Product diversification: How tech entrepreneur decoded sustainable business growth path


Steve Karechio, founder of Tier Data Limited, an IT systems form, at their office at Two Rivers in Nairobi. PHOTO | POOL

In 2008, with entrepreneurial passion burning in him and seeing serious business opportunity in IT support services, Steve Karechio resigned from his job at Citi Bank and joined hands with his friend to start a business outfit called Blue Range offering IT support services to various businesses.

Having built the system at Citi Bank that was used to collect data for Safaricom Initial Public Offering (IPO), the biggest ever in Kenya, he figured he was ready to step into the murky waters of entrepreneurship.

“We were able to close many businesses deals and since tech integration was just starting within the business circles for the Kenyan market, demand was very high,” opens Steve, the Managing Director of Tier Data Limited, a leading IT systems integrator.

Steve and his business partner ran the company successfully, with 20 staff occupying half a floor of office space until 2012 when Blue Range closed shop.

Unsustainable growth

“We grew very fast and did a lot of things, an exponential growth and the more we grew, the more the business was not sustainable to meet its financial obligations and so we folded in 2012 and I decided to go back to employment as head of IT at Centum Investment Plc.

Steve says that with the collapse of his business, he learned two very important lessons; aggressiveness and consistency of products you are bringing to the market and being able to push those products until they are sustainable.

Biggest challenges

“One of the biggest challenges we had is that we used to develop one-off projects and walk away. We didn’t have a product that we could keep building over time,” he explains.

The IT guru says that one of the lessons he learned is that as long as you are running a business, especially within the IT sector, you need to have a one-off deal but also that one innovation that keeps you operating and that your vision should not just be purely to rake in deals, but to innovate around a particular set up over time.

Steve transformed the company's IT department into Tier Data Limited, an IT outfit that would serve the sister companies and other clients.

Overseeing growth and risks

Over the past four years, his team of 30 staff has developed products and offered outsourced IT services, serving 30 clients ranging in the fast-moving consumer goods, education, real estate, and hospitality sectors.

“Being a member of Centum family is a double-edged sword cutting both ways. It’s a huge advantage because you have a captive client who will open doors anytime, but the same way those doors are being opened is the same way people will have perceptions on our ability,” he emphasises.

Biggest headache

“What we are trying to do is break away from the Centum Plc brand and that’s our biggest headache.”

Steve adds that businesses will always need technology to progress, either for growth, cost controls or improve efficiency, and technology will always have that specific purpose and anytime they approach clients, they innovate around that specific client.

He adds that at present, their biggest risk is that being a provider of real time IT solutions to clients on 24/7 basis, data security and storage is critical. They mitigate the risks by having redundant data centres in the cloud and on premise.

Business leadership

Stave points that transition from a purely IT specialist to a business a leader has been a huge challenge, and he is still learning that particular journey.

“Leadership requires you to understand quite a number of things – how to deal with people, a huge element, and being able to handle different temperaments, especially the younger staff,” he adds.

“The other challenge is stakeholder management – board, shareholders, partners, clients and the whole ecosystem is new to me. As a leader, you have to understand stakeholder management and every day is a learning journey.”

He adds that the conversion from head of IT at Centum to Managing Director at Tier Data “puts me straight into entrepreneurship journey”.

Planning for the future

In the next five to 10 years, Steve plans to have one flagship product, a utility management system that uses internet of things (IoT).

“We foresee us having a factory to assemble IoT devices locally because the market is huge – we have 2 million manual water meters and we want to convert them to smart meters,” says Steve.

By 2029, he envisions that Tier Data will be the largest and preferred systems integrator within the East African market and take over the African market in the next ten years.

“As businesses take a hit, the number one thing they do is cut costs so as to survive the hard times and the businesses that will survive are those that are prudent, and able to make decisions much faster and the only way to do achieve that is via technology within their ecosystem,” he advises.

Steve sees a huge opportunity for Tier Data to sit down with struggling businesses that are trying to push through the tough economic times and “see what we can do for them in terms of digital transformation, efficiency, cost cutting and control measures” .

“It’s a tough period and we may not be able to price highly but the work is already cut out for us,” he adds.

On cash flow

Steve says there are two elements he looks at when it comes to cash flow management.

“There is cash you need to inject to finish a project and then there is ongoing basis cash flow. I always ensure that we have a three- month cash cover on operational expenditure (OPEX),” he says adding that any entrepreneur should strive to build a cash cover of between 3 to 6 months on the very important OPEX.

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