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An "imported is better" mentality
Another Penang-based software house making inroads into the local market is KarenSoft Solutions Sdn Bhd, which grew out of Chee Chong Hwa's accounting practice.
Chee began dabbling with the software to speed up his work at a Taiwanese company in Prai, which resulted in a DOS-based fixed asset management solution. Word got around of its successful implementation and soon Chee had a growing customer base.
"In the early days, I was often asked, 'what will happen to us if you cross a street and get knocked down by a bus?' I used to be annoyed but it was a lesson in the importance of continuity in a potential customer's mind," he says. That led to the birth of the KarenSoft brand in 1991; Karen being an acronym for Killer Applications which are Robust, Elegant and Network-ready.
KarenSoft currently has a host of suite and standalone products including enterprise resource planning (ERP), manufacturing resource planning (MRP) and financial solutions, hotel management and healthcare information systems, and an integrated Web browser.
Chee says the local software market is stifled by the deep-rooted "imported is better" mentality.
"There is a clear-cut preference for foreign-branded software whenever the cost exceeds RM200,000 (US$52,600). The decision-makers, particularly the non-IT literate management, may want to play safe and avoid any risk by choosing expensive foreign software which may or may not be appropriate for their needs.
"If the project fails then they would not be held accountable for choosing a lesser-known brand. The other fear is that local software outfits may fold and may not be able to provide support and future upgrades," he notes.
Chee says that unlike their foreign counterparts, local software companies have limited or no budget to spend on marketing, advertising, promotion, brochures and attractive packaging.
KarenSoft grew purely from word-of-mouth and referrals. But the products were a cost-effective alternative and obviously useful as they currently have 200 customers from small to medium-sized enterprises.
"In retrospect, my biggest regret was not concentrating on marketing. Fortunately, with a pending IPO (initial public offering) and additional investments, this problem is now being addressed and we are expecting exponential growth in three to five years," he adds.
The company currently employs six programmers and is projecting revenues of RM1.2 million this year, RM5 million in 2000, and RM10 million in 2001.
Although KarenSoft was unable to raise any grants, it did get a five-year tax break for up to 70 percent of sales profits for its MRP2 product, and managed to secure a banking facility in 1998.
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