Analysis of Obstacles in Implementing the Finished Banknotes Business Model: A Case Study on Banknotes Printing in Indonesia

Article Info Abstract Purpose Bank Indonesia as a central bank uses Perum Peruri as a banknote printing service provider. In general, Bank Indonesia is a consumer and a banknote paper provider that intends to change the business model from printing services to finished banknotes or end-to-end processes. Therefore, this study aimed to analyze the obstacles faced while implementing the finished banknotes business model by Perum Peruri. Methodology A total of 9 obstacles were identified based on the literature and discussions with five experts from the banknotes printing industry, Bank Indonesia as a consumer and regulator, the Ministry of State-Owned Enterprises, and the Indonesian Printing Security Association. An interpretive structural modeling analysis was used to measure the strength of the relationship between obstacles, develop hierarchical levels, and classify and rank each obstacle. Findings The results showed that the main obstacles included limited working capital, dependence on supplies of foreign banknotes, the complexity of their procurement, and barriers to accessing banking. These obstacles can be solved when Perum Peruri improves its capabilities and receives support from the government. Originality This study is original and provides new knowledge about the obstacles faced by banknote printing companies when changing their business model.


Introduction
Companies must adapt to environmental changes to maintain business continuity (Wheelen et al., 2018). Business model changes are also intended to improve services, attract new users, grow strategy by increasing user base, and ability to retain existing customers (Panda 2020).The business model canvas (BMC) helps identify whether current business processes follow environmental conditions (Osterwalder et al., 2010). The business model reflects a company's strategy as a way to realize various strategic choices (Marseille and Chereau 2019). In this regard, the transformation from the conventional to a modern business model adaptive to the business environment is essential for growth and development. The company would maintain its sustainability by evolving from a traditional to a sustainable business model. This transformation requires significant changes to their strategy, business model, organization, talent, operations, and culture. Furthermore, companies should transform certain functions, business units, or the entire organization (Shuili et al., 2021;Van Tonder et al. 2020;Mcnally 2018). A more holistic approach also needs to develop a business strategy model (Kitsios and Kamariotou 2019).
It is insufficient to measure companies from economic, social, and environmental aspects (Martí 2018;Müller and Pfleger 2014). An example is how manufacturing companies in China are competing again in the international market after two years of being hit by the Covid-19 pandemic. They entered a new normal by transforming and upgrading to increase market competitiveness and sustainable development (Shuili et al., 2021).
Threats to business continuity also exist in the banknotes printing industry. This sector has a limited number of companies because not all countries have banknotes printers. However, they face threats such as the trend towards digital-based payments (Lloyd et al. 2016;Stalmachova et al. 2022;Polinkevych 2022;Bouwman et al. 2020), environmental issues (Hayta and Oktav 2019), the demands to use money security features on paper, design, and printing technology, and government regulations (Nasdaq's OMX's 2019;Bank Indonesia 2019). The limited number of banknotes printing companies worldwide has made the competition more challenging.
The banknotes printing industry uses the printing service and the finished banknotes business models. The printer only provides banknotes printing services in the printing service business model. As the primary raw material, banknotes are prepared by the monetary authority, the Central Bank, or the government as the customer giving the order. This business model is commonly used in commercial printing, such as the National Printing Office (NPO) in the Philippines (NPO 2019) and National Printing Bearue, Japan (NPBJ 2018). Additionally, the model is currently being implemented by Bank Indonesia (BI) and Perum Peruri (PP) (Peruri 2020). This business model has several characteristics using the Business Canvas Model approach (Osterwalder et al. 2010). First, it aims to serve banknotes printing services in the value proposition aspect. Second, the key activity is printing, and revenue comes from payment for services. Third, the cost structure comprises all printing components but does not include banknotes paper. Fourth, key resources are humans competent in printing, while the main partners are ink suppliers and banks that provide capital. Fifth, the key relationship involves customer gathering, monitoring, and evaluation, and distribution is accomplished with Logistic. Sixth, there is ERP integration, and the customer segment is Bank Indonesia (BI) as the central bank. These characteristics are shown in Figure 1.
The finished banknotes business model handles overall production processes, including procuring and printing banknotes and processing paper waste. This model has been utilized by many world-class banknotes printers, such as De Larue in the UK, which received orders from various countries in Africa, Asia, Europe, and parts of South America (Echo et al. 2020). Other competitors such as Giesecke+Devrient, Germany (G&D 2019), Crane Currency, Malta (Crane Currency 2019), and The Fábrica Nacional de Moneda y Timbre, Spain (FNMT 2019) have fewer marketing networks. De Larue is the world's largest banknotes printing company, with a network of more than 140 countries, as shown in Figure 2. The finished banknotes business model has several characteristics using the Business Canvas Model approach (Osterwalder et al., 2010). First, the value proposition is to serve end-to-end or finished banknotes providers. Second, a key activity is to procure paper, design, print, deliver banknotes, and destroy waste. Third, the revenue comes from selling finished banknotes and the margin from paper purchases. Fourth, the cost structure is purchasing banknotes paper, waste treatment, and printing components. Fifth, key resources are HRs competent in procuring banknotes, printing, and design. Sixth, key partners are suppliers of banknotes paper, ink, and banks as capital providers. Seventh, the key relationship involves customer gathering, monitoring, and evaluation, and distribution is accomplished with Logistic. Eighth, there is ERP integration, and the customer segment is Bank Indonesia (BI) as the central bank. These characteristics are shown in Figure 3. In 2020, BI issued an Independence Day Note 75,000 to commemorate the 75th Independence Day of the Republic of Indonesia. The issuance was a trial of the finished banknotes business model on PP applied to various world banknote printers companies. Moreover, the trial tested PP's dynamic capabilities in utilizing the opportunities offered by BI. A company's dynamic capabilities increase when it explores and exploits opportunities, enabling it to maintain business continuity (Rengkung 2018). The driving factor for changing business models is market and technology turbulence, the chosen strategy, and innovative types of activities (Gatautis et al. 2020).
There are two methods of printing banknotes regarding BI Regulation No. 21/10/PBI/2019 about the Management of Rupiah Banknotes. The first method is printing Rupiah Banknotes, including providing raw materials by BI (Bank Indonesia 2019). The most significant revenue in PPs business is printing Rupiah banknotes (Perum Peruri 2021). This makes PPs vulnerable to BI regulations, including changes in the business model from printing services to finished banknotes. Also, changes in government policies impact the current business model (Berti and Casprini 2018). The seven factors leading to business model innovation are market pressure, government policies, entrepreneurship, culture and strategy, technology, human resources, and organizational capabilities (Tian et al., 2019). This makes PP consider maintaining and improving its performance in the future. The finished banknotes model significantly increases PP's income because BI purchases the banknotes at prices higher than the printing services business model. There is also a new revenue stream from banknotes paper components because the procurement is transferred to PP. Therefore, the change in the business model helps increase revenue and the company's viability. PP could increase profitability by innovating and efficiently procuring banknotes and the production process. Banknote procurement efficiency could be increased by establishing sustainable relationships with paper producers. The company has built a bundling model of internal resources and inter-company relationships to improve performance (Yang 2017). This enables printing companies to estimate the raw material needs to reduce ordering and storage costs (Irmayanti 2019). Additionally, good coordination in the supply chain makes procurement more efficient (Wankmüller and Reiner 2021).
This study aimed to analyze the obstacles faced while implementing the finished banknotes business model. A comprehensive analysis is needed to identify the obstacles hindering the implementation of the new model. Furthermore, analyzing the main constraints on implementing the finished banknotes business model helps map independent, linked, dependent, or autonomous obstacles (Saxena et al. 1992). Identifying these various obstacles is expected to help companies mitigate all harmful risks in the long term.
There is no study on changes in the finished banknotes business model in the banknote printing industry. Most studies focus more on using security features to distinguish genuine or counterfeit banknotes. However, some other studies discuss the issues surrounding banknotes as a means of payment. This study provides new knowledge about the obstacles faced by banknote printing companies when changing their business model into finished banknotes.

Research Method
This study used Interpretative Structural Modeling (ISM) analysis to identify the main obstacles to implementing the finished banknotes business model. The ISM method is a modeling technique developed for strategic policy planning (Marimin, 2017). It turns an ambiguous and poorly articulated problem into a visible and well-defined model useful for many purposes. Identifying a system's structure is invaluable in dealing with the system effectively and in better decision-making. Structural models include matrices and interaction graphs (Warfield, 1973). The ISM model has nine elements, including sectors of society affected, program needs, main obstacles, possible changes, program objectives, and benchmarks to assess each objective. Others elements are activities required for action planning, measures to evaluate the results, and institutions involved in the program implementation (Saxena et al. 1992). The stages in compiling the implementation of Interpretive Structure Modeling (ISM) were initiated by brainstorming with experts with knowledge about the study subject. The discussions with experts were formulated into a program and divided into elements and sub-elements. Furthermore, a contextual relationship was developed between the sub-elements. The next step involved composing a structured single interaction matrix (SSIM) representing the respondent's perception of the relationship between elements. The Reachability matrix (RM) was compiled by changing the notation V, A, X, and O into numbers 1 and 0. Additionally, the ISM model was compiled as a problem-solving model, as shown in Figure 4 (Saxena et al. 1992).

Interaction relationship between sub-elements
The relationships between elements is interpreted as in Table 1. Were arranged using symbols or the notation V, A, X, and O, whose meanings are: • The notation V is given for the element Ei to the element Ej.
• The notation A is given for the element Ej to the element Ei.
• The notation X is given for the interrelationship between Ej and the elements Ei.
• The notation O is given when there is no relationship between the Ej and Ei elements. The reachability matrix (RM) was prepared by changing or converting the notation in SSIM: • When the relationship between the elements Ei and Ej = V, the elements Eij = 1 and Eji = 0 • When the relationship between the elements Ei and Ej = A, the elements Eij = 0 and Eji = 1 • When the relationship between the elements Ei and Ej = X, the elements Eij = 1 and Eji = 1 • When the relationship between the elements Ei and Ej = O, the elements Eij = 0 and Eji = 0

Interpretation of ISM results
Marimin (2017) stated that the ISM results could be interpreted using a driven powerdependence matrix comprising the following 4 quadrants: • Quadrant 1: Autonomous or weak driver dependent variable. The sub-elements in this quadrant are little related to the system. • Quadrant 2: Dependence or weak driver strongly dependent variable. The sub-elements in this quadrant are not independent and are influenced by other sub-elements.
• Quadrant 3: Linkage or strongly dependent variable. The sub-elements in this quadrant affect other sub-elements. • Quadrant 4: Independent or strong driver weak dependent variable. The sub-element in this quadrant is the strongest and becomes a key element.
ISM data could be processed using the Eksimpro application. Figure 5 shows the mapping of the driver power and dependence sub-elements.

Results and Discussions
This study used Interpretive Structural Modeling (ISM) to identify the main obstacles in implementing the finished banknotes PP business model. A focus group discussion was conducted to determine the relationship between elements in terms of mutual influence, cause-effect, or unrelatedness (Marimin, 2017). Informants comprised experts in the money printing industry and security documents in Indonesia. They included BI, PP, Kem BUMN as shareholders, and the Printing Security Company Association (Aspersindo), as shown in Table 2. The discussion with experts identified nine sub-elements as the main obstacles to implementing the finished banknotes business model. Firstly, the price of banknotes is susceptible to foreign currency fluctuations. Second, limited working capital for the cost of procuring many banknotes. Third, dependence on the supply of foreign paper money. Fourth, shareholders' policy to reduce Interest Bearing Debt Ratio to EBITDA. Fifth, the complexity of procuring many banknotes. Sixth, limited supporting infrastructure for providing end-to-end money. Seventh, cost of fund not absorbed by Bank Indonesia. Eighth, barriers to accessing banking due to limited collateral. Ninth, the standard cost calculation system has not changed.
Experts evaluated and weighed the nine elements based on their importance. The results are shown in Table 3: The Structural Self Interaction Matrix (SSIM) and Reachability Matrix (RM) results in Tables 4, and 5 show the relationship between the main constraint sub-elements. Figures 6 and 7 show the results of the power-dependence driver matrix and the structural model of the main constraint elements.

Sub elements main obstacles
Dependence on the supply of banknotes paper E1 Shareholders' policy to reduce the cost of fund E4 The complexity of procuring banknotes paper A power-dependence driver matrix graph was constructed from the results of data processing using the eksimpro application, as shown in Figure 6: Figure 6. Driver power-dependence matrix main obstacles Figure 6 shows that the main constraint sub-elements, including limited working capital (E3), dependence on the supply of banknotes paper (E1), the complexity of procuring banknotes paper (E5), and barriers to accessing banking (E8), are in the INDEPENDENT quadrant 4. These four constraints are the main ones, are not tied to other sub-elements, and could even affect other sub-elements. Therefore, they should be prioritized to be resolved. In contrast, the sub-elements of sensitivity price of banknotes paper (E2) and the unchanged standard cost (E9) is in the LINKAGE quadrant 3. That means every action on a sub-element in this sector impacts other subelements. The sub-element of shareholders' policy to reduce the cost of fund (E4), limited infrastructure (E6), and cost of Fund not absorbed by Bank Indonesia (E7) are in the weak driverstrongly or DEPENDENT quadrant 2. These sub-elements have independent characteristics and depend on other sub-elements. Therefore, a hierarchical structure is formed between the subelements based on the power-dependence driver matrix, as shown in Figure 7. The hierarchical structure in Figure 7 shows that the priority of finding solutions could focus on the sub-elements of the four main obstacles, E3, E1, E5, and E8. This is because they hinder the implementation of PP's finished banknotes business model. They are: • (E3) Limited working capital for the cost of procuring banknotes paper. • (E1) Dependence on the supply of foreign banknotes paper. • (E5) The complexity of procuring many banknotes paper. • (E8) Barriers to accessing banks due to limited collateral.

PP Has Limited Working Capital to Procure Many Banknotes Paper
The composition of banknotes absorbs almost 35% of the total price of printed notes. The income of IDR 4.6 trillion or 14 billion billets from banknotes printing in 2019-2020 (Perum Peruri, 2021) exceeded the capital of IDR 2.2 Trillion or 14 billion billets spent on purchasing banknotes paper. Whereas the PP's working capital based on the annual report 2020 is only Rp 759 billion. So, the amount is certainly not balanced with PP's financial posture. Therefore, the first solution is negotiating payment schemes with banknotes paper suppliers. The proposed scheme to paper suppliers is payment without a down payment. The second solution is to use the supply chain financing mechanism or supplier credit. This requires PP to conduct fund-raising cooperation with domestic banks or banks in paper supplying countries with a more flexible payment scheme. The Bank would also finance the production of banknotes paper.

The Complexity of Procuring Banknotes Paper
The annual need for banknotes is estimated at 6,000-8,000 tons. PP only provides printing services in the current business model, while BI procures banknotes paper. The results of discussions with resource persons handling the procurement of banknotes showed a high procurement complexity, and most suppliers are foreigners. Until now, PP has not had sufficient experience procuring large quantities of banknotes paper from abroad. So, if there is a failed tender, it can cause the production to be hampered.Therefore, communication with suppliers must be appropriately maintained. Several factors support the assurance of the supply of banknotes at a more efficient price. They include the ability of the procurement unit to identify the potential providers' production capacity, prepare the price calculation or owner estimate, and negotiate during the tender process. The factors leading to procurement failure are lack of incentives to cooperate, poor communication, unclear division of competencies, and non-compliance with standards and regulations (Wankmüller and Reiner, 2021).

Dependence on The Supply of Foreign Banknotes Paper
Banknotes are the primary raw material in the banknotes production process that uses cotton to ensure the printed banknotes last longer than pulp paper. The limitations of cotton fields and the number of banknotes paper mills make Indonesia highly dependent on a supply of banknotes paper from other countries. BI imports banknotes from some countries such as Germany, England, Russia, and Korea to meet its needs. Currently, in Indonesia only two companies produce security paper and banknotes paper, namely PT Kertas Padalarang (PTKP) and PT Pura Barutama (PB). However, their capacity is limited, so they can only provide materials for a few banknotes..
Most other paper mill in Indonesia, such as Sinar Mas and Tjiwi Kimia, supply non-security commercial paper with an export orientation (Warta Ekspor, 2019;Widyatama, 2019). To meet the needs of banknotes, the primary source comes from overseas producers that use foreign currency. This makes the price of banknotes volatile following the fluctuating rupiah exchange rate against the dollar and euro. Therefore, the high risk of purchasing foreign raw materials requires procurement planning to assist companies in reducing additional ordering and storage costs (Irmayanti, 2019).

The Obstacles to Getting Working Capital From Banking
Financial Services Authority Regulation Number 42/POJK.03/2017 requires banks to follow the principles of proper credit or financing. Therefore, debtors must meet guarantee requirements following the Financial Services Authority (OJK). To reduce this risk, guarantees for providing Credit or Financing based on the debtor's ability to settle the agreement obligations are essential factors that need the banks' consideration.
Recently, asset guarantees are becoming a serious concern from the Ministry of State-Owned Enterprises. This is because many state-owned companies fail to pay their debts with company assets as collateral. The PP 2020 annual report shows that non-current assets such as land, buildings, and PP machinery are IDR 3.8 trillion, while the total debt on investment loans and working capital is IDR 2.9 trillion (Perum Peruri, 2021). As a result, PP's financial position does not allow increasing the debt ratio.
Therefore, BI issued a policy for procuring Rupiah with a payment scheme different from other goods. For instance, a down payment of more than 30% guarantees payment for printing made by PP. Another solution, the Ministry of SOEs provides State Investment to ensure PP has sufficient liquidity to buy many banknotes paper. This policy has been implemented on government strategic projects such as toll road infrastructure development, airport, and harbor.

Conclusions
Changes in the business model are the company's efforts to maintain business continuity. The change to finished banknotes benefited PP by increasing revenues and profits due to the transfer of the banknote procurement process from BI to PP. However, the price of printing money increases significantly to 35% due to the inclusion of the paper cost component. Therefore, the impact on PP's profitability depends on PP's ability to get banknotes at a more efficient price.
The production costs would increase when PP fails to obtain banknotes at an efficient price. Several factors made the price of banknotes higher than procurement by BI. For instance, not all banknote producers are willing to lower prices, and limited production causes scarcity and delivery problems due to the Covid-19 pandemic.
It is essential to identify the main obstacles in implementing finished banknotes. The ISM method identified four primary obstacles the company should anticipate when implementing the finished banknotes business model. They are limited working capital to procure banknotes, dependence on supplies of foreign banknotes, the complexity of paper procurement, and obstacles to accessing banks due to limited collateral.
The constraints of limited working capital and the obstacles to accessing funding from banks are solved in several ways. From BI side, BI makes a payment scheme for banknotes supply contracts as the customer and the regulator according to PP's paper payment scheme to suppliers or BI provides amount and time guarantees to state-owned banks regarding the accuracy of payment of banknotes procurement contracts. From government side, the government gives the state an investment scheme to provide additional capital to PP or the addition of state capital is considered government capital participation.
The government increases local content for domestic goods, though the raw material for banknotes paper is imported. Therefore, the government should encourage local paper producers to supply paper with various safety features. Furthermore, it should provide incentives to local paper producers to guarantee raw material availability for banknotes to ensure price efficiency.
PP must adopt the process of BI's banknotes procurement to eliminate interference with production targets and the schedule for remittances to BI. It means PP should review the procurement organizational structure and assess its internal capabilities. This is because their workload has increased considerably after implementing the finished banknotes business model.