'Technology is the key to documentation' an interview with Veqar Ul Islam, CEO Jaffer Business Systems (JBS)

Jaffer Brothers is one of the first businesses incorporated in Pakistan right after independence. Today the Jaffer group has several companies under its umbrella with Jaffer Business Systems being its IT arm. BR Research sat down with the CEO of the company to talk about the IT landscape in Pakistan, where Jaffer Business stands and where it intends to go in the technology world. Veqar started his career with Jaffer Brothers in 1985. His career spans over 27 years working with different multinationals here and abroad including Comptel Corporation, Nokia Corporation, Nokia Siemens Networks and NCR Corporation at senior executive positions. He came back full circle back to Jaffer Brothers in 2014 as CEO of Jaffer Business Systems. Following are edited excerpts.

BR Research: How has Jaffer Systems been doing the past few years since you joined? Give us a little history.

Veqar Ul Islam: Let me start by telling you that there are only two local companies in Pakistan which have a history of over 40 years, and JBS is one of them. It is a sad reality of a country that has such high potential in technology and there are only two IT companies that have survived that long. In 2014, I was called in by the management to take over the control of the company. The management wanted me to turn it around as the business had become stagnant for a number of years.

The first thing that happens in any turnaround is to evaluate where you are, what your current baseline is-i.e. what the revenue is and do the costs justify that, and if they do not, then the business will have to take actions on the cost so it can become sustainable. We restructured the business. It took us over a year to fix the basics of the company. Then we launched a framework which continues to develop to date.

That framework is around growth, excellence, and innovation. Before I joined, we were a typical IT infrastructure company where we used to sell IT products and services. With the new framework, we were considering growth from the perspective of where we are headed. For an IT company, it is important to evaluate the existing portfolio and its relevance in the upcoming future. The industry is changing incredibly fast, and IT companies need to evolve before they become irrelevant and are wiped out. With financial growth, we were also looking at growing our market share with our portfolio. The second part of the framework was excellence and we defined it as "a bit early". Whatever we will do, we will do a bit early. As an example, if we have promised a 30-day delivery to a customer, we will deliver it in 29 days. This changed the company culture completely.

The third thing we did the innovation. We set up an innovation unit that was chartered to do three things: one, add value to existing products. The products that we sell come directly from the software companies and we sell them. This made us a trading company, rather than an IT company. In order to become an IT company, customers must buy the original product from us and get a value-add (an app, training, few extra services, points that they can accrue and utilize later etc.) This differentiated us from other suppliers. Second, getting behind startups through acquisitions. We wanted to become a part of the start-up ecosystem, and not just financially. It is a common misconception that startups basically need money, when in fact they need a business model and a corporate structure to make them work. Third task of the innovation unit was product development. This is where we would develop original products around which we could build an entire business model.

BRR: Tell us about the progress within the innovation unit since the company gave them these charters. And how has growth over the past five years been within the company since you joined?

VUL: For products that we sell, there has to be some element of value-add that customers get from us. Our account managers have already started this practice and we have a value-add portfolio to choose from. We have also already acquired a data analytics company called BlueTech Consulting and they have grown tremendously from a one-person company to nearly 70 people with major projects with prominent banks, telcos etc. They are also working in South Africa and just won projects in Qatar. The model for acquisition is that the owner of the company will run the company himself and we provide the back-end support. The owner remains the single largest equity holder, he runs it but he follows the corporate structure we have for governance. The third exciting charter was product development and we have done that as well. We essentially came up with an Enterprise Resource Planning (ERP) system for the households in the form of the app Hysab Kytab.

Overall, we spent the first two years stabilizing and restructuring. Within the past three or so years, as a company we have grown 250 percent. Our new framework is working. We evaluated our excellence performance and found that before, we were meeting delivery times for our products and services only 22 percent of the time. Now we are 83 percent of the times delivering earlier. In innovation, as I explained earlier, we are acquiring and developing new apps.

BRR: What gap in the market was you seeing that made you launch Hysab Kytab. What does it ultimately aim to do?

VUL: Just like a business that needs an ERP system to function on a daily basis, a household also needs a system of budgeting, planning, recording, tracking and monitoring. Running a household is not very dissimilar to running a business. But we usually run this home system in our heads, or maybe in paper diaries, or perhaps, the savvier household managers do this on spreadsheets on their computer. Given its importance, and everyday use, it is surprising that nobody in this country thought of digitizing this entire experience. Within this app, users can record and track their income and transactions, they can see trends, and they can budget accordingly to reach different financial targets; they can identify areas where they might be spending too much, where they could save etc.

It is not a novel idea because there are other apps in the market as well globally. But we have added some features that are unique to it. As we speak, it has already had 300,000+ downloads spread across 160 countries (80% in Pakistan) and has already recorded 5 million+ transactions. The app is being used in 104 countries without any marketing push from our side. This same app can also be modeled for small and medium enterprises which was originally the idea behind this app. Now that the new government is documenting the economy, specially traders and SMEs, they don't have a choice. And to document, they will need technology because the existing paper-based systems will not work.

BRR: What is the monetizing model on the app?

VUL: There are several ways of monetizing. There is a global trend that is picking up right now where banks are offering this facility that whatever transaction the customer makes at the bank; the budget would automatically get updated. Possibly 5-10 percent of the bank globally have already gone in this direction. Customers can integrate the app with the banks. We are getting great traction in Pakistan and outside already. That's one model. The other is where we are advertising and hosting or integrating e-commerce players on the app which users can directly avail from the app.

BRR: From the users' perspective, do you think it could be distracting for users who are trying to budget their household expenditure-especially if they are trying to save-to be told about e-commerce deals/campaigns they could buy on the app. Do you think perhaps you are doing too much with the app?

VUL: That is in fact, our USP. First, there is flexibility on the user perspective. They don't have to go through these e-commerce campaigns on the app. Customers can simply focus on the budgeting part. But other users may appreciate the features as now they can buy and budget at the same time. We strongly believe that as a customer starts using the app, he will automatically want to have that connection. Why? Suppose you ordered something on Foodpanda. Now every time you order from Foodpanda and want to budget that, you will have to open Hysab Kytab and plug that expenditure in. If you are ordering twice a week, the mere effort of manually plugging the numbers is a lot. Alternatively, whenever you order from Foodpanda, our app automatically updates the food budget. We want to eliminate data entry as much as we can. In a cash-based society, it is a tough ask.

In essence, the app can identify areas where a consumer might be spending a lot, and could save by incorporating one of our campaign partnerships. And these offers are much targeted because the app is using your user history to determine which campaigns can be offered to you. As an example, suppose a consumer is spending Rs18,000 on fuel. The app could direct that consumer to a campaign which offers a discounted deal where the consumer saves say, Rs6,000 on fuel, which could go into their savings, and help in meeting one of their saving goals. The apps allow the consumers to avail deals that ultimately go into their savings which is win-win.

As we move ahead, we would also want that users can calculate their tax returns through this app and you can automatically move all the records to the FBR income tax filing app. Some use cases we know, but as the app is used, we will come up with more areas where the app could be used. We are capturing the core of the consumer. In the physical world, that core starts at the income where all decisions and actions are subsequently made.

BRR: If you are able to expand the reach of this app, you will have accumulated a tremendous amount of consumer level data about expenditure and spending behaviours of households. Such data does not exist in Pakistan save for the national level surveys that Pakistan Bureau of Statistics does. This can be a treasure trove. How do you intend on protecting this data?

VUL: Yes, the opportunities are plenty because in cash based economy like Pakistan, nobody knows where consumers are spending cash. In terms of protection, it is as secure today as anything else in this world. It is also as insecure as anything else in the world. It is secure because we are using the cloud services of the top companies of the world which follow global best practices. It is also insecure because today if Microsoft is asking by the US government through some enactment of the law to release data, Microsoft will hand over that data which would include our data as well. That is the same for Apple, Facebook, or WhatsApp. We cannot control this. In terms of Pakistani law, data protection laws are in their infancy. We try to maintain our practices to global standards.