Spotlight

More muscle to flex

Now that it has been taken over by Oracle, i-flex should do better in the US market, says Sushma Naik.

Dissatisfaction is a great motivator for change. This was just one of the reasons that led to the formation of a company that is today known as i-flex solutions. “We had worked with other companies and were beginning to feel like we were programmers on hire. There was no value addition, either for the customer or to the employee, and also no growth. As a change from what software companies were doing at that time, we wanted to add significance to what our customers got,” says R Ravisankar, CEO, International Operations & Business Development, i-flex Solutions. The story began in 1989 when i-flex commenced operations in India as Citicorp Information Technology Industries, developing software products based on Citibank’s mainframe-based corporate banking product. The company had a simple strategy in place—to enable financial institutions worldwide by investing in domain expertise and product.

Lone product ranger

The Indian software industry had a good reputation when i-flex entered the picture. However, Indian software companies were not looked on for products. “In a way, we were suffering from the success of an Indian services company. We did not pitch for low cost, which was a different take in the market, because made by Indians was popular and not made in India,” recalls Ravisankar. Despite that, the company aimed to be a leading specialist provider for the BFSI vertical. “Aiming to be a specialist in the industry, our products are designed around the needs of the business, and we also work closely with clients to develop customised modules,” Ravisankar adds.

From day one, i-flex decided to start on a global delivery model and strategic local partnerships. It was important to build a global brand as opposed to low cost which was the common selling point other companies adopted. With domain expertise in banking, the choice of the industry vertical was hardly in debate. Worldwide, BFSI is the biggest consumer accounting for nearly 40 percent of the global software consumption.

When Rajesh Hukku, Chairman & Managing Director, i-flex, and his team aimed high to be profitable, from day one they formulated a realistic market strategy. They defined the markets of South East Asia, Africa, Middle East and some parts of Latin America as low-hanging fruits. “These were markets below the horizon of large players. It gave the big guys no dollar advantage,” says Ravisankar. Yet, the long-term plan was not to be restricted to such markets. The focus was to move on to financial institutions in the US, the UK and Japan. “Of the company’s revenues, the United States accounts for 40 percent, while Europe 30 percent. We had the opportunity to present our work in other markets and have successfully made the transition to bigger markets,” comments Ravisankar.

With Oracle entering the market, US banks will give i-flex a closer look, now that Citigroup is no longer in the picture.

Products are its pride

i-flex’ portfolio of offerings comprises Flexcube, a product suite for retail, consumer, corporate, investment and Internet banking, asset management and investor servicing. Flexcube has been ranked world’s no. 1 selling banking solution for three consecutive years—2002, 2003 and 2004—by UK-based International Banking Systems. It is today more than a banking solution, encompassing an entire suite of solutions in the sphere of business intelligence, CRM, e-commerce, data warehousing, brokerage and insurance.

Apart from Flexcube, Reveleus and Daybreak are some other products that are gaining popularity. Reveleus, the metadata-driven information management infrastructure, coupled with a suite of integrated analytical applications, is a business intelligence and analytics solution. The company is betting on this solution in the risk and compliance arena. Daybreak is a lending system that automates all aspects of financing for the consumer-lending industry, and is designed to handle specialised lending requirements, enabling lending institutions to create new revenue streams and increase profits.

Risk management, anti-money laundering and regulations such as SOX are complex yet essential in the banking industry. “Though anti-money laundering is still relatively small, it is the fastest growing. We have recognised the importance of Basel II for which we have a special offering. The banking industry is competitive, regulations are tough and customer expectations high,” says Ravisankar stressing the importance of compliance.

i-flex’ Consulting and System Integration group provides business and technology solutions that enable financial services enterprises to create new business models. The group provides business and IT strategy consulting, business and technology consulting, and process and quality consulting. i-flex’ Technology Deployment & Management Services group designs, develops, deploys and manages IT infrastructure for financial institutions. Larger systems have different products that have been invested in without a holistic view. “These legacy systems cannot be simply dumped. We never sold ourselves as a product company; we are focussed on our entire solutions. We are perceived to be a product-driven company, but the share of revenue from products and services is 50:50,” affirms Ravisankar.

Further, it has a strategic alliance with IBM (which runs mainframes for tier 1 banks). Its other partners include Microsoft, Intel and HP among others. So, will this give rise to a scenario wherein Oracle products will be favoured? Ravisankar assures that it is the customer’s need that will eventually dictate a deployment, and the companies that they partner with can be rest assured.

Oracle impetus

What does the Oracle deal mean to i-flex? According to Hukku, the branding that the company received for i-flex ever since the deal was struck has been more than what it received over the last decade or so. He explains, “We are just a $261-million company, but I believe we have been able to change the way Indian software companies work.”

Oracle’s strength is that nine out of top ten banks in the world are its clients, although its products are deployed for database and ERP. Oracle will improve its reach in this market leveraging i-flex’ products and services. Further, since Oracle is one of the world’s largest software firms, it is a potential client for i-flex itself.

i-flex has had non- exclusive partnerships with Oracle, IBM and Hewlett-Packard, and is doing joint marketing and development with IBM. But the Oracle alliance will now be more equal than others.

i-flex aims to be an MNC that has originated in India, but with a local flavour in the regions it operates. The company’s sales presence will be local to the market it caters. It has support for multiple languages in products and training—Japanese, German and Portuguese to name a few.

i-flex aims to achieve a strong presence in Brazil, India, Russia and China.

Hukku says, “We will continue our working relationship with Oracle, and work on next-generation projects. This will be done through a committee with people from both sides, but both will maintain their independence.” It remains to be seen if in the long run, Oracle decides to change its mind about swallowing India’s star product company.

We are just a $261-million company, but I believe we have been able to change the way Indian software companies work Rajesh Hukku Chairman & Managing Director i-flex	We never sold ourselves as a product company; we focussed on entire solutions R Ravisankar CEO International Operations & Business Development i-flex

On the software side, the move from point solutions to complete process capability is enabling it to consciously move to developed markets. The company plans to move its focus to tier-1 or -2 customers. Other plans on the cards include increasing its geographical presence in areas of software, services and consulting. It intends to pursue the direct sales model to a partner and alliance model; this may not be mutually exclusive, as in China it has an equally strong direct presence through their subsidiary there.

Apart from the product play, i-flex has added a BPO piece to its portfolio. It acquired Equinox in 2004, a company that provides platform-based services for the US mortgage market. It plans to expand this business, and play in the high-end transaction processing and analytics part.

There are issues that need to be considered before the champagne bottle is uncorked. First, there is a need for it to balance Citi, with which it has just signed a five-year deal, and happens to have got a preferred vendor status. The other is its relationship with IBM. The giant competes in the same space as Oracle—database and middleware. Company sources say that this will not be a factor, and it is the customer who will ultimately dictate his needs, it is an aspect that cannot be brushed over.

With Oracle coming into the picture, apart from taking its core banking products to tier 1 banks in the lucrative US market, it can look to sell Flexcube on Oracle databases. The company has targeted the $1-billion revenue mark and with Oracle backing it, it has a good chance of achieving it.

sushma@expresscomputeronline.com