scale. We did not have to provision new solutions to get them productive.

In the past seven to eight months, we have been busy rolling out new capabilities for our colleagues when a lot of other companies are struggling to even figure out a way to keep their colleagues connected and remain productive.

So we did not predict Covid-19, but we built our infrastructure to be ready for disruption, and it allowed our business to continue operating without skipping a beat and to continue to serve our clients. Some will say we have entered a new normal, but look around our firm: We have chosen a new better — better ways to work together, better ways to serve our clients and a better path forward for all our colleagues. I can say that Aon technology is a big part of the new better.

Julie Devoll, HBR: How does Equinix help you bring together and interconnect your digital infrastructure?

Rakesh Inamdar, Aon: We have built our multiple network performance hubs globally in pretty much every geography — Dallas, Washington, D.C., London, Amsterdam, Singapore, Sydney, Sao Paulo in LATAM — to support our global infrastructure and our global client base. We purposely partnered with Equinix and chose its locations to build out our NPHs. Equinix provided us the most connected footprint of capabilities and services — be it public cloud connectivity to AWS, Azure, GCP — with Equinix Fabric, our easy access to the largest carrier-neutral telecommunication aggregation points in the globe. So choosing Equinix was a no-brainer.

Julie Devoll, HBR: As you look to the future of digital infrastructure, what does this look like in three to five years?

Rakesh Inamdar, Aon: The two technologies that we feel the strongest about are AI and ML — and 5G. As we look to the future, we believe AI and ML doing data analytics and predictive analysis will drive new business insights that are not possible today. We already have tremendous amounts of data and strong industry knowledge in the area of risk. So we are well-positioned to take advantage of this opportunity if we make the right investments in the digital infrastructure to unleash the power of AI and ML.

Specifically in the area of core infrastructure, we believe 5G will be the biggest disruptor for traditional network connectivity and the network OEM industry. We envision that Aon offices of the future will not have any network switches, access points, telecommunication equipment or circuits. Each 5G-enabled Aon endpoint will leverage a virtual slice of the world carriers’ 5G network to access Aon services wherever they may be.

Julie Devoll, HBR: Rakesh, how would you describe your partnership with Equinix?

Rakesh Inamdar, Aon: We see Equinix as a valued infrastructure partner in our digital journey, allowing Aon to bring together and interconnect services and capabilities available in the digital economy marketplace. This includes their own services, such as Equinix Fabric and Internet Exchange, and capabilities from the boundless ecosystem of technology partners — AWS, Azure, GCP, Salesforce, Workday, to name a few — available on the Equinix Fabric platform.

This partnership includes Aon having a seat at the table as part of the Equinix Customer Advisory Board (CAB), and it has allowed us to have some level of influence in the future capabilities that Equinix develops that we could take advantage of. For example, we wanted to connect to Salesforce. As part of this CAB, we made a request to Equinix, and they worked with us to start a POC [Proof of Concept], working with us and Salesforce to onboard Salesforce to the Equinix Fabric platform, which allowed us to connect to their services seamlessly.

Julie Devoll, HBR: To wrap up our discussion, what are some of the steps Aon is taking now to get ready for the future? Any platforms or technologies that you’ll adopt at greater scale?

Rakesh Inamdar, Aon: Aon is maniacally focused on providing enterprise-wide standardized IT platforms on which we can build our future business applications. We do realize that public cloud and the marketplace ecosystem allow us to leverage capabilities that we may not have time or resources to develop ourselves. To that end, we have a cloud-first approach and expect 70% to 80% of our new applications and solutions to be developed in the cloud.

To enable this cloud journey and meet future needs, we realize that we’ll have to continue to enhance our core infrastructure and our network performance hub platforms.

Julie Devoll, HBR: Rakesh, thanks so much for joining us today.

Rakesh Inamdar, Aon: Thank you, Julie. It was great talking to you about Aon’s digital journey.

Julie Devoll, HBR: For more information about how to create your digital advantage, visit equinix.com.