​View the original article here
If being competitive means one egocentric person striving to gain advantage over another, making for contentious human relationships, then Sbu Shabalala, the CEO of software development company Adapt IT cannot be called competitive
If being competitive means collaborating, co-operating and working with people in a way that brings out the best in them and yourself, in order to get ahead, then that is probably closer to Shabalala’s version of competition.
He seems surprised that the subject should even come up. Thinking big has always been part of his nature. “Perhaps it's because I grew up with three siblings and there was healthy competition among us,” he offers
Shabalala’s aim is to build a South African software house with an internationally recognisable brand and software exports around the world. The goal is to generate R3 billion in revenue by 2020 (the company generated R578 million in 2015) and R10 billion/year within ten years. “We can be a significant player in the South African market but that’s not enough. The model that we are developing requires that we go offshore. That’s where the opportunity is.”
The goal sounds audacious, however consider that Adapt IT already exports its product to some 27 countries; its earnings have compounded at 28% a year for the last five years and operating profit has compounded at 43% a year in the same period.
With numbers like these it is clear that acquisitions are a key part of the business model and have catalysed the company’s growth. But acquisitions are not simply a land grab to bulk up the numbers. Instead they have enabled targeted expansion into new sectors â€" oil and gas for instance; and seen the company acquire specific intellectual property and valuable vertical market skills.
Underpinning every acquisition, and in fact every business decision, is intellectual property (IP). The company is firmly focused on developing its own IP and acquisitions are made with this in mind. IP is Adapt IT’s key differentiation. “South Africa is crying out for a company that develops intellectual property that is resalable offshore,” he says. “There are too many local companies customising international software (and paying license fees on this) or simply selling services.”
Adapt IT develops software solutions for companies in the manufacturing, education, energy and financial services sectors. In future Shabalala has his eye on the health sector as well as IT security. “I believe there is a gap for HOME local IP here. We can then sell it in Africa and beyond.” While each piece of software is built to solve a specific problem, it is designed to be sold ‘in a box’. This makes the model replicable and scalable - at minimal cost.
For instance, following the tragedy at the University of Johannesburg in 2015 where the mother of a prospective student was trampled to death during a stampede for places, Adapt IT developed an online registration system for the university. This solution is now being sold on to the company’s 52 university customers around the world.
So how does a little South African company with a market capitalisation of R1.8 billion get its products noticed globally? Shabalala’s reply is revealing, “Slowly. You can’t do this in five years, it can take ten to 20 years to build that kind of reputation.” He is a very patient man, and enjoys thinking analytically â€" perhaps it harks back to his days as a software programmer when solving complex process problems was the name of his game.
“We extensively market our products more than our company. Customers don’t care who develops the software, just that it works well and that it is the industry standard.” Products are regularly benchmarked against the industry leaders. Once they are ‘mature’ they are rated by the likes of Gartner, the world’s foremost IT research and advisory company. For instance the company’s educational software is ranked in one of Gartner’s ‘magic quadrants’ and has achieved the global recognition he refers to. To identify trends the company spends 30% to 40% of its budget on research and development, which accounts for 5% to 6% of turnover. This is quite high by global standards.
While Shabalala is very much the public face of the company, he makes it clear that he is one cog (albeit an important one) in the wheel.
His chief sidekick is Tiffany Dunsdon, the sharp-as-an-arrow financial director.
The pair has worked side-by-side since the Adapt IT transaction with Infowave Holdings in 2007. He is the more cerebral of the two and is happiest developing strategy and planning how to take the business to the next level. With Dunsdon at his side, the numbers back up the strategy.
"Her business acumen and ability to manage complex negotiations has proven invaluable over the years of acquisitions," he says. Adapt IT has concluded about eight acquisitions in its 12 years of existence.
It is while talking about ‘our people’ and how they will take the company forward that the unfailingly polite and measured Shabalala becomes animated.
“We have valuable skills, and with skills like these it is essential to build a high performance culture,” he says. “Our people must be able to grow. They have clear career paths, clear KPIs, clear incentives. We set stretch targets but share all information necessary for them to achieve these targets.
“They are amazing. I marvel at their thinking. It’s the ‘secret sauce’ in the innovative thinking that makes this company great. It is easy to lead such people,” he says.
On the other hand, perhaps being led by a man who thinks big makes working there easy? “It’s not a dream,” he replies. “We have a vision and we are driving it to fruition. It’s possible.”
​View the original article here