JSE-listed ICT group Gijima is conducting a large-scale re-appraisal of its entire business as it seeks to emerge from a difficult period. The company has endured poor financial results, key account losses, forced retrenchments, mismatched offerings outside its core competencies, and a sluggish cultural transition from merely box-dropping to a client-centric solutions provider.
"We came to the conclusion that 'more of the same' is simply not an option," a frank Tony De Sousa, Gijima's products executive, tells Brainstorm.
Interim CEO Eileen Wilton believes the future is far brighter than the recent period, which she describes as 'challenging'.
"Gijima has a solid plan that we've been executing against to drive the company to a return to profitability," she says, citing a healthy order book of almost R4 billion, and a strong presence in fundamental areas like its Microsoft and SAP integration businesses. Gijima took home six Microsoft Partner Awards last year.
Hard knocks
Gijima's recent history has been clouded in suspicions arising from large public sector contracts gone awry, and its close political and government connections. Billionaire ANC benefactor Robert Gumede's Guma Group holds 36.5% of the company's shares. CEO for the past five years until the end of 2012, Jonas Bogoshi had joined the company freshly from Sita.
It now employs 2 500 staff throughout southern Africa, and provides solutions for 40 of the JSE's 100 biggest companies. Gijima's trademark claim is that of SA's most empowered large ICT firm - with a level-2 broad-based black economic empowerment rating.
Over the past two years, the share price has slipped dramatically - even though it's fairly tightly held by mostly institutional investors - following two loss-making years (headline losses of R50.6 million for the year ending June 2012, and R208.9 million the year before).
Revenue for the year to mid-2012 was flat at just over R2.5 billion.
Two of its most devastating losses were its contract with the SAPS, which was mandated to re-tender the business, and the scale of its Absa contract being roughly halved as the bank brought some outsourced IT operations back in-house.
"It's been hard for us to regrow that revenue in one year," Wilton admits.
Looking forward, De Sousa talks of the opportunities available in the 'big four' emerging technology sets beginning to take hold on corporates around the world - cloud, mobility, big data and social media. He indicates that Gijima's intention is to be positioned for the coming-together of these trends.
"The convergence of those four is what Gartner refers to as the 'nexus of forces'," he says, adding that he believes Gijima is gaining a name in the mobility and cloud spaces, as they're a 'natural fit' with the company's core capabilities. "It's difficult for any organisation to execute well on any one of these emerging technologies in isolation of the other three."
From the recent re-appraisal of its offerings, De Sousa outlines the five distinct areas of focus for the company: SAP, Microsoft, 'ICT services' (comprising unified communications, security, enterprise service management and data centres), 'managed workplace' (the convergence of end-user computing and mobility to enable organisations to manage any 'connected endpoint'), and systems integration.
Service ethos
On the chopping block is its mining software solution, MineRP, which it has already disposed of, and the high-level business consultancy work, which was competing with dedicated consultancies like Bain and McKinsey, adds De Sousa.
This tightly focused approach to technology and the service ethos to customers is noted by Clinton Jacobs, business manager for the IT sector at local analysts BMI-TechKnowledge.
"The restructuring at Gijima may have caused some uncertainty about the direction of the company, but it does seem they have articulated their turnaround plan well and have shareholder support," he says. "Putting customers at the centre of your turnaround plan is always a good thing, as many turn inward in tough times."
It's difficult for any organisation to execute well on any one of these emerging technologies in isolation of the other three.
Jacobs highlights the facts that Gijima remains a 'major player' in the IT industry, as well as its strengths in the SAP environment and in desktop support.
"An area in which I think they're particularly well placed is enterprise mobility, where they were out of the gates early and have developed holistic enterprise mobility solutions," he adds.
In fact, global analyst firm Ovum recognised Gijima's mobileIT platform as a 'technology to watch', which De Sousa says is the first time a South African solution has received this accolade.
Ovum's analyst, Richard Hurst, describes the mobileIT platform as seeking to "weave together the varying threads of enterprise mobility, including infrastructure, devices, applications and users.
"Gijima is able to offer an integrated, holistic approach that ensures all devices and platforms are served," Hurst says.
The 'Who Am I' debacle
Perhaps one of the key determining factors in the recovery of the Gijima brand will be the developments from here on the controversial 'Who Am I Online' project.
'Who Am I' is the re-engineering and digitisation of the key processes of the Department of Home Affairs (DHA). It seeks to deliver a significantly enhanced national population register, including birth and death certificates, processing of identity documents and passport applications, visa and other permit applications, as well as enhanced movement control for South Africans and foreigners at the country's borders.
The multi-year, still-unfinished project has been fraught with problems. In mid-2011, Gijima and the DHA jointly announced that, as part of the terms of the settlement of the contract, Gijima would pay a massive R374 million towards the writing down of invoices and the future rendering of support and maintenance services.
"The settlement was intended to bring the project back in line with the original objectives and cost estimates, which were expected to be approximately R2.3 billion," says Wilton. "Gijima was one of a few suppliers in this project and continues to deliver selected services to the DHA, as per this settlement arrangement.
"Gijima cannot comment on the contractual value paid by Sita, and the total costs incurred by the company on the project, due to confidentiality agreements," she adds.
BMI-Techknowledge's Jacobs says Gijima's reliance on public sector business is a concern. "Despite all the difficulties when dealing with the public sector, it's a major consumer of IT services and can't be ignored. A balance between public and private sector business would be ideal, but in tough economic times, it may be difficult to accomplish."
Make or break
De Sousa points to the threats posed by operator divisions like Vodacom Business, MTN Business and Telkom Business as they encroach more and more on Gijima's and other traditional ICT companies' turf.
Putting customers at the centre of your turnaround plan is always a good thing, as many turn inward in tough times.
Wilton also believes that with some of the company's clients being regional subsidiaries or divisions of broader global corporates, there's the ongoing risk of the corporate looking to consolidate all global IT operations under one primary supplier.
"We're a South African company and we're very proud of our heritage," she says, adding that its focus on customer service helps to answer this problem, as Gijima becomes more of an aggregator of solutions than a provider of technologies, irrespective of whether the solutions are delivered on-premises or in the cloud.
While Gijima's full recovery is still very much 'in the balance', there are enough strong fundamentals for the market to see a return of investor confidence.
First published in the July 2013 issue of ITWeb Brainstorm magazine.
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