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Having consolidated its product portfolio and made its mark in the emerging markets, i-Flex is now ready for a splash in the US market. By Pooja Garg
The message? Having spent the past decade consolidating its products business, i-Flex was now gearing up for the big push. While services would continue to contribute their share to the topline, it was products that would fetch the big buck. Says Rajesh Hukku, Chairman, i-Flex: "Software services offer a linear model of growth---one cannot keep doubling people and infrastructure every year. Profitability gets eroded after a while." Adds R. Ravisankar, CEO (International Operations & Technology), i-Flex: "With China and Philippines opening up, we did not see cost-benefit as a long-term advantage (in services)." If almost half of the company's revenues of Rs 206 crore (1999-2000) comes from products, it is because of its clear focus on the banking and financial services market. For one, there were no big names in the market to take on---an advantage which the other Chennai-based ERP product company, Ramco Systems, did not have. Besides, having Citicorp for parent helped the company develop strong domain knowledge in the chosen niche. Not surprisingly, its Microbanker software was rated as No. 1 corporate banking product by International Banking Systems, UK, in 1995. Then, in 1997, its back-office automation product, Flexicube, was adjudged No. 2 by International Banking Systems, UK. "We decided to stay away from legacy systems and Y2K work and into newer technologies---workflow, data warehousing, e-commerce, and Java," says Ravisankar. What also worked for i-Flex was the fact that it decided to target markets that had low-entry barriers like Africa, South-East Asia, and the Middle East. The initial set of satisfied customers helped the company spread the good word around. Of course, Citi's image as a technology-savvy bank rubbed on to i-Flex. The result: nearly 70 per cent of its annual revenues comes from repeat orders. Says Satish Naralkar, Executive Director, nse.it, a product and services customer: "We have known (I-Flex) since 1997, when they did datawarehousing for us. In Flexcube, they have an international product." With happy references to cite, i-Flex now plans to launch its products in the US, where it already has customers for its services business. "Advanced markets like the US and Japan account for 80 per cent of total IT spend by financial institutions," says Ravisankar. Even the home market of India is waiting to be tapped. At $1 million now, the local market accounts for a bare 2 per cent of i-Flex's revenue. " With banks becoming customer-friendly, there is a growing need for connectivity within the bank and, thus, a growing market for us," says Deepak Ghaisas, i-Flex's CEO, who took over in June. Proceeds from the planned IPO are to be used to build i-Flex's marketing infrastructure abroad and acquire smaller software products companies. That apart, a few strategic alliances are on the anvil. The one with HDFC Bank will tap the application service providers (ASP) market, and another with the nse.it will launch a brokers' plaza. Says Ravisankar: "Our vision is to be a global company with software development centre in India, rather than an Indian company with offices abroad." While i-Flex may not have to worry too much about competition on the product front, there are plenty of rivals in services. But, then, that's just the kind of inflexion point it wants to rocket into a different trajectory. |
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It's
been a busy year at i-Flex. First, the Citicorp subsidiary --- which
specialises in banking and financial services software---revamped key
executive positions in June this year. Then, early this year, the
11-year-old Citicorp Information Technologies Industries picked up a 26
per cent stake in Command International Software, a subsidiary of the
US-based, for a toehold in the insurance software market. Finally, in
September, things fell into perspective when i-Flex announced that it
would go public to mop up about Rs 1,000 crore from either the Bombay
Stock Exchange or Nasdaq, or both.