AltX-listed Ansys is a niche technology company based in Centurion. The company recently reported its revenue soared almost 89% for the period ended 31 March, to R474 million. However, this success did not come on a silver platter.
ITWeb senior news journalist Admire Moyo (AM) caught up with outgoing CEO Teddy Daka (TD), one of the few blacks leading successful tech companies in SA, to get his view on where it all started and where the company is going. From 1 October, Daka will assume the role of executive chairman.
The group develops, produces, distributes and integrates niche technology-driven engineering solutions for harsh environments in four sectors: rail, defence and information security, mining and industrial, and telecommunications.
AM: How did Ansys start?
TD: The Ansys Group is a combination of a number of businesses. But Ansys itself started many years ago, in 1987 to be exact. I wasn't involved at that stage - it was just a small little business. By the time I got involved, it was a R7 million business.
The company used to be predominantly in the development of black boxes for aircraft. If you think about it, a black box is a very high-tech computer that is able to work in a very harsh environment because it would record what will be happening in a cockpit, what happens in the aircraft's instrumentation and the health of the aircraft. But the real competence on our side, because anybody can make that, is to make that computer work in harsh environments. In the event of a crash, that box can withstand lots of force and pressure - it should work. So that's the genesis of the competency of the company. Then it grew from taking the same kind of capability into different environments such as mining, telecoms, railways, defence and information security coupled with some acquisitions along the way.
AM: Are you still making black boxes?
TD: No, we don't make black boxes anymore. It's not because we can't. It's because for a business to succeed, you also need a domestic market that can sustain what you are trying to build. We don't have a domestic market in the manufacturing of aircraft in SA so we always had to rely on the international market and it was extremely difficult to remain competitive in that market. When black box manufacturing was started, SA was under sanctions and there was a need to have such a capability.
AM: How did you get involved in Ansys?
TD: I pretty much bought a controlling share in 2001. A colleague of mine, who I had met in a different business, told me: 'I know you like technology and you are crazy about technology. Is this something you would want to look at?' I looked at it and decided to buy the controlling share.
By then, it was a small R14 million turnover business which was predominantly a defence contractor mainly producing systems for the defence market. We were mainly producing weapon systems for helicopters or systems that go into a fighter jet. Effectively, what we did is to take the defence discipline and capability and apply it to different industries. That's how we grew the business.
AM: Since your involvement in the company, how have you transformed it over the years?
TD: My initial involvement in the company was more of a passive investor; I wasn't active in the business. As the business began to grow, I assumed the position of director and chairman of the company. With the difficulties of post-2008, the market went down, the business went down, and I had to step in as CEO to help the business.
When I took over, it was making serious losses and turnover was about R65 million but now it's about half a billion.
AM: So were these changes mainly because of you coming on board and being more hands-on?
TD: I am always worried to attribute success to one individual although an individual is a contributor to that. So I am one of the contributors because a number of people who had to work together. Without that, there is no way I could have done it on my own. I just happened to be the leader and CEO of the company. As CEO, you are responsible for strategy, vision, direction, getting talent, etc. But it is the talent that does the work.
AM: What challenges did the company face before you moved in?
TD: The basic challenge, in my view: we had a business that was badly designed for the type of market that we were operating in. Once you have a design that is not conducive for the market, you have problems. Strategy is about aligning a business with the environment and making sure the capabilities and resources you have are aligned. You can't get it right all the time but this is what you try and do.
The company then had pretty much one customer, the biggest railways player in SA, about 85% to 90% of our revenue was coming from there. The bulk of the work the company was doing is what you would refer to as 'jobbing'.
The other fact was that there was a concentration risk - we were more or less working for one big customer. A number of things had to happen to redesign the business to be in line with the market. So we moved away from all those activities that led us to a mass production type of business. At the same time, we also began to diversify the market in terms of where we play. We moved away from just being railways to telecoms, strengthening the defence, mining and now information security. Even within the railway sector, we further diversified. Instead of dealing with one operator, we went to other clients.
If you look at our railway turnover three to four years ago, it was about R37 million which constituted close to 70% of the business. Now it's down to about 30% of the business but R130 million. So we have grown the business although we shrunk it through diversification. We have also developed a new vision for the business whereby we are going to become a business that produces technology but it's led by IP using our engineering capability to produce products for the world market.
AM: There are few black people leading technology companies in SA. How did you make it to the top?
TD: If I knew the answer to your question, I would have probably put it in a bottling package sitting somewhere in the supermarket and selling it and making a lot of money. I can only share with you my journey. Whether my journey resulted in this, I don't know. I've always had a passion for technology; I have worked for Rio Tinto; I worked for Telkom. So I was always in a position of working in businesses where there was technology. Having passion for my continent and my country, I always wanted to produce something. I am not really excited about importing and selling to you. If it makes sense and there's a big market, yes I will do that. The real fascination for me, at a personal level, is looking at the socio-economic problems that we have and finding solutions for them. The simplest definition of technology is 'taking scientific knowledge and applying it to practical purposes'.
AM: You will step down as CEO to assume the role of executive chairman. How will this impact your day-to-day duties at Ansys?
TD: The change is effective on 1 October. Rynier van der Watt will become group CEO. The new role will have all the responsibilities of a chairman in a normal board. In addition, I will still have the responsibility to manage the business development side of the business; I will also look after investor relations, as well as mergers and acquisitions.
AM: What sort of business opportunities are you witnessing in the South African market?
I am quite excited about the problems that we have in SA and on the continent - problems mean solutions; and solutions mean products for us. If you look at the growth of mobile telephony, this opens huge opportunities for finding solutions and developing new technology for that. On the one hand, is the Internet of things - we have installed a lot of sensors in different industries. The next wave is how to connect these sensors to produce better data and management of what you have put in place to make the Internet of things actually happen. That's a huge underexplored market, and Africa, mainly because we sort of jumped the landline space and moved into mobile, provides a good platform as one of the fastest growing regions.
However, with the development of all these things, information security will become an issue. Estimates are that cyber security business in Africa is worth about R3.5 billion. That's a huge market that we are also looking to tap into.
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