Steady wins the race

Ivan Epstein, CEO of Softline, proves that it’s possible to thrive in the accounting software market.
2 December 2009

Accepted wisdom in the local IT industry is that there are only a few people who have the experience, business savvy and vision to shape and influence the local market to any great degree. IT Personality of the Year for 2009, Ivan Epstein, is one of them.

Currently the CEO of the Softline Group and the CEO of the Sage Group in the Southern Hemisphere, Epstein has been around as long as the local software industry itself, delivering and supporting accounting software to that most demanding of markets: the SME sector.

Along the way, his company has acquired 70 percent market share for accounting solutions in South Africa as well as gaining customers in 50 other countries around the world. In that time, the software industry has changed beyond recognition. Softline’s products have evolved too and now do customer relationship management, warehousing, ERP and business intelligence.

In 1988 Epstein, along with cofounder Alan Osrin, had a vision to bring accounting software to the man in the street. Armed with only their qualifications and a loan that was barely enough to pay for a computer, they set out to bring computerised accounting to everyone who wanted it.

“The business was started in 1988,” recalls Epstein. “It was myself and Alan – he is still with us and looks after our Australian operations. So this was a classic start-up – a real one, not where someone leaves you R5 million. At the time we were auditors, and accounting was done manually. The concept was to offer software that would do this because we understood accounting. It was the start of the IT industry. Everything was made from scratch. Most companies could not afford computerised systems, accounting software was only for large companies and it was large multinationals that dominated accounting systems. But people couldn’t afford them. We wanted a product that was affordable.

We wanted to sell our software to the man on the street; that was our target market: small businesses.”

No one had done what they wanted to do. Epstein says he didn’t even know that it was possible.

“We just managed to secure R5 000. None of us came from backgrounds of money so we hardly had enough to start anything – all we had was our degrees. I had to learn quickly.”

The secret of success

Epstein’s other challenge was one faced by every start-up: getting that first customer. “The only expertise we had was accounting. We had no computer expertise, but we managed to secure our first client. The client asked if we had a track record; we had none. They were fine with that but asked if we had any other customers for reference.

We had no other customers. Then it was, ‘Sorry, we can’t use you’.”

Times haven’t changed much. Epstein says this question was asked recently when he gave a talk at the University of Pretoria.

“Students were intrigued as to how to secure that very first client when you start a business. It’s tough – the statistics in SA show that only ten percent of start-ups survive the first year. We took that chance, and we survived.” Softline steadily acquired users over the next few years but was not yet the dominant player.

“Pastel was the leader then. I had just started Incredible Connection. It was called Software Connection then. At first we had two stores and I grew that to about eight stores. But I came to realise that software was my passion. I managed to convince the board and we bought Pastel. And we built on it until the early 2000s, when we refocused our business and concentrated more on being a focused software player.”

In 1997 Softline listed and in November 2003, Softline was acquired by the SAGE Group plc. Epstein is now one of four CEOs at the helm. “There are four CEOs that control the SAGE group: Southern Hemisphere, North America, continental Europe and India. And in the southern hemisphere, it’s me.

Sage is 14 500 employees and we make £220 million before tax. The emphasis of the group is to develop better software for customers in the respective geographies, including understanding local regulations, local environments and customers.”

He has some words for local policy makers.

“We need more education and stimulation of small business. SMEs need to be given tax concessions and delayed payments to help stimulate growth. We see the attrition of SMEs every year. There needs to be a real initiative and a proper committee to drive it. We are ready to help, but government has never approached us. It’s tough.

Government has a lot of priorities, but still the growth of the SME sector is pretty buoyant in SA. The expertise is there to help others, guys who are doing it successfully – guys like us.”

Epstein puts his money where his mouth is. He’s part of the Life Champion Leadership Programme at Life College where he volunteers time to motivate and mentor students.

“Softline is no stranger to skills development. We run a highly successful internal programme as well as a leadership programme through our parent body, Sage. We recognise, of course, that development must go beyond our office walls. As part of a commitment to addressing the skills shortage, I believe that leaders at all levels have the responsibility to become involved in organisations that foster tomorrow’s leaders today, sharing their most valuable asset – experience – with our youth.”

And to his 1 500 employees in South Africa, he also has much to say.

“I don’t want you to work here if you don’t want to. You should come here and enjoy it. We’ve got this great office and this beautiful gym and restaurant. We make it a cool place to be because work’s a big part of your life. And you come first. Ask anyone who runs a business who comes first. They say ‘the customer’.

I say that’s bullshit. For me, my people come first. My employees come first. My customers come second. If my people are happy and are loving what they do, my customers get great service.”

And what of the future? Epstein says he’s not particularly worried by the decentralised software model.

“We can’t be all things to all people. It’s a pretty straightforward business. I don’t see it as technologically complicated. We keep it simple and we just work with the customer. We’re not rocket scientists.”

He encourages other entrepreneurs to have the courage of their convictions. “Starting a business is one of the most challenging, but rewarding, things you can do. The reason most people never end up doing it – although I’m sure many would love to – is because they believe it takes luck, a clever idea or just knowing the right people. That’s not true. It’s about you.”