Editor’s note: Syscon Solutions was launched in Hyderabad, India in 1996. Its ERP product, Syscon Cronus, is targeted for small and medium manufacturing enterprises. In 2006 it became one of the first ERP solutions to be offered in the SaaS/cloud model. We talked with co-founder and managing director S. Vijay Venkatesh about Syscon’s startup experiences and lessons learned. This article is brought to SandHill readers in partnership with ProductNation.
How did your company originate — what was the original vision?
Vijay Venkatesh: Having worked for 13 years with various midsize manufacturing companies, I thought of starting my own business and started a chemical trading company dealing with pharma and rubber chemicals and representing manufacturers from Tamil Nadu, Mumbai and Gujarat.
When the opportunity came to start Syscon with one of my old colleagues with two developers, I thought it would be something which was of my type. Added to this was the fact that IT was only afforded by big corporates; SMEs could not dream of it.
Our initial idea in 1996 was to develop a customized solution for manufacturing industries. As we started, I observed that we might end up doing the same thing differently for different people. This would leave us with several versions of codes, which might make the maintenance and upgrade impossible. With all the facts, we decided to go in for a product development and tell the customers to use what we have rather than asking them what they want. We shut our marketing department for a while and went for a small loan and working capital. There was no looking back.
Is there a story behind your company name?
Vijay Venkatesh: Syscon stands for “System Consulting” or “System Configuration.”
What are some of the challenges you’ve had that you didn’t anticipate? How did you resolve them?
Vijay Venkatesh: I always used to think, though there is a huge number of SMEs in the market, that the rate of customer acquisition is very slow. But now, instead of blaming the SMEs, I think that it is due to the fact that there are more failures than successes of ERP among SMEs in India.
It is the responsibility of the ERP vendor to bring in all the missing links to address this challenge. I learned that we needed to make our ERP product simple and also train our customers because SMEs are not computer savvy. I also recognized that SME CEOs have so many things to do that they cannot devote time to software product reviews. To address this challenge, we implement only the essential modules to start with and then scale them up step by step.
Please describe one of your company’s lessons learned and where it occurred in the time line of your product development.
Vijay Venkatesh: We have learned several important lessons of being a product company as opposed to an IT services company. First, instead of asking the customer what they want, we learned to tell them to use what we have. Next, we needed to make sure any new requirements made sense for larger target clients and make sure that we take time to bring those features carefully in to the product.
Also we learned that a software product company needs a complete ecosystem including sales, implementation, support and training, coupled with training partners, technology partners, hosting partners and industry associations.
How did you find your first customer? Did it take longer than you anticipated?
Vijay Venkatesh: Everest Organics Limited (EOL) became our first customer in 1999. I met the managing director and told him about our product and vision of being a long-term committed vendor for the SMEs. We gave several rounds of demos for EOL’s core team. After four months they released a purchase order for us.
At that time our product was not fully mature in several functionalities. We have done numerous amounts of customization (almost 60 percent) and made more than 250 visits over nine months for training and implementation. Since there was no Internet in those early days, the data transfer was happening through floppy discs on a daily basis.
The EOL office and factory works online now. We are proud to continue serving EOL today after 14 years!
With our experience of EOL and the product maturity of our ERP solution we are in a position to serve much bigger clients in the pharma segment. Some of the new pharma clients have seven manufacturing units. Our implementation now takes eight to 10 visits over three to four weeks compared to nine months with EOL. We also have started remote implementation for SMEs, which is very cost-effective and easy to manage.
What was your toughest moment since launching your company?
Vijay Venkatesh: There were many tough moments. Here are three that stand out and show how difficult the sales process can be for a startup.
A Hyderabad-based manufacturing company had been evaluating our ERP solution for seven to eight rounds. One fine evening, I met their top management team for a final discussion. Almost everything was finalized. They confirmed that the order would be ours. The next day when I went there to pick up the purchase order, I was surprised to learn that the order was given to a Chennai-based ERP company. The reason for the decision was that the Chennai company had 400 people and we were just six people. But in the end their solution was not fully implemented and the Chennai ERP company closed after four years.
In another case, one of the big steel industry companies based at Hyderabad was in the process of evaluating an ERP solution for over four months. They had zeroed down on two vendors and we were one of those. Their IT head wanted to visit our office facility. That day it was raining cats and dogs in Hyderabad. When he came to our office, our cellar was full of rainwater, which then caused a power shutdown in our office. We lost that order.
In another instance, our power line was disconnected. We got a call from a big Bangalore-based pharma company saying that their executive director wanted to visit our office for a demo of our ERP solution. We had to ask our neighbor for a power connection to run our computers for the demo. But later they chose another company’s ERP solution.
What is your top advice for first-time entrepreneurs or startup CEOs?
Vijay Venkatesh: First of all, the CEO needs to set an example for the entire team by his or her virtues. The CEO must develop a great and respectable culture in the organization. Cheap popularity does not run for a long time. Be nice when you have to be and tough when you have to be. Rules are very important and flexibility is equally important. Closely monitor systems and people to make sure that rules are not broken and flexibility is not misused.
It’s a good idea to start the company in a garage, meaning keep your overhead low until you generate revenues. But my advice is also to keep your overhead low even when you generate good revenues since you do not know when the next recession will hit you. Always keep your reserve tank full for the next eight to 12 months of fixed expense.
Another tip is to never rate your company based on its revenues. Instead, rate it by employee satisfaction levels. Only satisfied employees will give services that make satisfied customers, be responsible team players, put the organization’s interest above their own interests and become good future leaders.
This does not mean that you need to celebrate your employees all the time. Engage with them and involve them in the work, recognize their good work, allow them to make mistakes (that is the learning curve) and punish them when they repeat the same mistakes. Never allow politics and cynicism. It is the CEO’s responsibility to make sure that every employee is provided with the right orientation required for them to perform their jobs. Remember: for the best results, employees are responsible; for failures, the CEO is responsible.
Organizations are perpetual. The time span of the CEO in an organization will be limited. So the top responsibility of the CEO while managing and developing the organization is to develop the leaders. The culture is the essential thread within the organization that connects everyone to the common goal of the organization. The CEO needs to create, establish and transfer this very diligently, which makes the CEO dispensable.
Finally, my advice for startup CEOs is to be ready to work with people who are smarter than you. And it will be difficult to convince them to stick with you. But that is an important secret of success and growth.
What non-software business or social leader has most influenced your approach to your personal life or your career?
Vijay Venkatesh: I was truly inspired by Sri Nara Chandrababu Naidu, ex CM of Andhra Pradesh, for his planning, able administration (even a common man can feel the results on the streets), respect for professionals, setting an example by his actions, the amazing follow-up system he put in place, his political will in execution and his ability to earn respect by results, not by power or position.
S. Vijay Venkatesh is co-founder and managing director of Syscon Solutions Private Limited. He has 30 years of experience in IT and manufacturing. He used this domain expertise to co-found Syscon Solutions in 1996 and build its ERP product, Syscon Cronus, for SMEs. He serves as president of CAPSULE (Consortium of Service Providers for Upgradation of Enterprise), a non-profit association of service providers in various verticals enabling SMEs to improve performance and achieve sustainable growth.
Kathleen Goolsby is managing editor of SandHill.com.