Gijima has had more than a difficult year, what with the Who Am I Online (WAIO) saga involving Home Affairs, the company's disastrous financial results and a Broadcasting Complaints Commission ruling that demanded the SABC apologise about a story involving Gijima chairperson Robert Gumede badmouthing the Mail & Guardian.
“It is probably one of the most difficult years for me as a person, but I think also for the organisation,” says a stoic looking Bogoshi, who is probably feeling buoyant because he's laid a lot of troubles to rest. Then there's the matter that after taking a hiding on the JSE, Gijima's shares are on the up and up. This is because of a recent SENS announcement that the company is in discussions that could affect shares.
Bogoshi obviously won't be drawn on the share issue, but says there are areas where Gijima wants to invest and divest in order to build sustainable competitive advantage. Now that the messy business of WAIO's behind Gijima, Bogoshi wants to focus on growth and the lessons learned from WAIO.
“For the last 10 months or so, we have been working to try and get that resolution on WAIO. We ultimately got it, but it had a serious impact. The kind of meetings we had with the people, the kind of discussions we had for us to ultimately come to this agreement, took a lot out of lots of people, not only me, most of the people in the organisation, the leadership team of the organisation,” says Bogoshi.
Waterloo
WAIO has been Gijima's Waterloo, a defining point for the technology company. When news of the settlement between Gijima and Home Affairs broke in March 2011, Mail & Guardian reported that “Gijima, the IT company controlled by controversial businessman Robert Gumede, is seen as too important to be allowed to fail, according to a source familiar with the thinking behind this week's deal between the company and the Department of Home Affairs”. As part of the solution, the South African Revenue Services stepped in to rescue the operation by taking over much of the project and leaving Gijima to sort out the plumbing. Did this mean that SARS had effectively bailed Gijima out?
“Absolutely not. Absolutely not,” says an adamant Bogoshi. “If you look at this, this was the worst that could ever happen. It was not a bail out. We had to write off all those moneys. If you look at it now, where we are, we halved the shareholders equity, so the result was not a good result, but it was the right thing for us to do. But there was an alternative. I mean, let's not forget that. The alternative was to litigate.”
It was a sobering experience for me and I have learned to be tough.
Jonas Bogoshi, CEO, Gijima
Litigation, however, would have affected cash flows and may have alienated government, which makes up a massive chunk of Gijima's business. For the last financial year, government work accounted for well over 40% of Gijima's revenue. “There was no way to think that SARS bailed us, because we were not paid for it (the project). We wrote that off so I am not sure where the bailing out came from. We are worse off. We are worse off, but overall, it was the right thing to do.”
Bogoshi describes dealing with the WAIO fallout as a “sobering experience”, and says he has realised how important stakeholder management has become for Gijima. “Today, I am much closer to SARS than I was before, because I was working with them. I am much closer to some of the law firms that we are dealing with, both for us and for government. I am much closer to some government officials. But yes, it was a sobering experience for me and I have learned to be tough, because going through those experiences you have to be tough or else you won't survive.”
Servicing government
Bogoshi says government remains important to Gijima, and his company will continue to actively service the public sector. “They (government) are the largest spenders of ICT products and services, so we are going to have to work with them, but yes we had to relook how we work with government, no questions about it. The first thing we did was to look at how we contract with government, because that one is important.”
Key lessons from WAIO include ensuring the company is au fait with the Public Finance Management Act, which Bogoshi says is fairly complex, and managing risk. “What we do is we identify risk much better. On all the projects that we are running with government now, we have an external team looking at the risks, and we decide what to do, if we need to intervene quickly. So far, on one or two large projects it is working very well.” Bogoshi says better risk management has seen Gijima walk away from government projects where the risk is deemed too high.
“We have always had a good relationship with Home Affairs; the new DG, I know him from his previous roles. On a personal level we have always had a good relationship.” Bogoshi says following the signing of the Home Affairs agreement, Gijima will sit with Home Affairs to agree on the detail of the way forward.
A big future focus for the company will be rebuilding Gijima's reputation, but Bogoshi doesn't believe that Robert Gumede's attack on the Mail & Guardian has in any way hurt the company.
“Robert Gumede is quite a big figure, not only in the IT industry, but also in South Africa in general. For us as a company, it is more of a plus than a negative to have an association with someone like that who is really one of the top entrepreneurs in South Africa,” says Bogoshi, adding: “Yes, you can talk about the SABC and the issues around that, but there are other issues where Robert has won against some of the publications. But that is part of his personal life. That does not affect Gijima. Remember that Robert is a chairman, a non-executive chairman.”
And what about the Telkom tender story, where it was alleged that Gumede made payments to a Telkom official? “That has not even affected us at all, and personally I am not even aware of the details, so it is something that I cannot even comment on,” says Bogoshi, adding that he is quite happy with the input and support Gumede gives Gijima as a non-executive chairman. “What he does in his personal capacity is up to him as a person, and I am sure you can talk to him about that.”
Looking ahead, Bogoshi says Gijima will focus on cloud computing and will ensure that the ICT company is well geared to challenge the competitive threat of services coming in from India as well as telecoms operators that are moving into the technology service arena. “We are becoming a client centric organisation,” says Bogoshi. “We are changing the model of the company. Moving forward, you must have people who understand the customer intimately and the pain points of the customer.”
Bogoshi says Gijima will be rebuilt around four key industries, namely financial services, the public sector, industrial - which includes mining and manufacturing, and the commercial sector. “If you look across the world, and in Europe, most of the businesses are going the same way as we are going, because just building capability is not sustainable, you have to understand your customer. That's the one part. The second part that we are focusing on is that it is important for us to internationalise Gijima so we have to go beyond the borders of South Africa.”
Here, Bogoshi says the company is looking at investments or partnerships with companies that will help it become a more global player. This is where Bogoshi hits his stride, obviously glad to have shaken off the worst effects of an intensely difficult year. Whether or not Bogoshi will be able Bogoshi, who is probably feeling buoyant because he's laid a lot of troubles to rest will depend on how well the company has integrated lessons from WAIO, the kind of acquisitions and divestments the company makes, and whether Bogoshi's effectively able to realise what he believes is a strategy for sustainable competitive advantage.
Disclaimer: Mandy de Waal occasionally works with Mail & Guardian and helped investigate the WAIO story for the paper's investigative unit amaBhungane.
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