Ict@innovation: Free your IT Business in Africa/2-5
Module 2.5 The Linux Solutions Experience
Registered Name: Linux Solutions Ltd.
Staff Strength: 10
Type of business: Software and Hardware sales
Linux Solutions was founded in 2000 and currently employs 10 people. The company started off as a pure open source company but due to the nature of the software market in Uganda, where clients are accustomed to proprietary software, Linux Solutions sees it fit to integrate other services and products as a means of staying relevant and industry survival. The company offers a wide range of services and products including technical support, consultancy, software deployment, IT hardware supply, and networking.
Linux Solutions Ltd has been involved in promoting and doing business in open source software for over eight years. The company's motivation for going into open source as a major business falls under three main pillars:
- To provide a service with the aim of encouraging the adoption of open source software in Uganda.
- To prove to the business world that open source works and is good for them.
- To carve out a niche that would give the company a competitive advantage.
Asked how far Linux Solutions have gone in realizing the above motives, the managing director commented; “We have registered success in all of them. As of 2008, there are over 15 companies offering Linux services in the Ugandan FOSS market. Many businesses have opted for Open Source at the server level and Uganda is one country that has such a high concentration of server based computing relying on open source. Today, support for open source is as easy to come by as Windows. There is a Linux User Group with over 300 local Ugandan members most of whom are engaged in open source work.”
FOSS Business focus
Because of its long experience and involvement in open source software in Uganda, Linux Solutions has encountered a number of problems and have employed some strategies to deal with those problems. The company has identified the following as possible obstacles to doing business around open source software in Uganda:
- Getting company start-up capital and financing new projects or business initiatives.
- International product procurement.
- Payroll management and book keeping.
- Human resource management and retention.
- Poor payment habits by clients.
- Qualification for government contracts.
In dealing with some of these problems, Linux Solutions had to start as a small company with few individuals and with the little money and resources at their disposal. Gradually the company relied on incoming revenue to grow the business.
Although government contracts are lucrative, Linux Solutions prefers private sector clients as opposed to government contractors. This move may be due to the fact that private sector clients are often smaller institutions, more clearly focused on their needs, less bureaucratic, and often pay their customers faster than government departments.
Linux Solutions employs a full-time accountant and contracts an external financial consultant to help guide the accounting and financial matters of the company.
In dealing with its customers, Linux Solutions sets up strictly enforced payment terms which are discussed with clients before entering into any form of agreement.
Compete or cooperate: Founded in 2000 when no, if any, company was contemplating doing business around open source software in Uganda, Linux Solutions Ltd may be described as the 'grand dad' of all open source companies in Uganda. When new players or open source based SMEs come into the marked scene, Linux Solutions extends its helping hands, simplifying and explaining to newcomers how to deal with potential customers. On its own part, the company educates its clients as much as possible about the software it deploys and supports. This approach, according to the managing director, “makes them [customers] value us more”. Other aspects which have worked well for the company in its business venture are always being available to offer support when needed. The company puts a lot of effort in ensuring that it is excellent at promptness of service delivery.
The company did localise the Firefox web browser a while back as a pro bono activity. However, the company is no longer involved in any software localization because, as the manager put it, there is “no money to be made”.
Linux Solution markets its products and services through direct marketing, focus group marketing, classified sections of the print media, its own website, by email to some known agents and interest groups, and through product launches where the public is invited to watch demos.
Linux Solution's business plans for the next few years aim at improving its competitive standing and embodies the following:
- Improve on customer service management.
- Have a highly skilled technical workforce that also has sales and customer service skills.
- Improve on the company's branding.
- Adjust marketing to suit the kind of clients the company is targeting.
- Reach out to people's needs and reduce the emphasis on technology in communicating with customers.
All the services (Technical Support, Consultancy, Software Deployment, IT Hardware Supply, and Networking) of Linux Solutions are a mixture of open source and proprietary software. This is because a number of the company's clients request services on both open source and proprietary software. Among the services, software deployment and IT hardware supply generate more revenue for Linux Solutions. In the company's context, software deployment means selling anti-virus and anti-spam software, setting up Firewall/Mail/File/DNS/Proxy servers (on Linux) among others.
Linux Solutions does more customizing of existing open source solutions than developing new ones. Some open source software the company has customized for its clients includes Squid, Webmail (SquirrelMail), Webmin, OpenVPN, e.t.c. Software customization is not usually at the code level. The company has three experienced open source developers who mainly tweak interfaces and deployment options to get certain work done for their customers. Any enhancements or modifications the company makes on open source software are shared on the various product mailing lists.
Following this experience, Linux Solutions' advise to someone building business around open source software in Africa in general and Uganda in particular is to avoid specializing in only one service sector or product. For example, starting a business in which one will sell computers with pre-installed Ubuntu, or opening a training center to teach Linux courses. According to the managing director, there is a need to diversify so as to ensure that as one revenue source dwindles in one service sector, another probably keeps you afloat. In this market, SMEs need to have some other services or products that complement their open source focused opportunity in order to survive.