#edGY: Staying niche to dream big

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MALAYSIAN IT service company Goldbury Communications Sdn Bhd knew it had to occupy a niche to stand out on the world stage. It implements systems applications and products (SAP) software for the automotive industry.

SAP SE is a global enterprise software maker that helps businesses manage their operations and customer and supplier relations. It offers industry solutions for 28 sectors, including mining, healthcare, retail, oil and gas and, of course, automotive. Businesses typically buy software licences from SAP and hire IT service firms to implement the software.

Goldbury founder and CEO Zuhri Yusof acknowledges that there was a lot of scepticism at first about whether his company should be so narrowly focused. After all, it was small, set up just last September and from a country that was not particularly known as a big player in IT services.

The 32-year-old entrepreneur recalls weighing up the decision. “If you can do everything [well], that’s good.”

But Goldbury was new to the market that it needed to penetrate. So the crucial question for it was: “What is your niche and focus?”

This is why Goldbury only serves automotive clients from anywhere in the world that want to implement SAP. And it is the only authorised SAP training academy in Asia.

“There are 3,000 automotive-related companies using SAP globally. We knew that even if we were to grab a small slice [of the market], like 5%, that’s more than enough to chew on,” says Zuhri.

According to a 2013 report on the global automotive industry by McKinsey, a consultancy firm, things have recovered since the 2007/08 global financial crisis. It states that industry profits are on an uptrend, having climbed from €41 billion in 2007 to €54 billion in 2012.

By 2020, global profits could increase by another €25 billion to €79 billion. “That is good news but the benefits will not be distributed equally across all geographies or all types of cars,” the report says.

Ambition and scepticism

As a niche service provider, Goldbury has had to think big. “Because of our niche nature, we have to be No 1. We want Malaysia to be known, we don’t want to be jaguh kampung anymore,” says Zuhri, an accountant who found his calling in IT consulting.

The naysayers in Goldbury’s early days included officials of a government ministry who had discouraged Zuhri from his global ambition. “Go regional at most,” they said.

That didn’t offend him. He respectfully disagreed and carried on. “Based on their statistics, service companies that went global often failed. But my objective, from day one, was to go overseas. So we proved them wrong. Now, after one year, we are known as one of the companies crazy enough to be vertically focused.”

Zuhri believes that Goldbury has a competitive edge because there are few players that are true specialists in its chosen niche.

Still, competition is tough in its market because competitors are large tier-one consulting and IT service firms, such as Oracle, Infor and Accenture. “It’s rare to have a company specialising in SAP for automotive [applications],” Zuhri concedes.

Goldbury entered the market offering its services at a lower fee than prevailing rates. “The typical consultant in Malaysia costs between RM1,300 and RM2,000 per man day. When we came in, we offered about RM750 per man day — now, it’s up to about RM1,500. It’s very competitive,” says Zuhri.

Fast growth

Goldbury had ready clients and made money from the get-go.

When it commenced operations last September, it had secured subcontractor roles with Sime Motor, Honda Malaysia and Honda Thailand. One year on, Goldbury would like to be a main contractor instead of playing the bit parts.

Zuhri was able to get clients from the start because he had been paving the way for the company before it was launched.

In his previous role in Proton Holdings Bhd, he had led a project to implement SAP for the national carmaker’s end-to-end processes, the first for any carmaker.

SAP took Zuhri around the world as an expert speaker on the software’s automotive industry solutions. The circuit helped him build credibility and broaden his network, he says.

Last year, he wanted to do more and left Proton with a team of 11 to start Goldbury. Now, with a staff strength of 43, the company is still in hiring mode.

Goldbury will end the year with 11 clients, some 80% of which have operations outside Malaysia. Zuhri is projecting an increase to 21 clients next year.

Goldbury has its headquarters in Kuala Lumpur and satellite offices in Singapore and the UK. It will open offices in Australia and Saudi Arabia by the end of the year.

Its current clients include UK’s Inchcape, Subaru Australia and Naza Kia, and it is in the midst of wooing, among others, Saudi car distributor Abdul Latif Jameel and Zuhri’s old employer Proton.

Things seem to have come full circle and Zuhri chuckles when asked about his relationship with Proton. “It is a popular question,” he says.

He admits that Proton was “a bit upset” when he left with a large team of people but he believes that Goldbury can work with it.

“I think they have realised that there is more value in working with us than against us. It’s about improving their processes. Customer retention. Wouldn’t you want to do it?”

Aside from Goldbury’s clientele, Zuhri says earnings have grown too. Revenue for 2014 is likely to hit RM17 million, and the company is targeting RM45 million for 2015.

Support contracts comprise about 40% of Goldbury’s earnings, a proportion that Zuhri describes as a very “comfortable buffer”.

He was initially reluctant to take on short-term projects that paid well, but found that he had to. What Zuhri wanted was for clients to engage Goldbury for support contracts, for their consistent revenue stream.

“Projects have bigger value but are more volatile, more towards the top line. But if you want profits, [win] support contracts, which are for a minimum of two years, and a standard period of five years. If you are good with the client, 10 years. So in 10 years, your business is fixed already!”

Ultimately, Zuhri says what drives him is to prove that a small Malaysian company can be a competitive player on the global stage.

This motivation is “quite natural” for him because it is about doing things better than yesterday.

“I sleep about two, three hours a day. I think a lot. I think about thinking of what we can do better. To succeed is one thing, to show progress is the greatest satisfaction of all.”

This article first appeared in #edGY, The Edge Malaysia Weekly, on December 8 - 14, 2014.