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Finding his feetPikom ICT Strategic Review | Branding in a digital world

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LEE LAY KIN./THE EDGE

Value in open source ERPby Karamjit Singh

In the early days of the IT sector in Malay-sia, many an entrepreneur made a very comfortable living as resellers of hardware and software products by mainly Western companies in both the consumer and en-terprise space. Nothing wrong with that,

but it did not add any value to the IT ecosys-tem as far as creating intellectual property or spinning off companies go.

These system integrators — whether they sell their products to the enterprise market and computer shops, or whether they sell consumer-oriented hardware and software — would need some sort of logistics capability to store their products and distribute them to the various outlets, even if they were selling software.

Nowadays, with the Internet, business mod-els have changed and the distribution of soft-ware is done with a few strokes on a keyboard. Being a reseller, or partner as it is now called, is no longer just about pushing products. The name of the game is services, especially in the enterprise space, and instead of sales assistants to push sales, one needs software programmers to customise software for individual corporate customers.

Meanwhile, the business models for selling

software have expanded, thanks to the rapid growth of the open source movement. For Sayf Che Ismail, who started out as an entrepreneur building his own enterprise resource planning (ERP) solution, with dreams of taking on the big boys in the arena, reality soon bit and hard. “We started building our ERP solution right after college. You have to be a bit gung-ho then, and believe you can build anything,” he said.

However, even with a client who was will-ing to work with them, it took six months to build an ERP system for the client. But when the client started having trouble with the sys-tem, Sayf realised his company was too small to provide the necessary support, and get more clients at the same time.

He then came across an MSC-status com-pany that was building its ERP and having the same issues he was. “The only diff erence was they had MSC status, which was valuable and a track record. So my partners and I decided to buy them and combine our operations. The combined company was called B.I.S. R&D Sdn Bhd. But we also realised at the time that it was not easy building our own ERP solution. We had to look for something else.”

That something else came in the form of Openbravo, an online open source-based ERP solution. This was in mid-2009. Sayf proceed-

ed to build a relationship on the principles of Openbravo, and after six months of technical training, all done online, they launched in January last year.

While BIS is a reseller, the nature of its relationship is diff erent from the traditional reseller mode. The six-month technical train-ing points to this. Another diff erence is the sharing of expertise by all the professional partners of Openbravo. The partners are free to use any software customised for their respec-tive home market customers. The reason for this? They make money from implementing the software and providing customers with technical support.

Not surprisingly, Sayf says Openbravo is one of the most forward looking open source companies, which is led by former executives from the likes of Microsoft, SAP and other lead-ing tech fi rms. “They are very passionate about making this work, and today have a company that is over 250 people strong, with excellent support for its partners.”

Fast forward to today and Sayf is proud of the fact that B.I.S. has just been awarded the Asia-Pacifi c Partner of The Year by Openbravo. “We are also functionally and technically cer-tifi ed by Openbravo, and are one of their 200 professional partners globally,” he says.

With Openbravo focusing on the twin areas of ERP and Point-of-Sale solutions, Sayf says it is natural for B.I.S. to focus and build a niche in integrated retail. This simply means any busi-ness that operates a chain of stores and wants to manage its goods, or SKUs (stock keeping units) in industry lingo, in a more organised and transparent manner.

“Our solution is ideal for SMEs, and is ro-bust enough to handle a manufacturing-based business too,” he says. Aff ordability is a key attraction of the open source solution, and Sayf knows from experience that this is key to attracting reluctant SME owners to tap the power of the technology.

“In fact, we have developed a software as a service (SaaS) model for our solution, as the next generation version of Openbravo is uti-lising cloud computing services.” What this means is that B.I.S. will soon off er an ERP so-lution that sits in the cloud, a hot area in the technology space. Customers will only need to fork out around RM20,000 in upfront invest-ment and pay a monthly fee of under RM1,000 to Amazon Cloud Services to keep their data in the cloud.

“This changes the game completely for SMEs and other companies, which before this

CO N T I N U E S O N PAG E 4

Sayf (left) with his team leader for Openbravo solutions, Mohd Shaiza Ibrahim, at the Mizi outlet in Gombak. All fi ve Mizi outlets use the ERP solution.

IBM: Use analytics to fi nd out what customers want

THEEDGE M A L AYS I AM A L AYS I A | JANUARY 24, 2011netv@lue2.0 4netv@lue2.0 4

IBM: Use analytics to fi nd out what customers want

A system to solve Mizi’s problemsKENNY YAP/THE EDGE

needed at least two servers, the use of a data centre to house their servers and to deal with the rapid deprecia-tion cost of IT hardware. IT used to be a problem for us too, when we were not familiar with the hardware but had to deal with that in the name of providing good services to our cus-tomers.”

While Sayf believes the cloud-based solution will really help the company push its solutions and serv-ices, he acknowledges that the biggest challenge remains the reluctance of Malaysian business owners to take to IT. “Many still don’t trust software, much less software that will now sit in the cloud.” Still he believes that the value an ERP solution brings to businesses will be clear, especially once they hit a certain size.

“When they hit a certain size, their standard UBS accounting soft-ware will struggle to give the busi-ness owner a proper view of the business, and many have come to realise that this actually prevents

them from growing the business,” he says.

The owner of the Mizi chain of stores is one such person. Azmi Nay-an, managing director of Mizi Sports, tells netv@lue2.0 that his main problem was managing the variety of products it sells as Mizi carries multiple brands, with each brand having its own cod-ing system. Worse, some of the smaller brands did not provide barcodes, which he knew would become a problem. Stock keeping was also a problem, ow-ing to the number of items Mizi car-ried and needed to have in stock. “We knew we needed a system that could solve all this,” says Azmi.

This is where B.I.S. came into the picture. Sayf showed Azmi how other companies around the world had ben-

efi ted from using Openbravo. “This gave me comfort as I have had bad experiences using independent soft-ware vendors. The fi nancial manage-ment capabilities of Openbravo are good, and of course, the price was very reasonable.”

Azmi will judge the success of the investment he has made by the extent that the software can help him determine customer buying habits and patterns. “We want to sell whatever we buy from suppliers, so making sure that our purchasing is as close to consumer demand as possible is very important to me,” says Azmi.

If Openbravo can help Azmi achieve that, Sayf will have a win-ner on his hands.

F R O M PAG E 1 Th is [how other companies had benefi ted from using Openbravo] gave me comfort as I have had bad experiences using independent software vendors. Th e fi nancial management capabilities of Openbravo are good, and of course, the price was very reasonable — Azmi

In the largest global insurance study un-dertaken by the IBM Institute of Busi-ness Value, more than 60% of consumers indicated that they are planning to use more than one interaction point — such as phone, website or face-to-face meetings

— to purchase insurance policies. One-fifth of the respondents said they use more than four different interaction points to research and compare their insurance options.

According to press release from IBM, a to-tal of 21,000 consumers in 20 countries across the world, including Malaysia, were asked about their shopping and buying patterns for insurance. The sample size was generally 800 respondents per country. As a result of the study, IBM is urging insurers to augment their traditional sales strategies to incorporate social media and analytics techniques.

“Our fi ndings show that the customer of the future is diverse and multi-modal,” says Primo B Aguas, Insurance Sales Lead, IBM Asean. “Consumers prefer interaction point choices — and consumers can and will switch insurers if their preferred interaction points are not available. Insurance has shifted from a sellers’ to a buyers’ market.”

Consumers selected online channels (49.5%) as their top preference for information gather-ing purposes to search for insurance. Follow-ing close behind was personal contact with an agent (47.9%), peer groups like friends and family (46.4%), and websites of aggregators or independent comparison providers (35.5%).

The study also found that consumers in Malay-sia had the highest level of trust in the insurance industry and loyalty to their insurers compared with consumers in other countries surveyed. Gen-erally, the relationship between trust and loyalty is more pronounced in the emerging markets than in the industrialised economies.

Asked to drill down on why this was so with Malaysian consumers, Aguas suggests that this is due to causation: “Loyalty is highest because trust is highest. Trust is usually not only a func-tion of market factors, but also cultural values: Does the trust in the insurance agent translate

into trust of the institution he is represent-ing?,” he says. Or, to put it diff erently: Malaysia is simply not as bad as the other 19 countries in the survey, he suggests, which is not saying Malaysians trust the industry.

The recommendations to insurers in-clude: • Increase the number of available interaction

points: As consumers want to use multiple touch points, insurers should make it easy for customers to search and purchase insur-ance products beyond personal interactions — employing print, social media and smart-phone channels. These interactions should be branded consistently, present identical information and allow users to switch in-teraction points without losing information provided at other points of contact.

• Follow your customers and use analytics: Insurers should study the data of insurance search and purchase decisions and employ them eff ectively. They should also engage consumers actively to reveal data about their preferences to develop customised strate-gies based on personal experience. The use of customer analytics can reveal valuable behavioural data that will allow insurers to compare interaction point off erings to the preferred mix of targeted customers. While insurance fi rms already use analyt-

ics and the help of actuarial scientists to study trends and off er new policies or kill those that are not advantageous to them, Aguas points out that the analytics insurers use is with regard to products, which more or less fi t the customer set they have. “Using analytics to fi nd out what

customers want — instead of the “eat this or die” approach — will defi nitely improve trust and loyalty,” he suggests.

The report recognises the ongoing impor-tance that consumers still place on personal interaction. Indeed, when consumers receive information from a person, 80% of them stick with the person for the actual purchase. Re-garding the consumer’s preferred channel for purchasing insurance, personal interaction points are overwhelmingly preferred by 31.5% of those surveyed, with the insurer’s website a distant third at 16.8%.

While mobile shopping is emerging into a rising global trend, IBM’s survey surpris-ingly revealed that only 1% of consumers say they use their smartphones to search for insurance.

Surprisingly, only 1% of consumers say they use their smartphones to search for insurance

REUTERS