KarenSoft Enters Regional ERP, New Straits Times, Wednesday, August 4, 1999

KarenSoft Enters Regional ERP

New Straits Times, Wednesday, August 4, 1999


Local start-up targets low-cost ERP solutions at Asia-Pacific audience.

KarenSoft Solutions Sdn Bhd, a little known Prai based software developer, is making waves in the local IT industry. It impressed market research firm International Data Corporation (IDC) Malaysia enough to get itself included in IDC's enterprise resource planning (ERP) solutions report in Asia-Pacific.

IDC was particularly impressed by the company's KarenSoft Manufacturing Resource Planning (MRP) 2 product. "IDC found it to be very comprehensive as it more than complied with their definition of an ERP system. It met the maximum number of criteria required for a product to be classified as an ERP solution," says Chee Chong Hwa. KarenSoft' managing director.

Furthermore, KarenSoft MRP2 was a finalist in the 1998 (Errata: 1999) Pikom-Computimes IT Product of the Year award in the Internet (Errata : Software) Applications category. It was also accorded pioneer status by the Malaysian Industrial Development Authority, the Ministry of International Trade and Industry, and the Ministry of Finance, under the Investments Incentives Act.

Quite an achievement for a company that had its roots in Chee's public accounting firm C.H. Chee and Associates.


SOWING THE SEEDS

Chee started on his career in IT, during the course of an accounting job for a Taiwanese company in the Prai industrial estate. During the project, he desperately needed a software to speed up his work but could not purchase one as such products were expensive at the time. As such, he decided to build his own software. This led to the development of the KarenSoft Fixed Asset Registration product which ran on DOS.

When news of the successful implementation at the customer's site got around, Chee found a willing market for his software. He then formed CHCA Software Solution to handle the IT side of the business. In 1991, KarenSoft Solutions was set up to take over from CHCA Software Solution.



BUILDING ITS PORTFOLIO

As time progressed, Chee developed over 14 applications between 1990 and 1995 to meet market needs.

From 1996 to 1997, more products bearing the KarenSoft brand were created. This includes the MRP software, KarenSoft Web Browser, Time Management System, and Financial Accounting System. The "Karen" in the brand name is an acronym for Killer Applications which are Robust, Elegant and Network ready.

In acknowledging the growing Windows operating system market, the company embarked on Windows development after 1995. Most of the company's current development work is for the Windows environment. However, KarenSoft still supports its existing Dos products as a number of its customers are on this platform and show no signs of moving to Windows in the near future.

Another notable trend that KarenSoft recognised was the growing influence of the Internet. This led to the development of the KarenSoft Web Browser, which started off as a standalone product that could handle Bahasa Malaysia. The browser is a plug-in for Microsoft Internet Explorer 3.0 and 4.0.

"There was commercial agenda to developing the product too, as we also used the browser to Web enable all our applications," he adds.

Competitively priced products contributed much to the company's success in the ERP market as well. KarenSoft solutions can be purchased for a few hundred thousand ringgit, compared to the million ringgit that would be needed for foreign software.

KarenSoft has over 200 customers consisting of small to medium-sized organisations in the manufacturing, hospitality, financial, healthcare, retail, trading, and service industries.



GROWING PAINS

Chee would not reveal the earnings brought in by the KarenSoft products, but did mention that the company's growth over the years had been funded by sales of its software. However, he admits that there was a limit to what could be done with the money that was brought in.

"I don't think we had sufficient funding to properly market our products," adds Chee, regretfully. "To date, much of KarenSoft marketing has been through word of mouth."



LOOKING FORWARD

As the company is now working towards taking on the world market, the need for a marketing campaign budget has become more urgent.

To address this problem, Chee has attempted to obtain grants. "However, as
private company, we are not eligible for government provided commercialisation grants," he reveals.

The structure of Malaysia's current grant system only allows private companies access to research and development grants. Commercialisation grants are reserved for universities to market their developments.

"The way I see it, the assumption here is that universities are the only ones with technology and are more in need of money for commercialisation," Chee says. This is a mode of thinking he would like to see change in time.

Since Chee cannot wait around until this happens, he hopes the company's initial public offering (IPO) exercise will help towards bringing in extra funds.

Chee is aiming to get the KarenSoft Group's corporate vehicle, KarenSoft Technology Sdn Bhd, listed on Mesdaq (Malaysian Exchange of Securities Dealing and Automated Quotation). The listing is also in line with the company's five-year plan, which started this year.

Qualitatively, KarenSoft Technology is ready for listing but Chee says that it falls short on the numbers. By using Mesdaq's Malaysian Enterprise Network (MEnet) platform for pairing start-ups with investment companies, he hopes to be able to meet the quantitative criteria.

Being taken seriously by local companies is the second reason for KarenSoft's listing exercise, As with many local software developers, KarenSoft experiences difficulties in getting Malaysian companies to accept its products.

"Local companies would rather use imported technology. Strangely, using Malaysian developed software is not an issue with foreign companies," he adds. "We think a Mesdaq listing will give us more credibility and show local users that we are here to stay."

KarenSoft's clients come from countries such as Japan, Singapore, Taiwan, Denmark, and France. It has also received enquiries from a hotel chain in the Maldives.

The other major part of KarenSoft's five-year plan deals with strengthening its presence locally and throughout Asia-Pacific.

"We've established branches in Penang and Petaling Jaya to handle sales and distribution," Chee says on the company's existing set-up.

The next step would be to set up an office in Johor Bharu which would cover business from Singapore as well.

After that, KarenSoft is looking at setting up offices in East Malaysia, Indonesia, the Philippines, Hong Kong, China, Taiwan, and Australia.



BRANCHING OUT

Armed with an extensive product portfolio, a Mesdaq listing exercise, and an Asia-Pacific expansion plan, KarenSoft's prospects in the IT industry looks promising.

It may have made a mistake initially by not placing an emphasis on marketing, but all that is water under the bridge. Things can only look up as the company sets course towards becoming a major software power house in Asia-Pacific. [A Suite of 'Killer' Applications]