Spotlight

Breaking out of the mould

Four Soft Limited employs both organic and inorganic methods in its quest for growth. By Tanu Talwar

Four Soft Limited (4S) is a leading provider of software products and IT consulting services offering tailor made solutions for the transportation, logistics, freight forwarding and supply chain management. Established in 1999, the company is committed to ride the technology wave and simplify business rules by resolving the complexities of supply chain management through offering centralised Web-based solutions. Founded by Srikanth Palem, a graduate in Industrial Engineering from Stanford University, the company began with the vision to bring forth enterprise class applications, ERP, which could stand comparison with world class ERP providers in their respective verticals.

Headquartered in Hyderabad, the company has established a direct presence in nine countries and reaches 120 countries through its partners. Its software development centres are scattered across the world—three in the United Kingdom, one in the Netherlands, one in the USA, one in Australia, one in Singapore and two in India at Hyderabad and Pune. Its worldwide research and development team has 800 members who are continuously engaged in enhancing its existing products and services and adding new inventions to its portfolio.

Srikanth Palem Reddy, CEO & MD, Four Soft, says, “Research and development holds immense importance for us. The team rolls out numerous components to keep up with the ever-evolving needs of our customers. Last year we spent nearly 10 percent of our revenues on product development.” The importance that the company attaches to its development activities can be gauged by its global hub of R&D is based out of Hyderabad, spread over 60,000 sq ft, accommodating nearly 600 employees. The team consists of skilled IT professionals tasked with the responsibility of coming up with a multitude of solutions and products.

Besides these development centres, the company also has sales and support offices spread across Asia, Australia, Europe and North America, Japan and France. “The primary reason of having sales and development centres across the globe is to create a feeling of proximity with our clients. By operating out of varied locations we remain in better contact with our customers,” explains Srikanth Palem Reddy. Then again, every customer has different needs based on local market conditions. Having a vast network enables the company to be in better position to understand the situation in a particular market and offer an enhanced value proposition to each client.

Overcoming hurdles

Ever since its incorporation, the chief factor that differentiated 4S Ltd from other companies in the industry was the idea upon which the company was based. Its focus on developing three-tier Web-based products for the transportation, logistics and the supply chain management market was a new idea at that time. Srikanth Palem Reddy recalls, “At that time, we had bought forward a unique concept. In order to materialise this idea a huge amount of investment, effort and above all a well formed vision was required right from defining the architecture to setting up the business logic and writing code.” Then again, the company chose to sell products in a market that was chiefly known for providing IT services. As a result initially the company did not find many takers for the services that it had to offer. This required the company to not only illustrate the usage of its products but also spell out the functionality of these products.

Moreover, with the idea being relatively new, another major hurdle encountered by the company was to find the right mix of people for its product development team. “We were offering a choice of a new technology (advanced J2EE technologies), at a time when the customer was still accustomed to a client-server technology, the technology itself was evolving and the skill base of resources in the market virtually non-existent,” adds Reddy. It became imperative for 4S to find skilled IT professionals who possessed the right skill sets.

Globally the company faced greater challenges; India was yet to make a mark in the product development arena. Reddy asserts, “When we started off the concept of a product company from India was unheard of in the global market. We had to break the mould to succeed.” The popular perception that prevailed was that Indian IT skills were good for price arbitrage but unproven when it came to cutting edge technology and functional strength. Being a start up Product Company another consideration for the company was to arrange funding. “Every new business demands funds and investments. However, being a start up, and a product company, we faced the inherent high risk of locating these funds as investments are required for at least three years without any immediate revenue,” adds Reddy.

By setting up a team with strong domain and technical expertise backed by an infusion of funds and a vision to educate customers to use technology to plan and efficiently move goods through the supply chain, 4S went into development. Soon, its consistent focus on offering high quality products and services, at a lower price point than provided by its competitors helped it overcome these challenges and made it a trusted name worldwide.

Gaining Customers

Starting out with just one client, the company has added 300 clients and about 50,000 users of its software products from across the globe. Over the past years, the company has bagged some prominent names— DHL, Eagle Global Logistics (EGL), Kuehne+Nagel, Matsushita, Schenker, PWC Logistics, Panasonic Logistics, UTI, Geodis, Frans Maas Europe, Franklin Distilleries. This has been achieved by understanding the unique needs of customers operating out of different geographical locations.

Then again, the company’s focus on technology and delivering functionally rich products capable of offering solutions to complex business requirements has not only enabled it to rope in new customers but has also helped it maintain close ties with early ones. Its consistency in offering the latest in the industry can be judged from its ongoing association with its first client, Snet Singapore. Srikanth Palem Reddy recalls, “We acquired our first client Snet Singapore back in 2000. The company adopted our solution named etrans.” Once that was a success, Snet Singapore deployed the solution in its branches in countries like Thailand and Malaysia. This long association has further being strengthened by 4S extending support to Snet Singapore. The company has a support team in India with a CSI manager, developers and functional consultant to cater to Snet’s functional, technical business and support requirements.

Innovation is the Key

The company has developed a model where innovation is driven by a blend of domain knowledge, technology and process layout. Reddy explains, “The clear strategic focus on domain ensured that the depth and breadth of transportation, logistics and supply chain domain could be built in a short span of time across the company.” The mix of technology and domain experts is able to continuously develop new products that are built to leverage the benefits of the Net by using advanced technologies.

For 4S a key to growth is develop innovative ideas. “In order to sustain it is important to innovate. At 4S a number of innovative ideas are generated and given shape thorough the mix of technology and expertise,” adds Reddy. He cites the example of the transportation/freight forwarding industry where there was no single Web-centric application that could seamlessly process shipments through the three different modes of transport (Air/Ocean/Road). 4S developed such a product in two years and implemented it at large global companies.

Such a blend of technology and domain competence has helped the company to develop products on advanced Java technologies. This technological bent of mind has helped the company introduce model-driven highly productive application frameworks. One can further judge its technological commitments by its alliance with leading technology providers such as Oracle and IBM. These alliances further strengthen the company’s determination to offer nothing but the best to its clients.

All round development

To grow exponentially, 4S does not want to leave any stone unturned and it intends to take both organic and inorganic measures to succeed. The company is focusing on mergers and acquisitions to counter competition and strengthen its global presence. Last but not least it wants to expand its product and services portfolio. In September 2004, 4S went ahead with its first acquisition and acquired Netherlands based Cargomate BV. The company is today known as Four Soft BV and provides transportation and freight forwarding services.

Taking the acquisitions road, 4S through its subsidiary in Netherlands, Four Soft BV went ahead to acquire DCS Transportation and Logistics solutions at an estimate value of Rs 80 crore in 2005. According to Reddy, the acquisition of DCS Transportation and Logistics Solution was one of the two most significant events for 4S. The acquisition gave the company access to markets such as France, Germany and the US, besides increasing its customer list manifold. The second most valuable deal, the acquisition of Denmark based Transaxiom Holding A/S, for an estimate price of Rs 40 crore, followed in December 2006.

Despite having a strong global presence, 4S considers India to be one of its most important markets. Srikanth Palem Reddy asserts, “In India, higher domestic as well as international trade, increasing industrial output, growth in organised retail market, technologically obsolete products and demand for visibility by the end customer will be the driving factors for our software solutions”. With the Indian market booming, the company is optimistic about growth here. In order to capitalise on this trend the company also launched a development centre in Pune in 2006, housing 100 employees.