Module 2.6 The Amest Santim Systems PLC Experience

Duration

1:15hrs

Outlook

Registered Name: Amest Santim Systems PLC Ltd.

Founded: 2005

Staff Strength: 5

Country: Ethiopia

Website: http://www.amestsantim.com

Type of business: FOSS training, software development, web hosting.

Synopsis

Amest Santim Systems plc is an Ethiopian based software development and web hosting company providing a host of services including domain name registration, networking, maintenance, IT consulting, outsourcing, etc. The company currently has five, full-time staff and realizes 90% of it's revenue from web development, 7% web hosting and 3% other services.

Introduction

In 2005, two Ethiopian IT specialists armed with a starting capital of about US$ 200 and few home based PCs came together to form Amest Santim Systems plc. For its founders, the biggest motivation for going into the open source business is the “not re-inventing the wheel” idea. Most of the open source tools the founders needed for software and website development are freely available for download, use and modification. The managing director, Nahom Tamerat Endale, commented that, these tools “can be completely trusted”. The open source geek culture in many cases drives business to focus on improving existing tools and software instead of starting new projects. But for Amest Santim Systems plc., the “not re-inventing the wheel” idea has added advantages for the company; “so in the end, the effort you need to put in to that project would be 1/10 of what you would have to give if you were to make [the tool] yourself and therefore, we choose [open source tools] whenever it’s applicable”.

Ethiopia is one of the countries endowed with private colleges and the government has also increased the number of its universities almost ten fold, and as a result, there are plenty of IT certificated graduates. However, Amest Santim Systems experience in the skill labour market revealed that only a very tiny fraction of the graduates are qualified (or promising) enough to work in IT and, especially in open source. “The few that one can find with great trouble know what they are worth and will not stay with one company for long, always looking for the better deal…. Or they themselves end up in the private sector by opening up their own shop…”

The two founders of Amest Santim Systems approach to startup capital was to sort of make the business pay for it self. Originally, the two, now the general managing director and the other the technical manager, both used their computers to work on projects right out of their own homes. After the first six months, they took the money earned during that period and rented and furnished what is currently the office complex of the company. Furthermore, the two founders also brought in their own home computers. A year later, again with the earned money; they bought more computers and hired new employees and so on. Reflecting on this experience, the general manager gave this account ... “So we can say that we started with pretty much nothing. In fact the exact figure was 2000 ETB (approximately US$ 200) for license processing and other costs that we had when we launched the business”.

FOSS Business focus

The managing director of Amest Santim Systems plc. advise to someone building business around open source software in Africa in general, and Ethiopia in particular is that;

Make your products and services affordable.
Make sure that whatever you are proposing does fit the purpose and that the client is really going to use it.
Customize as much of the software as you can, involving your customers in the process.
Be honest about your produce, what it can do and what it can’t do. Don’t promise what you can’t deliver or what the software can’t do.
Don’t always try to sell customers software that you’ve gotten for free even when you have customized it… be creative in finding ways to earn your keep. Try to earn revenue from maintenance of the software, feature addition.
Be creative! Be flexible!

Lesson learned

Amest Santim Systems plc. has learnt from other companies doing other businesses in Ethiopian and the environs, overcome some unique challenges associated with doing business in open source and see its revenue soar amidst the current economic downturns. There is a lot to be learnt from the company's strategies in attracting and building a sustainable clientele, hiring competent staff, harnessing one's own income as a start-up capital.

Entry barriers

The company encountered a wide variety of challenges and problems. First and foremost is the “building a client base” challenge. Already there were a couple of well known and established IT firms in Ethiopia when the company was started in 2005. These companies had done work for many of the big clients (such as government offices and NGOs) and therefore they already had leeway with them. Thus, any newcomer may have to overcome huge challenges and compete with the established business environment. But Amest Santim Systems persevered, studied the IT market and came up with some possible solutions:

reduce the price of their products and services and even in one instance, the company do the job for free,
boldly participate in public bids for projects, presenting the company professionally (which is something most others seem not to be able to do…) etc.

Once the company had done a couple of prestigious projects, clients began to come to Amest Santim Systems plc. instead of the company soliciting work from clients.

Another problem the company faced was (and to a large extent, still is) the unavailability of skilled (workable) man power.

Conclusion

Even though Amest Santim Systems plc may have followed these advises in its operation and in dealing with customers, doing business is not without its difficulties, especially in attracting customers, training, hiring staff, getting paid for the services the company offers.

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