Will Datec Crumble?

SAP enters Fiji's software market through Pacific Connex but Datec Fiji is not batting an eyelid

by Dionisia Tabureguci

DEPENDING on who you’re talking to in Fiji’s software industry, there are varied views on the advent of SAP business solutions to our shores but if there is a common ground, it has to be the growing perception that this Johnny-come-lately is a harbringer of changes never seen before in the market.

There are those who prophesy the demise of a certain major reseller, those who believe in the possible transformation of the smaller software companies, the shift to oblivion of those not receptive to the anticipated changes forecasted for the industry and most will nod emphatically as if it is a kind of vindication that, yes indeed, SAP will be something of a reckoning for a lot of people.

In a country where your average day to day person does not know so much about computers, let alone talk software, it is not surprising that the word SAP has become coined with the Native Land Trust Board, PacificConnex Ltd and the Fiji-born now New Zealand citizen Ballu Khan.

When you begin talking to a fellow who says something like: “Yes, SAP is THE software. It’s Tier One. It’s Fortune 500. It is one of the best you can get if you’re a big company…”, you are talking to someone either in the business of selling software or is providing support services to those who buy them.

For a fact, the name SAP is closely linked to huge multinational corporations on Wall Street, the kind that have offices all over the world and that do billions of dollars worth of turnover each year, making it imperative for them to use a software designed to handle the resulting complexity of the massive business.

In that fast paced environment, SAP is known as one of the Big Three, that term referring to the three ERP (Enterprise Resource Planning) software vendors whose products compete for the attention of these very big companies (the other two are Oracle and PeopleSoft).

Early this year, it became known that the brand was coming to Fiji via PacificConnex Ltd, a new joint venture between Khan and NLTB’s investment arm Vanua Development Corporation.

One could almost hear the silence of the industry as it braced itself for what it expected were changes but which it did not quite know what they were or what shape they would configure the market to.

Then the NLTB proudly announced it was awarding PacificConnex the job of putting in place the IT infrastructure for its business, core of which are granting leases and collecting rent monies for distribution to the indigenous landowners.

That was when the panic attack began for the one other company that those in the know were expecting would recoil and go running back to the boardroom for a Plan B.

Officially, Datec Fiji Ltd did not make a sound. But its major shareholder Jim Ah Koy did.

As former finance minister responsible for bringing in SAP for implementation by the Rabuka government in 1998 – this was following a report on the Government’s IT needs compiled by PricewaterhouseCoopers, the accounting firm that also ran a consulting arm for SAP in Australia - Ah Koy knew a fair bit about the software and warned NLTB that it would ‘bleed to death’ from choosing to run its business using SAP.

From experience, Ah Koy knew it was complex and expensive if one was looking at returns on investments . When it was scrapped in 1999, that SAP solution had already cost that government close to $10 million . 

And until today, the software has not been implemented.

Now apparently wiser, Ah Koy decided to take on an advisory role admonishing NLTB that it will lose more than it expected to gain.

Did Ah Koy’s seemingly anxious reaction point to a certain wariness in the Datec camp?

“Not one bit,” said its manager professional services Rahul Ganatra. He sat comfortably in the boardroom alongside the cool and composed managing director Krishna Sami.

Datec is apparently unfazed by all this SAP talk. If Khan had thought competing against something like SAP would be a ‘daunting task’, the only other company big enough to fit the bill as a competitor would be Datec Fiji and there it was wishing PacificConnex and Khan the very best.

“Bringing SAP here is like buying a plane and using it to travel from home to the office. Would you buy a plane or would you settle for a car? That is what this situation is about – SAP is too expensive and too complex it’s like buying a plane when what suits your need is just a car,” said Ganatra.

That was an echo of a remark made by the head of a smaller software solutions company who likened the situation to someone buying a limousine for driving along the backroads of Fiji.

“It is no doubt the world’s best enterprise-wide financial software but the question is: do we really need something that big and sophisticated for the size of businesses we have in Fiji,” he had alluded to NLTB’s decision to choose SAP.

According to Khan, the NLTB would be using mySAP Business Suite which is designed for small and medium enterprises (SMEs).

That seemed to mystify the local software expert who further questioned the logic in bringing in a product that would cost $1.2 million each year for 12 years to support.

“If what they’re giving NLTB is an SME package and it has to pay in millions every year, what company in Fiji would spend like that on software? For the size and complexity of NLTB, you can easily get a solution already in the market which can handle it for much cheaper , “he said.

At the Datec boardroom, Ganatra was ready with a list of multinational companies that had implemented an SAP solution and threw it out because it was too costly to run.

While many in the industry were speculating on a possible Datec run for the money move, Datec made clear it was doing nothing of the sort and would rather wait to see “SAP cut to size in the Fiji market”.

For those thinking there may be a possible partnership between PacificConnex and Datec, both parties have indicated an openness to talk but no one has made a move.

Such a partnership, said Khan, would have to be in Datec supplying the hardware for all PacificConnex jobs. After all, there is a business partnership between the computer hardware company IBM and SAP in the global market. In Fiji, Datec is the sole supplier of IBM computers. Khan is open for talks on this aspect but Datec is sceptical about it and thinks it is a way for Khan to get Datec to start rooting for SAP.

“We think SAP is not suitable for Fiji and we would never recommend it to any business here, not even to the Government” said Sami.

“When you talk SAP in those big economies, you’re talking billions of dollars turnover so it is logical for them. Our GDP (Gross Domestic Product)as a country is so small compared to that and we don’t need to spend so much money on such a complex software,” added Ganatra.

Datec obviously has anchored its confidence in its established market position, a good client base and its understanding of the Fiji market. Already, it is viewing its own strength as PacificConnex’s weaknesses.

“A few years from now, somebody is going to get burned from this and that is when they will understand that you don’t need to spend so much on such a software when you can get something for far less the cost and which does the same thing,” Ganatra said.

“It’s not going to be that simple so watch that space,” he smiled.

The train of thoughts in the other camp heads in a different direction. Khan is busy holding marketing conferences in Suva and Nadi, talking to around 15 companies and putting together proposals . Not to mention getting in Auckland Blues star player Carlos Spencer to incarnate the potential in PacificConnex and how a business could tap it.

The fundamental strength behind Khan’s aggressive marketing is his own experience and that of the PacificConnex team with SAP-based solutions. True the complexity thing has been tossed around but to Khan, it is really a state of mind.

“SAP is a business software. It is reasonably as simple or as complex as you want it to be but those are not software issues. They are management issues,” he reasoned.

Fiji, it seems, is ready for SAP. In fact, it has been long overdue , according to Khan. He believes the Fiji market is starving for quality world-class business solutions that reflect the technological advances already made in this industry.

But the might of SAP is only fully comprehended by those who have worked it into the landscape of a business and in doing so, have transformed that entity.

Described as fully-integrated, highly effective software that covers all vertical aspects of more than 22 different industries, SAP is being pushed here by Khan not just as a software for handling a business but a tool that may be used to ‘transform’ the business and take it to another level.

That, he believes, is where the market will ultimately be forced to make up its mind. Those wishing to transform are going to find PCX’s SAP product worth the investment while those wanting only to streamline and keep it simple will have to settle for something else.

Clearly, it is now up to the market to decide whether or not SAP is welcome or whether it will be written off again as a complex, daunting and expensive exercise that was never suitable here in the first place.

Both sides agree that only time will tell.

---

NOTE: This article was published in the Fiji Business Magazine as: Could SAP change the way we do business? Local software industry adopts a wait-and-see approach; pp 8,9, July 2004 edition.

Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.

***