24 October 2016
Locally developed software adapts better to local situations. Some also allow customization to be done easily and at a low cost. Photo: HKEJ
Locally developed software adapts better to local situations. Some also allow customization to be done easily and at a low cost. Photo: HKEJ

Why locally developed software can better meet SME needs

Small and medium-scale enterprises (SMEs) often have to make every dollar count.

But even for those relatively rich in resources, paying top dollar for foreign-branded software may not always be the optimal solution.

The price of software systems typically consists of licensing fee and modification charges, with the latter constituting 40 percent of the total cost.

Take logistics as example. When a company buys a logistics software package from major overseas brands, easily it may have to pay around HK$2-3 million and still it may not get what it really wants.

“Overseas software systems are usually designed based on warehouse situations abroad,” says Spencer Yung, chief executive of CAS Logistics Ltd. “They are far bigger and can accommodate a couple of trucks operating at the same time.” 

But warehouses in Hong Kong are usually much smaller.

Imported software can also be less flexible.

Each company has its unique workflow preferences. It can be as specific as whether a signature is required when goods are received and delivered, or whether goods have to be bar-coded before they are put on shelves.

Meanwhile, Hong Kong warehousing firms usually hold goods for their clients.

Let’s say a company has five clients, and each one of them may ask for an inventory statement in its own unique format.

Modifications for such workflow and statement format details can be costly.

But Yung’s firm has designed a ProLIS system that gives clients DIY tools to customize the system, hence saving a lot of money.

ProLIS costs about one tenth of a comparable imported system, Yung said. That is how “localization” benefits users.

SMEs also come in a wide range of sizes, staff numbers and financial strength. To fit smaller budgets, ProLIS allows clients to pay by subscription—HK$300 per user per month. This way it is more flexible and initial investment is much lower.

When asked what are the three major concerns of SMEs when investing in software, Yung said money, after sales service and flexibility.

Local vendors are sometimes at a disadvantage when it comes to after-sales services, not because they are bad but because customers can be skeptical.

Many local IT firms are quite small, and possibly young too.

“A client’s worst nightmare is their software system supplier suddenly goes belly up and they cannot retrieve their important business data,” Yung says.

CAS is no exception. It was set up in 2011 and now employs a total of 12 employees.

“Why should we trust you?” is a common challenge Yung faces.

But in fact a lot of these startups are very creative and competitive.

CAS solves this credibility issue by hooking up with large IT suppliers such as Hong Kong Telecom and Towngas Telecommunications.

As a logistics software partner of HKT’s cloud office plan, CAS can leverage on HKT’s recognition of its product quality.

The biggest advantage is that HKT has a devoted sales team to source clients. They will pick the most promising ones before bringing in CAS staff to explain the details.

When a contact is signed, the client’s counterparty is these big boys. CAS gets a revenue share.

Clients prefer to directly deal with big firms because they often need more than one IT service, like on top of logistics, they may also need computer security backup and phone service, and related hardware.

At the same time, they don’t have to worry about whether the system supplier will survive over the long run.

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EJ Insight writer

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