As technology entrepreneurs go, Kamande Muiruri ranks at the top.
In the mid-1990s, he was among the flag bearers of the Internet revolution in Kenya at Africa Online alongside Ayisi Makatiani and Amolo Ng’weno.
Harping on a big dream of how Internet would revolutionise Kenya, he was among the first employees of the start-up that would come to symbolise the aspirations of an emerging class of entrepreneurs in Africa. Africa Online and its founders was feted around the world in publications ranging from Time, Fortune, Red Herring and even the usually sober Economist.
Even as the company acquired celebrity, Mr Muiruri shunned the limelight to fix the nuts and bolts of expanding the business across the continent, rising to the position of CEO.
Now nearly five years since he parted company with African Lakes, the London based firm that eventually acquired Africa Online, Mr Muiruri is crafting a comeback with a tech start-up that plans to bet on the next big thing on the Internet; outsourced web-based applications.
Mr Muiruri, who has been running a successful IT consultancy named Digital Networks, serving the private sector, government and donors has for nearly once a year been developing and testing a web-based software that will allow small and medium-sized enterprises (SMEs) to outsource their accounting processes for their businesses to this start-up.
He says the business idea struck him after his own struggles to come up with an accounting software that was customized to his business. This then piqued his curiosity to find out how much Kenyans utilised computer technology to run their businesses.
“It was shocking, I had spent nearly a decade of my life trying to get Africa to use the Internet and what I was discovering was that though many small business had computers and access to the Internet, they were only using 10 per cent of the capacity,” he says.
“On the Internet they were only visiting international sites for instance to send e-mails and little effort was being used for e-commerce.”
He says that lack of interest in business technology as a tool to manage small businesses stemmed from software products that are not suited for the Kenyan market and then the fact that most of these firms were relying on freelance accountants who did not understand accounting software well.
The problem extended to the international levels because while firms like Microsoft, Intuit, Great Plains, SAP and Oracle have attempted to meet the accounting software needs for the small businesses, they do not have a strong focus on small businesses in Africa.
This is the gap that Digital Networks wants to bridge. He believes that with the government’s strong focus on tax compliance, SMEs will soon figure out that using technology to run a successful business is an easier way of doing things than running away from the taxman.
He also thinks that the government’s and private sector’s multi-billion shilling investment in fibre optic cable and various IT initiatives will elevate the use of business technology over the Internet.
As outsourcing—a key pillar of Vision 2030—gains momentum, SME will be doing most of the business processes on the Internet ranging from managing inventory, debtors, producing financial statements to filing taxes.
Digital Networks claims to fill this gap with an Internet based accounting system. Mr Kamande says that Digital Networks will also provide a team of accountants and IT support staff to help businesses that sign on work smoothly with the technology. “There are far too many businesses who rely on outside help these days. The lack of comprehensive ICT support to businesses is shocking,” he said.
Kenya’s rapidly changing business environment is creating new business models for SMEs, driving them to seek innovative ways to cut costs while boosting revenues.
Technology, and more specifically IT services, is the tool that many will use to achieve that goal. Kenyan companies are expected to start outsourcing more of their business processes in line with global trends.
“There is pent up demand for companies who need reliable and trustworthy advice on key processes such as accounting and IT,” said Mr Muiruri.
His firm joins a growing field of companies in the country who are keen to take up the new business model.
AccessKenya, the country’s first listed ICT company, hopes to start a specialized IT services arm in the near future. Existing companies such as Openview Systems are realigning their focus to meet coming demand from the new field.
The SME sector is slated to become a major player in the development of the national economy in coming years, as more Kenyans upgrade their jua kali enterprises.
Already, SMEs contribute an estimated 18.4 per cent of the country’s gross domestic product and employs over 28 per cent of the population.
The Economic Recovery Strategy estimates that 88 per cent of new jobs arising in the country will be in the SME sector.
“Modern economies run on technology. The economy grows if processes are speeded up and streamlined. Creating that solution for SMEs will translate to larger gains for the economy” said Mr Muiruri.
Traditionally, the SME sector has being ignored by most technology providers.
Mr Muiruri’s company hopes to meet that gap and is set to become active after a two year search for the right mix of services to offer the segment.
Driving the interest in SMEs are changes in the way small and medium enterprises do business on a day to day basis.
That is forcing a shift in the way they manage their processes, aping the growing automation of key functions already been practised by larger firms.
But the SME sector continues to suffer from a lack of unified service provision from key business suppliers.
Most providers tend to focus on the more lucrative and financially stable top tier companies.
Smaller companies are often forced to use solutions created for larger companies which do not provide value once purchased.
“Normally, companies would have to pay for an international consultant to come implement solutions,” said Henry Njoroge, CEO of Openview.
Mr Njoroge left his job as managing director of UUNET to head a smaller IT services company.
“If the customers chose local firms, they do not have to incur these costs realizing savings of between 25-30 per cent.”
Digital Networks promises to supply packages at just Sh25,000 a month, providing services to companies for a fraction of what they would pay if they hired international consultants or employed local experts.
According to research from international industry analyst IDC, more smaller organisations will outsource narrow functions like payroll, billing and data entry.
While some organisations outsource complete operations, the most commonly outsourced are information technology and business process outsourcing.
“I had the idea that small firms could be served better by employing locally adapted solutions,” said Mr Muiruri. His 10 man team will supply specialised IT services such as accountancy and IT support for a monthly service fee.
So confident is Mr Muiruri of the growth of the sector that he projects his staffing needs to include 41 people by the end of the year, and 100 people by the end of next year.
“This is the business of the future,” he said. “It’s no coincidence that IBM and Accenture started out in the same line.”
SOurce: Business Daily