CompuLynx IT in Kenya: Software, Hardware, Identity Management, Fraud and Loss Prevention

Sailesh Savani gives his assessment of the IT sector in Kenya. He also explains what differentiates CompuLynx from other companies and discusses international reach, investments and how he envisions the future.

Interview with Sailesh Savani, Founder and CEO of CompuLynx

Sailesh Savani, Founder and CEO of CompuLynx

What is your assessment of the IT sector in Kenya? What are the trends?

For the majority of the country, 85% of the money spent in IT has gone towards hardware and infrastructure, while 15% is going to services and software.

Something that we do is to publish our numbers. Everyone knows where we are right now, what our collectibles are, what market activities we are doing, what new vacancies are available, what other deliveries we will do and what are the pending customer tickets. It actually brings about a sense of belonging in people. It’s really a culture of aspiration and what we have been doing as an organization is publishing our profit numbers every year. Our promise to our people is that 10% of the profits will be distributed as either a bonus or increment. Again that brings a different kind of belonging. It’s never enough but we don’t want to stop. We want to continue to innovate ourselves in the people practices business. That is absolutely key for us. What drives me and my family to run this business is not for us to just have a bank balance ourselves. It’s about making a difference in 150 families. That has become a key driver for us and the money we receive is a by-product of that.

If the employees are part of the company, they are part of the family. In IT service companies it’s vital. You need the best people.

Absolutely. For new employees there is a nice welcome. There’s chocolate, a handwritten note from me and then in the first week, I personally spend one hour with that employee telling them about us and reiterating what we stand for as an organization. It’s the small things that count. One of our core values is that of premium partners. That is what we stand for and that is what guides everyone in this organization when they have to make decisions. It’s about empowering people and creating an environment where they can flourish and grow and challenge each other’s ideas openly. We value diversity in people. These are our core values and if you look at our core values, people are first. That is our first core value. We work with great people. Then we focus on customers. That’s our second core value.

Let’s talk about your customers. What differentiates you from other companies? What do you do for your clients?

We believe every business is unique. Every business has a 5% where they want to use the technology to differentiate themselves from their competitors and that is where our ability to customise and to then deploy solutions that are suitable for any organization comes into play.

Being a small company, we have the advantage of making decisions quickly. If we have to provide a service to a customer pro bono or if we have to give them something at a lower price, we can make those decisions quickly and it enables a better dialogue with the customer. We have been an innovation driven organization. Innovation is the cornerstone of our business and we have been recognised as innovators. We are first in many things that we have done in our market. It’s not always about inventing. It’s about our ideal and in my college last year, I learnt that our ideal is to rip and duplicate. If something is working well in other parts of the world then there is nothing wrong with bringing it here, localizing it and growing it in our market in a manner that is suitable for us. We do many things and we have been the first to really commercialize the usage of biometrics in the commercial sector. Until we did that, biometrics was mainly a technology that was used for law enforcement. We were the first to use password biometrics in our apps in our market. We use fingerprints for accessing systems. We were the first to bring smart cards into the country in 1999 and we did a very innovative project with the Kenyan wildlife service where we replaced cash at the gates with prepaid smartcards with identity on the chip and that was the first time that smartcards were employed in the bush in the world. That has really kept us ahead of the crowd. We are able to differentiate ourselves. We also do smaller things like integrate with banks. We integrate with payment providers in our retail technology space. We have been fortunate to have customers willing to be the early adapters of technology that has never been tried in our markets. That comes from the trust we have established with our customers over time: we have the ability to bring in new things and if it goes wrong we will be able to fix it. Technology can go wrong. There is no fool proof technology. We would be fooling ourselves if we said that this or that piece of technology won’t fail. Failure is not a problem. How you respond to failure and how quickly you are able to fix the problem is where you stand out as an organization. Because we develop many of our own products we have the ability to change and to take it apart. We can customize it and that gives us an edge. We don’t sell our product as a boxed product. We believe every business is unique. 95% of their processes are the same but every business has a 5% where they want to use the technology to differentiate themselves from their competitors and that is where our ability to customise and to then deploy solutions that are suitable for any organization comes into play. It plays a big role in the growth of our customers.

CompuLynx provides retail software products
CompuLynx provides retail software products, including point of sale, inventory management, customer loyalty, promotions, business intelligence, gift vouchers, etc.

What are your views on investment?

This is a very entrepreneurial organization. I am the dreamer in the business so I will dream of an idea and I wouldn’t always be looking at the commercial viability of that idea but we believe it is something that will work. We would invest in it and try to develop something. As a result I believe 30% or 40% of the time we have been successful and brought out some new products that work. Sometimes they have failed but that doesn’t deter us from continuing to invest in new technology and new ideas. As a result, on paper we have not been a profitable company because we continuously invest in development and innovation. But now we are making a conscious effort to be more profitable so that in time to come we become a great investment for any private investor or equity investor and perhaps a strategic investor.

How will you do this? What is your process?

I think it’s a two-pronged approach. First will be to grow our top line. Secondly will be to keep a check on our costs and to take a more informed approach to new research and development investments and to do more market research to get a feel whether this will work. This is where we have been putting a lot of money in terms of getting new equipment, getting samples, investing people in developing new things and 60% of the time it is something that will not work in the markets. It was somebody’s gut feel like me who will say; yes this will work, let’s just do it. Now we are going the extra mile and do a sample. Let’s talk to some of our customers and check with them. Will this work for you? Would you buy this? Do you think there is a market for it? That is helping us to reduce our costs and of course there is a lot to do if you want to cut costs. We have identified a cost cutting champion in the business and we are looking at eliminating wasteful costs. It’s not about cutting cost but about becoming more cost efficient. Top line growth is another space and from that perspective we are making a conscious effort to rebuild our revenue mix. Our revenue mix has been very much in line with the country’s 85%/15% split and when you sell hardware it’s not as profitable as when you sell software services, so we are making a conscious effort to sell more software and more services and to that end we have actually employed people who specialize in selling IT, software and services because it requires a different kind of skill and a different way of thinking. It’s probably easier to sell hardware or software out of boxes. Changing attitudes and minds in the markets are helping and we are making an effort to consciously sell more software and services. We are changing our business model from a one-off license sell model to an annuity cloud sales model which will then give us assured record revenue.

How international are you? What is the international aspect of your organization?

We have offices in 3 countries but we have customers in 32 countries. We sell on all the continents except America. We have customers in Europe, in the Middle-East, in Asia Pacific, South East Asia and Africa. We have been successful in being able to deploy solutions in much more mature markets. We haven’t even visited some of these places. We have a customer in Germany and we have never been there. Same with Jordan, UK, Pakistan, Naples, Bangladesh. We have never been there.

What do you sell there? What do you bring to them?

A lot of these opportunities originated in the market that we are presently in. For example, the solution that we employed in Bangladesh was from an opportunity that originated in Kenya. The customer knows us from Kenya and then we went with them to Bangladesh and employed our solution. I think there are two or three things. One is the fact that we are small. We are as cost efficient as the big boys. From that perspective we are able to deliver a solution at a much lower cost. As much as customers want a top notch solution they are also cost conscious. They would look at the ability of a company to deliver and they would look at the cost benefit. That has been a winner for us. Our turnaround time is also much faster. We are able to put together a team that will deploy the solution in different parts of the world much quicker.

But if I am an international customer wouldn’t I want to go next door? It would be faster to deliver or to help me if I need them and you are too far away in Kenya.

I think it’s our proven track record. We were doing a demo for an organization in Ireland. We did a demonstration for them on the web and what brought them to us was our track record in the industry. It was an international bid that we bid for and we were among the top two bidders. Our track record helps but after everything else has been discussed it comes down to the bottom line, which is the numbers. We are able to deploy at a much cheaper cost than the bigger companies. Having said that we are not a cheap company. There are companies they may deliver lower than us, but I believe we have a good balance between the big companies and the lower end of the solution provider market.

CompuLynx also provides hardware products
CompuLynx also provides hardware products such as cash counting devices, security devices, barcode scanners, loyalty card printers, biometric devices, weighing scales, mobile computing devices, POS terminals, anti-theft devices, etc.

What are you doing tomorrow?

I just graduated from MIT in Boston a couple of weeks ago. I was doing a 3 year entrepreneurs Master’s program. That has actually inspired my children to take programs in the US. My daughter is taking a 2 week summer program at Brown University in the US. We are looking at different universities. She is a junior and she goes to college in 2017. It’s more of a family trip.

So it’s not going to become your next and last continent to sell on?

No. We are not ready for America to be honest. We want to prepare ourselves. It’s a large market and we want to be able to meet the customers’ demands. It’s a very mature market and we have been successful in other mature markets and our strategy is to put our money where our mouth is. I would rather put the same amount of time, money and effort to grow a market that will give us faster returns where it will be appreciated better. That’s our goal.

How do you see the company in 3 to 5 years’ time? What investors would you want?

Firstly, our top line will be about 50 million dollars in 2 years. Secondly, the kind of investor we are looking for is a strategic investor who will bring multiple things to the table. One is expertise. Two is possibly a market reach that we can perhaps tap into. Third is a product that we can sell to our market and we can leverage our knowledge of our markets and offer their solutions or their products. It’s more of a strategic investment that we are looking for. We are not looking just for capital. We are really looking for expertise and the ability to grow our markets at a faster pace. We are looking for both organic and inorganic growth that should come about as part of an investment.

What kind of investor. An equity majority or a minority? How far are you prepared to go?

It really doesn’t matter. As a family we are not control freaks. Control of the business is not what drives us. It’s growing the business and as a result of the growth the people in the business should benefit alongside us as investors and owners of the business. To that end we are believers in governance. We have already started putting the structure in place and we formed our board earlier this year so we have external people on the board. It’s about bringing in more accountability and more transparency. It starts at the top. We now have a board where firstly, I as the CEO can be held accountable to, and secondly the board brings in expertise as well. These are unrelated and unbiased people that have no conflict of interest. They are professionals who bring in professional expertise into the business.

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