Uncategorized Discussing Software Solutions for Retail and Digital Identity with Sailesh Savani of CompuLynx – Marcopolis

Marcopolis presents Kenya Report focused on topics such as investments, doing business, economy and regional integration, featuring interviews with Kenya’s leaders. The sectors under review in this issue are agriculture, banking, energy, industry, telecom, IT, tourism, logistics and many more. 
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Have you had success finding strategic partners?
We have paused that search. In the meantime, we have decided to start our journey acquiring a company in India. We have met a few potential targets, primarily software product development companies, and we focused on one company in particular. We completed the due diligence at the end of February 2020. Then, COVID hit us. So, that transaction has also been paused because we were hit with uncertain times. Our plan is to acquire 35% of a company in India and then in three years we will acquire another 40% and eventually, in the following two years, acquire the whole stake in the company. We wanted to really strengthen our product development side of the business and that entails getting the right talent at the right price. Retaining talent in this market has been our biggest challenge from the technical side. But we cannot let the business suffer because we are not getting the right people or are not able to retain the right people. Most of our people end up with Safaricom, GCB, Equity Bank or Microsoft. Microsoft has now started developing their local development center. There was another company called Andela that was investing heavily in people as well. We have paused both of those activities and we are recapping the acquisition in India. We plan to do another due diligence when India opens back up for the remaining period. We have lost about one and a half years, but we plan to engage the same company to do an additional due diligence and then hopefully close that transaction by the first quarter of next year.
What are the internal challenges that prevent you from boosting your business?
Talent retention is still a big challenge for us. We have plateaued in terms of our growth over the last two years. From 2019 to 2020 we did not grow. 2020 to 2021 looks like we will close at the same level as 2019. As a result, we have not been able to increase our compensation to our employees, so retention has been a challenge. We have lost a few people. Thankfully, we have not lost any strategic team players which is a blessing. That reflects on the confidence that those important team players have in CompuLynx’s vision and strategy. Short term, low cost financing continues to be a challenge as well. We are not able to raise low cost financing for our projects. Debt is available, but whether that is an affordable choice or not is the question. Low cost financing is available, but it will erode our margins.
Are you still searching for technological or other investors?
Getting money is not a problem. It might come at a high cost, but we can get money. We do not want people coming with a pile of cash and leaving us with the cash. We are looking for someone to help us expand our markets and customer reach.
What is your assessment of the software development sector? Have you modified your business model at all in relation to the COVID pandemic? What are the latest trends? What has been the impact on the sector itself?
Our two current product lines are retail and digital identity. In both we are continuing to make investments in terms of product development and new idea development.
We provide solutions in the retail space and we have seen many of those retailers fast tracking their ecommerce agenda. As a result, people are making themselves more present in the online space and customers are now starting to buy groceries and essentials online. With that, delivery services also have geared themselves in that direction. There is a company called Sendy that we are integrated with. We launched our ecommerce platform right at the beginning of the pandemic and we offered it for free to whoever wanted to use it, including hosting it. This was to help people to weather the storm. We had the platform available. We told people to use it and not to pay us anything, but at least make it convenient for your customers to be able to order goods from you. They were already losing business because people did not want to come into stores. Another issue is in the biometrics space. For example, in the digital identity space, a lot of the companies that are using touch biometrics have started looking at non-contact based biometric models and modalities such as facial recognition. In addition to using your fingerprint, companies are looking at face and voice recognition and behavioral biometrics as an alternative method of digital identity. As a result, some of our customers have started looking at that technology. We are testing that with some of our large customers and we are helping them to build on their existing fingerprint based biometric KYC system to have a facial addition as a biometric modality. On the negative side, there has been a cut in spending on non-essential technology. We have seen some of our customers cutting down on annual maintenance contracts. They have now moved to on call because they cannot afford to pay our fixed costs and they choose instead to only pay when they call us or need a service. That has put pressure on our predictable revenue. We have certain fixed costs of our own. To some of our own service providers, we have also had to make a tough call and cut those costs and be on call with them as well. In terms of our product offering, we have moved most of our products to the cloud and we are offering most of our software as a service basis instead of a CAPEX model and OPEX model. As a result, we have seen uptake. There is a twofold impact. Our CAPEX revenue has gone down. If a customer was spending $20,000 with us before, he will now only spend $5,000. But he will sustainably spend $5,000 with us. So, that has given us a sustained predictable revenue opportunity and it has also enabled us to reach customers that were finding us unaffordable in the past. It has helped us to expand our reach. The uptake has not been that we gained hundreds of customers overnight. But there has been an increase in new customers that we are onboarding on a monthly basis. The ticket value has gone down because this is a pay as you use model.
What services do you provide that help you to stand out? What are your competitive advantages?
We are the only ones who are providing our software as a service in the market, except for companies like Oracle or Microsoft. We are the only ones doing this as a homegrown player. Additionally, from a service and support perspective, we have been able to keep our services almost uninterrupted during this entire period. That is because we quickly adapted to working from home and most of our support staff are now working from home. We had to strengthen our infrastructure. From a development standpoint and even from a ticket management standpoint, we had to centralize our ticket management system and put that as well as our entire source code on a secure cloud. We had to do a lot of things to enable ourselves to work from home seamlessly without dropping the quality of service, effectiveness, and efficiency. We did see a drop in efficiency in the first three to four months while we were still adapting ourselves to the new environment. But it is now working well. We have found ourselves in a space where we do not need a huge office. Starting next month, half of our office will be gone in terms of physical space. We have a flexible desk system in the office now where you come in with your device whenever you want to work from the office and you occupy any desk and connect to the network here and start working. We are learning new ways. We used to find it very odd when we would see companies outside of Kenya doing these kinds of things, but we have learned and we have adapted.
What is happening in terms of your development, not only in Kenya but internationally? Has that modified your approach to the region and to the rest of the world?
We had an office in the Middle East in the UAE. We had a small team there supporting our customers in the GCC and in Europe. This team was mostly from India. Because of the pandemic they went back home and they were working from there. We had no sales opportunities that we were pursuing, so we shut down the UAE office. We have decided that we will provide technological support from India and Kenya to the customers in the GCC and Europe. Any sales activity will be led from Kenya on a need basis. Right now, there is no major sales activity going on in the GCC. For all practical purposes, we are out of the GCC. As for the rest of the world, it has not been a happy situation and from a sales perspective we have plateaued. This next quarter is looking up. This year has not been too bad. We project that we will close at the levels of 2019 which is good given the situation that we are in.
What is your vision for the company for the medium term, three years’ time?
Our two current product lines are retail and digital identity. In both we are continuing to make investments in terms of product development and new idea development. We still have a few products that are not on the SAS model. That development is going on now so that everything will become SAS. In the retail space, we will continue to expand products that are mobile based and internet based in terms of ecommerce, consumer apps, marketplace platforms, etc. Doing so will help retailers to continue to ride the ecommerce wave that has just started in this part of the world. We are continuing to add products that are leveraging the several modalities of digital identity in the banking space where there is a lot of work being done in digital identity, primarily eKYC. We are also investing in other products that are not specific to a certain vertical. For example, we are piloting our visitor management system that is offered on a SAS model. For visitors entering a gated community, office building, or office, their entire journey is digitized in terms of enrolling at the reception, meeting the right person, and being checked out. For example, in residential premises, it will cost $2 per month. It is a ridiculous amount of money, so it really doesn’t matter to people. And they are getting additional security, additional features, and additional convenience for people that are residing in the community as well as for their visitors, contractors coming into the premises for repairs, etc. For office buildings and for commercial premises, we will charge $1 per employee, for example. Our thinking has completely taken a 360 degree turn. It is ridiculous to sell software. It has to be on a subscription model.
Would the residential services be for the consumer directly or targeted at the larger real estate developers?
We are selling through different channels. First is the estate management companies, such as Knight Frank. We are also selling to security companies. Security companies have their guards at the US Embassy or the KRA building sitting at the reception on the ground floor of the building. We are enabling these security companies to provide this as a service to their customers. We are also providing this directly to some of the corporates who want to own the platform themselves.
What is your inspiration? What drives you to do what you do? How have you achieved what you have on this journey?
We rebranded ourselves at the end of 2019. We changed our mission in terms of why we are doing what we are doing, what we care about as a company, what I care about as owner of this business. We are here to build technology for a better tomorrow. I am personally and professionally in a stage in life where I do not wake up in the morning and go to work just to make more money. It is about making a difference. It is about developing people. It is about building a world that we believe in and leave in a better state than we found it. It is a mammoth task. Every person must make his own path. What drives me is building technology for a better tomorrow.
What is your plan for those future goals?
We are reinventing ourselves. We are revalidating our strategic plan because it is unfocused right now. What we have strategized is no longer valid. We are going through a lot of internal thinking processes and reworking our strategy for the next three years. We do not want to envision ourselves beyond the next three years because it is a tall order to make those predictions. But we can safely predict how the next three years are going to go given where we are and given the changes that have happened as a result of the pandemic. I do not have a five or seven year plan. We only want to look at three years into the future and we are doing that internally. Personally, I am an optimist. The worst is behind us and what we are going to see is just a betterment of what has happened. With the vaccination coming in and the rest of the world getting vaccinated in the next two to three years, if at least a majority of the population gets vaccinated, we will be in a better place. There will be the Deltas and the Gammas and new variants, but this is going to become like the flu and malaria and tuberculosis. We have seen this in the past and humanity has lived through it and we will live through it. The worst of this pandemic is over and behind us. It is just going to get better. At what pace this will happen is something where we will just have to wait and see.
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