Interview: Jonas Bogoshi, Gijima CEO

Jonas Bogoshi, Gijima CEO
“…the product side suffered, and in some cases had quite a severe impact on the business”

Gijima recently announced increased profits for the year to end June 2010 in spite of challenging conditions, how did you achieve this?

Jonas Bogoshi: We focus on high margin business as a company. When you look at the composition of our revenue, most of it comes from services business rather than product. Our services business has grown from 80% of revenue to about 85%. Secondly, we also focus on annuity business; we make sure we have those long term contracts. The last one which we have been focussing on in the last 18 months has to do with very large, complex system integration projects- these are high margin projects, very complex with high risk.

Gijima also reported a 2.4% decline in revenue for which you were quoted as saying “there were specific reasons”. Could you please expand on these reasons?

Jonas Bogoshi: There are 2 main reasons. Firstly- the IT market in the last 18-24 months was subdued. IT expenditure has been depressed over time and to the extent that we were exposed to product business, that part of the business suffered, in particular our unified communications business. Secondly, it has to do with our Home Affairs contract. We’ve got a dispute with our client and we decided that because of the uncertainty of this issue, we must take a view that is very conservative, and that had an effect on both revenue and profits.

Have you seen growth on the services side?

Jonas Bogoshi: We saw growth on the services side of the business, the product side suffered and in some cases had quite a severe impact on the business, because it was tough… our clients did not spend as much as we expected them to. There is an upswing now but it’s much slower than we expected.

Gijima has been shielded from adverse market conditions by focusing on annuity business. Was this a deliberate strategy you adopted in anticipation of a downturn?

Jonas Bogoshi: It has been a long term strategy- in the last 3 years it has been our focus. Once off product business is not the focus for us. When you look at product business, margins are in the region of 3% and if you are very lucky you get to 12%, that’s not the business we want.
Also, we focus on complex, long term projects where the competition is not as severe, because people need to have skills and competence to compete with us, but if you focus on product you have so much competition. Yes, we sell products in some areas there’s no doubt about it, sometimes because that’s the nature of the business- if you need CISCO equipment we sell that- in some cases just to defend our customer. If you don’t allow other people to come in and sell product, then they cannot go in and start building relationships, so it’s a defensive strategy.

Gijima is a major player in mining technologies, can you tell us how you came to dominate this space?

Jonas Bogoshi: These are applications that enable mining houses to optimize the management of mines in general. Our system actually comes from the mining companies themselves, at one stage it used to belong to a particular mining house and we bought it a long time ago.
In South Africa we have about 80% market share in this area, and around the world we are number 4.
We have just launched MineRP, which is an ERP system for mines. ERP is an end-to-end process in a typical enterprise- it is typically an integration of different systems. In the mining industry you’ve got a number of different systems and what we are doing is we are replacing them with one system.

Have you taken this Mining solution further into Africa?

Jonas Bogoshi: Around Africa we’ve deployed our mining technology in Ghana, in Namibia we do work for Rio Tinto, Zambia and Zimbabwe- so it’s well spread.

Do you have plans to take Gijima further into Africa through strategic partnerships or otherwise?

Jonas Bogoshi: Firstly we are internationalising our mining technologies. When you look at Africa in particular, part of our revenue comes from the continent because we provide support to our multinational clients such as ABSA, and as they extend their footprint around Africa we follow them.
Also, some key solutions such as border control and identity management systems are required across the continent. We are already in talks with a number of countries- looking at how they can secure their borders. Currently Malawi, Zambia and Uganda have shown interest. We also had a delegation from Nigeria who have been in discussions with us.

You noted in a statement that South Africa has been relatively slow to adopt cloud computing. In your opinion, what is responsible for this?

Jonas Bogoshi: In general we have been slightly behind the curve. It is partly because the security issue hasn’t been clearly defined and CIOs are still a bit uncomfortable. It is also about the infrastructure, whether the network is ready. Plus I think we are going in steps, the private cloud option first before the public cloud.

What would you be doing if you were not CEO?

Jonas Bogoshi: I have no idea but I’ve always had a passion for being a lecturer, so maybe, someday I will want to be a lecturer in Mathematics. If I was in a completely different field that is.