Kenya IT Sector: Innovative Software Solutions by Software Technologies Limited

Interview with Chets Mukherjee, Operations Director at Software Technologies Limited

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

The IT sector in Kenya is very diverse. It includes hardware, software, telecoms, etc. Increasingly, we have the fintech space that is taking off. There are a lot of fintech companies in Kenya and Nairobi has always been seen as the Silicon Savanna. People see us as this sort of hotbed for innovation in the region. We have a lot of tech incubators, some of which Software Technologies Limited helps incubate. We have hundreds of new ideas cropping up every day. The great thing about technology is that there is not a huge barrier to entry. Sometimes, you just need someone with a great idea and a laptop and they start writing their own code or they come up with a new mobile gateway or mobile payment platform. The tech space is thriving in Kenya and a lot of Kenyan companies have become benchmarks within Africa. I was recently in Ethiopia and everyone in the region compares themselves to Kenya. When you talk about M-PESA, mobile payments, software development in our space, Kenya really seems to be the benchmark for a lot of Africa to measure themselves against. It is a thriving sector and provided that the government keeps supporting the sector, there is a little bit of regulation but not too much so you do not kill the innovation aspects of it, then the sector will continue to thrive.

What do you offer and what makes you different from the competition?

We want to build Software Technologies into a pan-African brand where people recognize us for what we do. We want to go outside of Africa and have our solutions sold in Europe, North America and across Asia Pacific.

Software Technologies was founded in 1991, so we have been around a long time. We focus on three keys areas of software: people, processes, and governance. On the people side, we have our full HR human capital management system that is used by some of the largest corporates around Africa. We have our process management solutions around contract lifecycle management. Our final and probably best-selling solution on the governance platform is our eBoard platform. It basically helps customers manage what we consider governance risk and compliance. We help people run everything from their board meetings to their compliance issues to risk management across the enterprise. Over the last few years, we have had a very steady push towards what we call SAS, software as a service. Today, every eBoard customer is on SAS. eBoard has now been extended beyond the enterprise. We have recently put eBoard into the Kenyan Parliament. Every MP and senator is now running a version of eBoard called eParliament to essentially run all their legislation and manage all their papers. We have a training division as well called the Institute of Software Technologies which manages all our training requirements, both internally and for external clients.

What would you like to push more? What are the benefits for the clients?

On the governance side, out of the clients who come to us, many of them still run their board meetings manually on paper, etc. We try to change the way people think about governance and the way boards are run. Over the last few years, Directors now bear a lot more responsibility for the actions of their companies. Fifteen or twenty years ago, when things went wrong in a company, people would just point to the management and the CEO. Now, when you sit on a board, you have a legal responsibility for the actions of your business. It is no longer good enough to just turn around and say you did not know or were not aware because it is your job to know. More and more Directors are taking a more active view on compliance. There are different types of compliance. The first is regulatory compliance. If you are a bank in Kenya, you are regulated by the Central Bank. If you are listed on the Stock Exchange, you are regulated by the Capital Markets Authority or the Stock Exchange. Statutory compliance is where you have to comply with the Revenue Authority, Social Security, etc. You may have internal compliances that you wish to comply with yourself such as agreements with your internal shareholders or private equity funds that you have to comply with at certain dates and times. eBoard helps to bring all of this under one central repository and we help customers manage this. Your board meetings become a lot more efficient. We allow people to do things like approvals electronically and they can be tracked. All the board pacts and minutes you no longer print, so there is an environmental impact as well. We did studies with some of our clients where clients are saving on average 40-50,000 USD per year just in photocopying paper. It is nice to save the money, but of course, you are saving hundreds of trees along with that. A lot of our big corporate clients have an environmental policy. eBoard is also seen as a nice way of the board leading from the front. You stop printing and wasting all this paper and it makes the board more efficient and saves a lot of time.

What is your eParliament platform?

eParliament was deployed just a few months ago and it is really an extension of eBoard. We help manage all the paperwork that flows through Parliament. In the corporate world, we call it an “agenda”; they call it an “order paper”. It is essentially the same thing but a slightly different terminology. We call it “minutes of a meeting”; they call it “Hansard recordings”. We have “resolutions” at board level or corporate level; they have “bills” and “motions”. Of course, there are different workflows. A Parliament will have a first, second, and third reading of certain bills and motions before they get passed into law. So, we help track all that paper, and there is a lot of paperwork. Our Parliamentary system was actually presented by the Kenyan Parliament team in Europe this year. They found that in addition to all the monetary savings, they will save about 2,000 trees per year. Often, when people say you have saved one sheet or 1,000 sheets of paper, people are not able to quantify it. But when you tell people you have saved 2,000 trees, that is a small forest. The benefits kick in very quickly, such as the ability to retrieve historical information quickly. So, if I am debating something in Parliament today and I said it was related to something we debated last year or last quarter, you can find that information quickly. We are now in the process of rolling it out to some of the county governments. Kenya has 47 counties and all of them essentially mirror the structure of the National Assembly. We are confident that it will work lower down. We are also talking to some of the regional governments in Africa about them adopting this platform as well.

How international is your company? Is it easy to work with other governments or do they look more towards local suppliers rather than someone from out of country?

We have customers across anglophone Africa now. We have customers all the way down from Botswana right through to West Africa, Nigeria, Ghana, and almost everything in between. Over the last year or so, we have begun entering francophone Africa. There are different cultures and practices involved in francophone countries. We are building up our team and our skill sets. The products are now available in French. That is the easy thing to do. Supporting customers in French, implementing in French, training in French requires almost a whole new team. That is what we are building up right now over the next few years. In terms of doing business with governments across Africa, we work with partners in every country we go into. We work with local partners who have been established there for a while and who understand the local requirements. More than anything, they are able to offer local support. After we leave the ground, you do not want your customer halfway across Africa to have to pick up the phone and fly you out every time there is a problem. If you have good local partners that can offer that first line of support, it makes your end user or your customer feel much more secure.

Are you looking for partnerships?

We develop all of our own intellectual property so we are not resellers for any of the big vendors. One of the benefits of this is that it gives us real neutrality. When we recommend something to our clients and tell them to use a product or a solution, we have nothing to make from it. I am not getting a commission from Microsoft or SAP for recommending their products. We sometimes have to combine certain things, so if there is a project where there are severs required or certain operating systems required, we will then work with certain vendors to deliver a product that requires multiple components. We personally do not have a focus on selling third party products. We prefer to focus on our own intellectual property. Essentially, everything we sell is built by us. This gives us two benefits. We are masters of our own destiny. We control what we sell and we control the pricing. That has been our focus as a business. We want to keep the intellectual property in house as much as possible. We will outsource intellectual property if there are very specialized things we are doing around security or video conferencing that is now built into all our applications and we will use third party technology for that. We do try to embed that technology into our applications so the customer sees one product which is our product.

Are you looking for partnerships abroad? Do you want to attract investors?

There was a private equity fund that invested in Software Technologies Limited in October-November 2018. We have been with them about 9 months so they are relatively new in the company still. They injected a lot of capital into the business. We have a three-year plan with them so we cannot see ourselves raising more money in the next three years unless something drastic happens with the business. Things change so quickly in Africa. The situations are so liquid. If suddenly we do require more money, we would go back to the market and raise either venture capital money or we have the option of trying to list on the Stock Exchange, whether in Nairobi or somewhere else. Those options exist. A lot of the FDIs around Africa are willing to lend money and if it is for a specific project we are doing, that would also be an option.

What is your policy for CSR?

Much of our CSR is based around education. We have been strong believers that if you can train people and give them the skills to go forward and get jobs, that can be very beneficial. We partner with various NGOs, churches, and various projects. We help to train people using our Institute of Software Technologies, which is our training center. To date, we have trained over 3,000 underprivileged members of society such as those that are blind, deaf, mute. We have trained people with a range of disabilities and various disadvantaged groups of people. Our policy on this is focused on creating jobs. In Africa, one of the biggest challenges is getting aid. You are constantly relying on someone giving you a handout. If you can train a young person and help them get the skills they need to get a job and become productive members of society, they in turn create employment and it has a knock-on effect. The majority of our CSR is based around our free training program. We have recently partnered with the Kenya Forest Service who is also one of our clients. We recently planted 1,100 trees just last month. That was really reflective of each tree each of our clients saved using our governance platform in the last 12 months. We have pledged to plant another 2,000 next year. That is a constant push we are going forward with.

What is your vision for the company in two to three years’ time? What do you want to have achieved?

We want to build Software Technologies into a pan-African brand where people recognize us for what we do. We want to go outside of Africa and have our solutions sold in Europe, North America and across Asia Pacific. My personal vision for the business is to go beyond Africa and have Africa, and Nairobi especially, seen as more than just M-PESA because that is what a lot of people know Kenya for. There are a lot of other great software products and technology coming out of this part of the world.

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