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Marcopolis presents the Saudi Arabia Report focused on the investments, doing business, economy and other topics featuring interviews with key executives. The sectors under review in this issue are industry, real-estate, ICT, investments, banking sector, telecom sector and many more.
InterviewsNovember 17, 2021
Discussing Procurement and Sourcing Management in Saudi Arabia with Iyad Aldalooj of Penny Software
Iyad Aldalooj, Co-Founder and CEO at Penny
- Written by Sandra Francisco
- Published: November 17, 2021
Interview with Iyad Aldalooj, Co-Founder and CEO at Penny
What is your scope of business and your presence in the industry?
Penny Software is an enterprise software. We serve midsize to large size organizations. They vary from private to government and semi-government companies. We help them completely digitize their procurement processes from A to Z. Our enterprise software serves as a software and a service. It is a SaaS software that is cloud based that provides a procure-to-pay and full digital procurement and sourcing management.
What are some of your specific products and services at Penny?
We have a complete procure-to-pay software, which means that an organization can manage their procurement, from the request all the way to the payment, going through the full procurement cycle. We also have lighter products that focus only on the sourcing side of procurement which include our E-Source product which digitizes the sourcing part. We serve customers, not only in Saudi Arabia and the region, but our product caters to serve global customers. In Saudi, we have the Penny Community which is a B2B marketplace that helps people and companies that are using Penny to do business with each other. It is a B2B platform where companies can source and find new products and new services. In a way, we have one product, but it is a modular product. Companies can take different parts of the product which is why we put them in the website as different packages. But in reality, it is the same product. The product is very flexible and very modular so companies can choose the modules that they need. When we take the procurement journey and break it down, from raising the request all the way to submitting a payment, it is a journey that goes through multiple stages. At Penny, we created modules where every step of that journey is an independent module. They can take the modules and integrate them with their own ERP system so they do not have to repeat what they already have. It could also act independently. On our website we created these packages, but they are not rigid packages and they are always flexible.
What is your competitive advantage?
Historically speaking, enterprise softwares, particularly in the procurement space, have only been serving the very large companies. These softwares are created and set in a way that is very complex and rigid. A lot of companies are actually scared of using these softwares because they are complex, difficult to implement, and they are also quite expensive. At Penny Software, we understand that procurement is complex and that there are many rigorous processes involved. Therefore, we created a software that caters to these case scenarios. At the same time, it is a lighter, much easier software to use and it is faster to implement. Most importantly, it is a flexible software. There are more features that we have that other competitors do not. For example, our Comparison Table allows our users to compare quotations in a much easier and flexible way. All of these combined make Penny much more agile to implement.
What is one of your success stories?
With Penny, users can manage RFQs, RFPs and RFIs to vendors, compare quotations, send purchase orders, and even payment.
Penny is now a year and a half old startup. We are in a very old and rigid industry where the competitive landscape is full of global giants. We are not the only Saudi company that is trying to serve this market, but we are the only one from the region that is disrupting this global market. Recently, Penny was recognized by Procuretech out of the UK and Kearney Consulting out of the US as one of the Top 100 most innovative procurement solutions with digital procurement solutions. The qualification process was not an easy process. Over 4,000 companies were evaluated against 50 different key points. That is an achievement that we are certainly very proud of and a recognition that makes our job much more enjoyable and rewarding. We were also selected as one of the Top 10 most customer-centric platforms among all these 4,000 companies globally. We are the only company from the region in the whole list, which is unfortunate. We would love to see more companies from the region and particularly from Saudi Arabia. I am confident that this is going to happen. We are also proud of our recent partnership that we closed with a company in Saudi called AHAD. They are part of THIQAH which is a semi-government company. We are building a product that I am personally very passionate about. It is a mini ERP for SMEs. I am very passionate about this partnership in particular because we know from our previous experience in the market, not only in Penny, that SMEs in Saudi need an affordable and easy to use ERP system because digital transformation is happening to everyone but the barriers to digital transformation are rigid. If we provide SMEs with a comprehensive ERP system that is affordable, this is going to empower and enable SMEs in the country.
Are you looking for investors?
Every startup and every entrepreneur should always be fundraising. Even if you are not actively fundraising, you should always be talking to investors. However, we are not actively fundraising at the moment because we recently closed a substantial round. Before that, we closed our pre-seed round of 1.3 million. The last round was obviously much bigger and all our investors from the previous round have reinvested which reinforces the belief not only in Penny, but also in the space. We were very fortunate and humbled to welcome a new set of investors in the last round. But entrepreneurs should always be talking to investors. Between every round, we should be building the company, achieving certain milestones, and preparing for the next round in order to grow. We have investors from the region, from the US, from Silicon Valley, and from the UK. Among our investors in the pre-seed round was Saudi Aramco and without them, we would not have been able to put the foundation of the platform. We are very thankful to the Wa'ed Program in Saudi Aramco and to all our investors such as Outliers VC from Saudi, Wamda from the UAE, Class 5 Global from the US, Plug and Play from the US, and angel investors that are truly angelic. We would not have been able to do anything without them.
What are the main challenges you are facing?
As a startup, every day has its own set of challenges. We cannot sugarcoat the journey. When you start a startup, you are failing until you succeed and that comes with a lot of challenges. The main challenge we have as a startup in the MENA region building an enterprise software is that, historically speaking, we do not have an enterprise software startup ecosystem. Most of the investors in the region do not understand this space. To build an enterprise B2B it takes time and it takes a lot of money to do all of the R&D in order to produce a product that you can sell and serve companies with. It is not easy. I have served in the B2C sector before starting Penny as a General Manager in Careem in Saudi Arabia, so I understand it very well. It is much faster. All of us have hailed a taxi once in our life, all of us have ordered from a restaurant before, which makes us all consumers. But, when it comes to something like building an enterprise system for procurement, you need to understand the person in front of you, which is more complex. In the region, we are yet to have an ecosystem that supports that. We have been very fortunate to have investors who believe in us and trust us and who have been extremely supportive. They trust us, but they might not yet understand the space and the challenges.
What is your vision for the company in the medium term, three years’ time? What would you like to have achieved?
At this stage, we are focused on serving our current customers. To us, it is more important to make sure that our current customers are well taken care of and are well satisfied and that we become as customer centric as possible rather than focusing on rapid growth. But, growth is also very important to us. Our vision in the next three years is to build a global procurement software. In the next three years, we want to serve customers globally. The way this market works and the nature of our competitive landscape as a global means that we are not competing with the other Saudi competitors. Our competitors are global companies like Microsoft, SAP, etc. All these global companies have their own procurement software. With procurement software, it does not matter if you are sitting in Riyadh or in Chicago. We have to acknowledge that this is a global, competitive landscape. Our vision is to be the best procurement system globally. In the next three years, we see ourselves on the path for global expansion. We have a plan of opening a global office outside of the region both for commercial and engineering.
On a personal level, what is your inspiration? What drives you to do what you do?
I am not to driven by being an entrepreneur or starting a startup. I am very motivated by being part of building something really big and meaningful. Before Penny, I joined Careem as a General Manager here in Saudi. When joining Careem, it was a very entrepreneurial experience for me. I was not one of the co-founders, but I did not care. At Careem, we were building something that was very big, that touched the lives of millions of people, and it was an opportunity and an honor for me to serve that purpose. Building a multi-billion-dollar company motivated a lot of entrepreneurs, including me. Now, what inspires me in Penny and what keeps me in Penny is that we are a software that is serving procurement and serving that space is what motivates me. A higher purpose for me is building a global competitive software company, from the region, from Saudi, to the world. This is also what motivates every Pennians. It is building something from scratch, from here, that could go global. In the region as a whole, and in Saudi in particular, we missed out on the Industrial Revolution over 100 years ago. But it is not too late to catch up on the Information Revolution. One of the products that Saudi and the region will succeed in exporting to the world is software. Software is an amazing product that we can innovate, build locally, and export globally. That is what keeps me going and that is what makes me tick.
ABOUT PENNY: Penny is a cloud-based procure-to-pay system, enabling users digitize and manage their full procurement cycle from request to approval. With Penny, they can manage RFQs (requests for quotation), RFPs (requests for proposal), and RFIs (requests for information) to vendors, compare quotations, send purchase orders, and even payment. Penny was designed to make things easy and consolidate all of an organization’s spending needs into one intelligent system.
For more information, please visit: https://penny.co.
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