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Agility, talent retention key to JK Tech's success
WITH rapid changes par for the course in the information technology (IT) industry, keeping up with the latest developments can prove costly for businesses.
For example, software updates aimed at phasing out old devices have progressively shortened the lifespan of computers, notebooks and smartphones over the past few years. Companies that expected five to six years of use from their bulk-purchased computers and notebooks are now having to replace them after three or four years instead.
Although one might think a device supplier like IT solutions provider JK Technology would be happy to have clients buy equipment more frequently, managing director Eugene Ang recognised that what his customers really needed was a solution that would help them manage costs and remain in business.
JK Tech started with providing equipment leasing contracts that promise a technology refresh at regular intervals. Then it took things a step further, offering to bundle maintenance services with the leasing into a Device as a Service (DaaS) contract with a single yearly fee.
"(The idea of) leasing has been around for many years, but the trend in Singapore really started in 2014," Mr Ang told The Business Times, noting that this was when the government started adopting it. Corporates followed suit a few years later.
Riding this new trend, JK Tech has been actively educating its customers about the benefits of leasing and DaaS, such as the guarantee that the equipment provided will be compatible with the latest software, and the reduced need to hire suitable IT staff to maintain the equipment. Leasing today makes up about 35 per cent of JK Tech's business, while DaaS is a relatively new concept that Mr Ang expects to grow in popularity over the next few years.
Ups and downs
JK Tech has come a long way since its humble beginnings as a PC shop in Katong, which Mr Ang set up with a friend. While the partnership lasted only five years, he kept the company going and managed to get it listed twice on the Singapore Exchange - once on the Sesdaq board in 2003, and again on the Catalist board in 2011.
Today, JK Tech is privately held, supplying and selling IT products and providing system integration and services to small- and medium-sized enterprises (SMEs), government bodies, educational institutions and multinational corporations (MNCs).
The main motivations for listing on both occasions were to improve the company's profile and gain better customers. However, JK Tech learnt some painful lessons in the first listing, as it expanded too quickly and started to incur losses. Looking to regroup, it delisted through a reverse takeover (RTO) by St James Holdings in 2008 just before the global financial crisis, an event that Mr Ang says actually helped his company rebound.
"When we were listed and one of the leading companies, our competitors were close behind and we were not a very clear leader. Because of our RTO and losses, we came down. But because of the global financial crisis, all our competitors came down too, because we were all facing bad times.
"I told my staff, this is an opportunity. All of us are at the same level after this crisis. Whoever works hardest will rise. So we worked hard and climbed above all of them. If not for the global financial crisis, our competitors would have continued growing and we would be far behind, slowly trying to catch up."
The company's second listing helped it establish itself as a market leader in systems integration, but Mr Ang took JK Tech private again in 2015 to focus on growing the business without the "distractions" of being a listed company, he said.
"Our delisting was not a negative factor. In the last five years, our turnover grew from S$48 million to S$141 million as a private company."
Profits have also improved. While Mr Ang declined to reveal exact figures, he shared that JK Tech has achieved 25 per cent compounded growth in its bottom line for the last three years. This is on the back of a diverse customer base, since although JK Tech counts several well-known MNCs and many government agencies among its clients, none of its top three customers contribute more than 5 per cent of its turnover.
Mr Ang expects the DaaS segment to grow over the next two years, eventually accounting for 15 per cent of JK Tech's business. This will be aided by the company's plans to offer DaaS contracts for not just regular office IT equipment but infrastructure products as well, such as data centres and networking equipment. "It's more convenient, because all the customer needs to do is to expense off whatever they pay us, and in the balance sheet, it will be very clean - there won't be any IT assets inside."
The natural next step, said Mr Ang, is moving all this infrastructure out of physical assets into the cloud, which reduces IT costs and simplifies maintenance and support. While some companies have concerns about privacy and security in the cloud, JK Tech is encouraging step-by-step adoption with a hybrid model that allows them to keep more sensitive information in on-premise servers, while regular office work and backups are hosted online.
Mr Ang expects at least 50 per cent of JK Tech's customers to adopt some kind of cloud initiative in the next three years, especially with new technologies such as hyper-converged infrastructure, which will reduce costs by 30 to 40 per cent compared to the hybrid model.
Building a strong team
However, his biggest challenge is not so much in keeping up with the IT industry's evolution, as much as in the age-old issue of manpower.
"It is the biggest challenge in our industry - retaining staff. We are not like a retailer where staff can come and go, and then the next person who can talk well can sell the same iPhone, iPad or camera. Ours is a relationship business," Mr Ang said. This encompasses relationships such as the one between a client's IT manager and JK Tech's engineers, which could lead to the client's business following the engineer elsewhere if the latter chooses to leave JK Tech, as well as the relationship between JK Tech's salespeople and its clients that would encourage clients to engage JK Tech for future contracts.
Another difficulty in the human resources department stems from the aspirations of IT graduates to work with the big boys of the IT industry, making it harder for SMEs like JK Tech to retain such employees for more than two or three years. One of Mr Ang's solutions to this is to constantly add to his team, which currently comprises 143 staff.
"Other people hire when there is a replacement required, but we hire whenever there is a good candidate. Our office has a lot of seats and our interview process is every week, even though we don't have a place, because the IT business is always growing. So whenever we see someone suitable, we just hire them because they can always bring in the business," Mr Ang said.
To better retain staff, he comes up with creative incentives and challenges. In 2018, JK Tech ran an internal challenge to identify the top performers across departments and sent the best 18 to the FIFA World Cup in Russia. This year, the prize is an eight-day trip to Tokyo for the 2020 Olympics.
"These initiatives are very crucial in motivating them, because it makes us different," Mr Ang said. "At first, I was afraid to share this with my competitors, but then I said, so what if they know? They will never do it."
Monthly sales meetings start with 30 to 45 minutes of current affairs discussions, with a recent meeting touching on topics such as the unrest in Hong Kong, US President Donald Trump's potential impeachment and the collapse of WeWork. Mr Ang, who is a former banker, also gave a lesson on how to read the property market using transactional data.
His passion for serving customers and providing for his employees has kept him going through the ups and downs in the past 29 years, and people management will remain his focus in the coming years.
"I cannot keep all the staff, but I have to make sure that the staff turnover rate for JK Tech is below the industry average. Once I can keep a pool of happy staff, business will take care of itself," Mr Ang said.