The software business

Blogging is a good tool for marketing... To be honest with you, this blog has been writing good about others and ocassionally being sarcastic to promote the culture of "thinking aloud, thinking allowed".

Of course, this blog was started off for a few reasons:

1. To write something.
2. To experiment with Google search engine such as SEO and etc.
3. To preach IT ideas.

Over the years, although the main reasons are still being maintained, however, more motives have been included such as:

1. Getting contents
2. Being articulate
3. Being accountable

In fact, I realized that there isn't much to blog about many enterprises in Malaysia, of course not as much as what Google can offer, but yet the excitement of technology innovations is not really happening in this country.

There are 1,677 MSC-Status companies in Malaysia so far. And I haven't hear much yet. Perhaps still too early to tell, or people are focusing on getting government projects. But is it the right market to go into ?

Government Projects:

Government project is a big word in Malaysia. Almost the whole industry is dependent on it. I only know I few companies who don't actually (well correct me if I am wrong) focus on it very much. They are people like Green Packet, Redtone, CWorks, Axiomatic Solutions and etc. These people actually focus on international market, take for instance CWorks, majority of its customers are from the Internet. (If you think I missed out something, please comment.)

The keyword "9th Malaysian Plan" has been haunting Malaysian for many months, ever since last year. Now, thing has been brought to calamity I supposed. but I am no expert..

We all know that the big money is from the government side, because it is taxpayers' money and projects will be big. Everybody knows that, and it is true anyway in this country (recently one of the big boys has just got a project).

But is there such thing as qualification ? Malaysian big boys are:

1. Heitech Padu
2. Sapura
3. CSA Malaysia
4. Mesiniaga
5. Formis

Not so big one like..
1. Partimas
2. Kompakar
3. Silverlake (the company without website)

All these are big players (IBM style).... means that they would have everything such as networking team, software team, consulting and etc. And they are all into government projects.

Let's not forget the foreign big boys ya!!! In Malaysia, they are all over here...

1. Microsoft
2. IBM
3. Accenture
4. Oracle.
5. SAP
6. Sun Microsystem
7. EDS
8. Atos Origin
9. Shell Global Solutions
10. HP
11. CA (Computer Associates)
12. EMC

Oh my godness, so many competitors!

What Dell taught me ?

Dell taught me one thing, when they decided to go direct, bypassing middlemen, is to target public sector. Because the big money is in the public sector.

And now you can see Dell's sales persons moving around Putrajaya day in and out. And these sales persons have short-lived career, because if they are not meeting quotas, they will be invited out. This is because when you go direct, you absorb all the risks (cash flow, inventory, inflation and etc). Thus, you can't afford to wait for long.

What IBM shows me ?

In recent TheEdge (December 18, 2006), the article 'IBM Reinvents itself" where it talks about the current CEO Sam Palmisano direction for the company is ...

IBM today is "a high-torque engine." High-margin businesses and lower costs "allow us to generate significant profit earnings and cash flow, even in this more moderate growth environment. simply put, we generate more profit from every dollar of revenue than most of out competitors... some say IBM is a services-led company. That's wrong."

Key to growth strategy is software. A decade ago, IBM's software was just the stuff that ran on its mainframes. IBM dumped that business under Gerstner, instead pursuing "middleware" - software that connects complex applications or systems at big corporations, letting them exchange data, or allowing new applications to link to older legacy systems and multiple applications to create larger ones.

According to Steve Mills (head of IBM's software division) "my business model is very attractive, but it's based on delivering licenses to customers. In a labour-centric business, you'd like to have a lot of customers, but you're limited by the amount of labour. If you carry the assets through, the benefits begin at the bottom line. You have certainty of outcome and the ability to execute with greater speed, helping ensure greater profitability. Does it have a top-line contributory effect? Yes, if you pick up the pace."

So, what they are talking about is really providing "you-name-it-we-have-it" software to big customers with big budgets. And by all means, it is referring to the public sector.

And they know the game well, they don't have time to waste, because time if more important than anything else. They have research teams, but they dont' go and do everything by themselves. Their solution is into acquiring software expertise. (Not only Microsoft and Google do the same thing...)

Since Palmisano took over, IBM has bought 51 companies, 31 of them in software, for U$11.5 billion. The acquisition centre on SOA, information on demand or service management - managing a client's computers and internal business services. In recent months, it purchased Internet Security Services, a software -based computer security outfit; FileNet, an information-on-demand service, and MRO software, a service-management specialist.

So, SOA(Service Oriented Architecture) is their marketing story... every marketeer needs a story to tell the customers, otherwise you are just wasting time.


Which game you want to play... or where do you want to belong to ???

I don't think many can envision to build another IBM and it will be there as long as I live. It seems like eventually, if you are successful, merging with the big boys are inevitable. This is what I called the exit plan.

Why need to merge ?

1. IT business is a trend business.
2. If you are not famous, nobody cares. when you accumulate results, people pay attentions. And competitors start to build up and saturation points will come. Therefore, either you keep innovating or keep getting bigger. (Google is doing both)
3. As an entrepreneur, you may be making millions for this two years, but if you don't have exit plan, you may be relying your whole life on these millions. To put a longer perspective, it is safer to cash out than to hope for a bigger pie with a buy-in of your current wealth.


Brandon Teoh said…
IBM officially opened new HQ in Malaysia