i.t. matters
Tuesday, May 16, 2006 | MANILA, PHILIPPINES
By MARICEL E. ESTAVILLO, Reporter
Success does not come easy, particularly if you are a local player in the fast-changing and ultra-competitive world of software development.
Last week, top executives of five Philippine-based software development companies shared in a forum some of their biggest challenges yet as they struggle to survive in the game.
The businessmen bared popular and not so popular decisions that they have taken in the past, decisions that one way or another have helped shape their view towards doing business.
To start, all agreed that failures come to a businessman who enter a venture with insufficient information.
Homegrown company Jupiter Systems went to China three years ago, lured by the promise that every foreign company with the right product can break into this market.
Jupiter Systems brought to China its flagship product, an enterprise resource planning software application for manufacturing, distribution, financial and personnel.
Unfortunately, Jupiter Systems failed, said President Juan Chua. But with the setback came valuable lessons which have become a handy guide for future foreign ventures. "When we put up an office in Shanghai, the government is requiring companies to automate their operation. Good for us, we thought. But companies only buy Oracle and SAP to comply with the requirement. And if you are not that big, they will not talk to you," he said.
Also, since the company started in Shanghai, it was competing with a huge number of second-tier companies, estimated to reach 500. And since it failed to establish partnership first with local companies, China became a daunting target for Jupiter Systems.
"Another regret is we relied too much on local hires. Because of the high demand, we lose them every three to four months," Mr. Chua said.
Joey Gurango, chief executive of Gurango Software, said that his first company failed.
In 1984, Mr. Gurango set up a company thru a $250,000 venture capital.
"After making over half a million in sales... 18 months later, we went bankrupt. Why did a profitable company went bankrupt? Simple, we were spending more money than we were making," he said.
"I failed to acknowledge that I don’t know everything. Business is about figuring out what you don’t know," he added.
Chris Stolk, president of Stag Philippines, said it is important for a company to know how to handle the "gimme pigs" in the industry, or those clients he described as "I want them all and will never pay for them."
"Some word of advise, if they [clients] say something, document it. If they don’t sign the change order, then don’t do the work," he said.
"The Philippines is a difficult market because of the maturity level and some cultural issues. You should make sure that it will be a win-win situation both for you and your clientŠ don’t push for not every client is meant for every supplier," he added.
For instance, Mr. Stolk said his company turned down more clients than it accepted.
PRODUCT TEST
Cliff Eala, chief executive of Stratpoint Technologies, said it is also equally important for companies to test the products after every stage of development. "Test early and after as soon as it is finished. If it’s ready, then test. If you don’t do this, then it can be very frustrating, you don’t know how to get there," he said.
Richard Dagelet, chief executive of mobile application development firm eScience Asia Pacific, said companies should target to be number one right at the very start.
"If you are not number one or two, don’t do it. Other companies with more resources than you can do it. Only 10% of the world’s businesses survive after 10 years, and another 10% of that 10% survive after 10 years, he said.
With all the challenges along the way, when do companies like them pack up and say enough?
Mr. Stolk said owners should "trust their guts and don’t ever look back."
"Three days before we go live, we filed a lawsuit with this client. And the reason was because the project manager had huge number of change requests, but refused to sign anything. There was too much risks involved and it is at that point that we said it is totally unreasonable," he said.
In 1992, after moving back to the Philippines and staying for six months, Mr. Gurango said he incurred $180,000 in loan and his five credit cards, each had $5,000 credit limit, were all used up.
"At time, my wife said that if you could not come back within two weeks, don’t come back at all. I was close to the breaking point. But fortunately, I had a good business model at that time," he said.
"In hindsight, if I am going to advise you today: you have to start with a confirmation that you have a very good business model, and you cannot define this on your own, you need independent opinion. And you have to live with the consequences of that decision," Mr. Gurango said.
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