Cover Story: The accidental training provider

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This article first appeared in Unlisted & Unlimited, The Edge Malaysia Weekly, on January 11 - 17, 2016.

S T RUBANESWARAN, CEO of KnowledgeCom Corp Sdn Bhd, taught himself to sell by reading books on the subject, closed a deal to become an SAP training partner without knowing what SAP was and went on to produce one of the most successful SAP online training programmes, with a 90% pass rate when instructor-led trainings were only managing a 30% pass rate.

Rubaneswaran got into the training business by accident. This engineering graduate entered the job market in 2002 when jobs in his particular sector were few and far between. Willing to take anything, he landed a position at ExecuTrain, which had an office in Bangsar, Kuala Lumpur. The company offered basic IT courses, so his job was to go out and sell them to companies. 

By his own admission, he was a nerdy 23-year-old, skinny, with thick glasses and a side parting. “Trying to do sales with that kind of look … you can just imagine how I came across,” Rubaneswaran laughs. 

But rather than quitting after his first humiliating month, he decided to teach himself how to do the job. “Every day after work, I used to go to the MPH [bookstore] near my office, pick up a book on sales and read a chapter. The next day, I would apply what I had learnt at work,” he says.

As Rubaneswaran didn’t have any money at the time, he could only manage one chapter a day at the bookstore. But at the end of the month when his salary came in, he bought the book. 

It took a weary four months before he made his first sale. But when he did, it was the largest in the company’s history — a training package for MCIS Zurich Insurance. “They closed the whole office to conduct the training for all of their staff. And by the end of the year, I had brought in the most revenue for the company for a salesperson,” says Rubaneswaran.

A year into the job, he was offered a sales position at a larger training company, KnowledgeCom, for more pay. “They hired me and a few of my colleagues as salespeople and trainers,” he says. 

But when they got there, they realised that something was not quite right with the company. “There were a lot of issues. All the people I came with left in the first two or three years,” says Rubaneswaran.

KnowledgeCom was a larger set-up and could run more classes — and bigger ones at that. The problem was that it was being mismanaged. Being one of the few to remain with the company, Rubaneswaran was promoted to senior manager in a short space of time. He knew nothing about management, so once again he hit the books.

He read Steven Covey and Harvard Business Review books and picked up an MBA at Nottingham University. “Basically, I took all the subjects related to management. The MBA took me eight years to complete, but that is besides the point. I went for classes, listened to what they were saying and came back and applied them in the company.

There were many issues. For one, the company was not being run efficiently. Classes that could accommodate up to 25 students were held for only five, which meant the same costs but one-fifth the revenue. The company also had difficulty meeting payroll and neglected crucial payments, such as Employees Provident Fund (EPF) and Socso contributions and even rent.

“What I did was fight fires. I ran around like a headless chicken to close this deal and get the money in so that we could pay salaries. And I did that for four years,” says Rubaneswaran.

“My accountant was another problem. He would only tell me one week before that we didn’t have money to pay the salaries. I would have to scramble to bring in a deal so that we could cover the salaries. I didn’t know at the time that we were not making EPF or Socso contributions,” he adds.

He would find all this out when he took over as CEO. Not that he had planned to, but because he was tired of living hand to mouth and constantly putting out fires.

The KnowledgeCom office was in the old Jaya Shopping Centre building. The building was scheduled to be torn down and all the tenants received a notice of eviction. Rubaneswaran thought this was a good time to leave.

“I went to see the shareholders [Datuk Zulzurin Merican and Datuk Nizam Tun Abdul Razak] to tell them what had happened and to say that I would help them find and set up a new office, but then I would leave. They told me that if I left, they would close down the company,” he recalls.

That stopped him short. The company had gone through so much and survived. To close it now would be a shame. “So, I took a RM200,000 loan from Zulzurin and started to build the new office in Dataran 32, Petaling Jaya, near the old office,” says Rubaneswaran. 

With that amount of money, he couldn’t afford to hire a project manager, so he had to sit there and manage all the contractors himself. When it was completed, the company only had RM600 left in the bank.

“They made me CEO and I had full access to the accounts. That’s when I realised we had about RM1.7 million in accumulated losses,” says Rubaneswaran.

The company would have to cut costs and quickly, then it would have to work out a payment plan with all its creditors. First, it outsourced accounting, training and marketing. Then, it brought the headcount down to seven or eight people. 

“We had to manage with a skeleton crew. We only kept our core fundamentals with us — sales, operations and the product,” he says. 

“EPF and Socso sent us letters about non-payment and I told them we could not afford to pay them now, but we would do so later, every sen.”

They agreed and asked for a scheduled payment plan. The company would not only have to make up for the missed payments but the interest as well and late charges. All in, the amount came to about RM140,000.

KnowledgeCom did not take a bank loan to cover the debts. Instead, it brought in enough business to service them and have some money left over. The sales team went out and pushed as hard as they could. It was during this time that the company got its biggest break — becoming an SAP partner.

Funny story. SAP was looking for a vendor and one of Rubaneswaran’s friends alerted him of it, telling him that this would be good for KnowledgeCom. But there was a problem. Rubaneswaran didn’t know was SAP was.

“This Indian national, who was based in Singapore, flew down to look at potential partners. There were many bigger training providers bidding for it and here I was, with my small company, trying to convince this guy,” he says.

“He asked me what else my company was doing, and I told him we were doing Microsoft, Cisco training, the works. Then, I told him what kind of plans I had for SAP without knowing the product.”

What made KnowledgeCom’s proposal interesting was that it was willing to provide SAP training online. At the time, Rubaneswaran didn’t know how difficult the SAP system was to teach and that in instructor-led classes, the average pass rate was only 30%.

The SAP guy was cautiously impressed, but he wanted to see the company’s office first. So, Rubaneswaran borrowed Zulzurin’s Mercedes-Benz to fetch him from the SAP office. He didn’t allow the fact that he didn’t know how to properly operate the car faze him. He explained his awkwardness away breezily, saying that his driver was the one who usually handled the car. They made it to the office, where Rubaneswaran gave his presentation. The man from SAP was impressed and decided to give the company a chance. 

“He gave me a contract the following week so we could pay €25,000 to purchase the product and start selling. I told him we had no cash, but that we would pay him once we did the sales. For SAP to actually agree to that was quite something,” he points out.

Then, he had to work to bring in the students. Because it was offering the programme online, KnowledgeCom could offer SAP training at a significantly lower price. The hard part was, well, the SAP course itself. 

KnowledgeCom’s students failed. Not once but over and over again. “So our reputation was getting quite bad. People would say, ‘You can go to KnowledgeCom to do your SAP training. It’s cheap, but you will fail the paper.’”

Rubaneswaran was busy analysing the problem and trying to fix it when the company got its next big break. This time, from British Petroleum plc. BP was setting up a shared service centre at KL Sentral and needed to train its staff in the SAP system. It had gone to see Multimedia Development Corp (MDeC), which said there were three SAP partners in Malaysia.

“They saw me and the other two established SAP partners. They were trying to give us a contract where they wanted us to train all the fresh graduates in SAP so that they would be ready to work straightaway without any further training,” says Rubaneswaran.

“Our track record was teruk (terrible) to the core, but I offered them something interesting. Their KPI (key performance indicator) wasn’t the passing of examinations. They just wanted more hands-on learning so that the students could function on the job. The exams were kind of just by the way. So we proposed and presented and they picked us.”

KnowledgeCom customised the training package for BP. “We turned what they would be doing on the job into the training programme. So they would come for training and learn how they would operate when they went to work,” says Rubaneswaran.

These students, like the ones before, also failed the examination. “BP didn’t actually care about the examination. But when they had invested so much and the students failed, they decided that passing the exam would have to be included in our KPI,” he says.

Again, Rubaneswaran had to find a way around it. “I had to crack my head. And so, we built an innovative model to help the students pass.

“Ours is an online model. We created a lot of stops along the way, where we had mini-examinations to evaluate the students. That way, we were constantly monitoring their progress and giving them hands-on help as well as three or four actual SAP mock exams to do. So, they were going through a very rigorous training online.

“We also put in a lot of coaching and motivation sessions, telling the students why they needed to pass the paper and what they would get from it and how valuable it would be 

in the next 5, 10, 15 years.”

When the second batch of BP trainees sat for the examination, the passing rate was a whopping 80%. “As soon as we achieved this, everyone knew about it. The industry knew, MDeC knew, and we won the inaugural award for the best SAP training partner,” says Rubaneswaran.

KnowledgeCom kept tweaking the programme and the following year, the pass rate went up to 90%. Armed with this record, Rubaneswaran approached the Ministry of Education. KnowledgeCom wanted to expand its student base and train university students.

“We got students from University Teknologi Malaysia, Universiti Kebangsaan Malaysia and Universiti Malaya. We used the same model and again, the passing rate was about 90%. These graduates could now go out and command a starting pay of between RM3,500 and RM4,500.”

The courses were no longer cheap because it was ensuring results. “By 2012, four years after I took over, we recorded a profit of RM1 million. We had already paid off our RM1.7 million debt,” says Rubaneswaran.

By this time, he had already bought out Nizam’s shares and held a 40% stake in the company while Zulzurin held the remaining 60%. It was at this point that a listed company, Censof Holdings Bhd, expressed interest. KnowledgeCom had received interest from other companies and universities, but this was the first listed company to do so.

“I knew they could probably teach me a lot of things, such as corporate governance and how to run the company better,” says Rubaneswaran. So, the two shareholders agreed to sell a portion of their shares to Censof and KnowledgeCom effectively became part of the group.

Things got difficult really quickly. Rubaneswaran had been used to running the company virtually any way he wanted and suddenly, this was no longer possible.

“Everything changed. Our governance, our payment system, even to make a purchase order or sign cheques or to do our budget. I spent the first six months regretting my decision. I also spent a lot of the time reading, trying to adapt to the new situation. Sitting in the boardroom with all these guys, I couldn’t even understand the jargon they were spouting,” he says.

“It took me six months to adapt and the next thing I knew, everything was under control and we became one of their highest performing subsidiaries. We made RM1.8 million within a year and we have had an average growth rate of 30% to 35%. This year, we will probably reach RM10 million in sales.”

Rubaneswaran attributes the drastic improvement in performance to becoming a part of Censof. “If we hadn’t sold, I would have been comfortable where I was, doing what I was doing, with no issues in life. But because I was put in a situation where I had to deliver every quarter and to report to the board, the audit committee, the shareholders every month, where if I didn’t meet my numbers I got queried. I was forced to perform. When you are forced to perform, you push yourself to the limit,” he says.

The next major milestone will be the listing of the company, planned for 2017. Rubaneswaran is gearing up for that now. “Before listing, we would like to have offices in Penang, Johor, Sabah, Sarawak, the Philippines and Vietnam sorted. And besides SAP, we have Microsoft and Oracle training as well — so many different products. The idea is to go into these countries with SAP, establish a market over there and then push the other technologies,” he says.

KnowledgeCom is also planning to buy a college. “Most of the graduates who come out of college today don’t have the skills to work in the ICT industry. The government gives us grants to retrain and recertify them to get the proper skill sets, but we want to see if we can produce graduates who already have the skills when they graduate,” says Rubaneswaran.