In 1989 Richard Firth left a stable job to join a small IT business called MIP. Founder of the business Granville Dunbar appointed him MD and Firth turned the business into one of South Africa’s most forward thinking software companies.
Today, MIP’s customers include healthcare,employee benefits and life assurance businesses, along with unit trust administrators, managed care companies and lending companies. Automotive dealerships also feature as a separate investment. And there is the motor maintenance and warranty short-term insurance.
One of the company’s first coups was the development of a new IT billing model based on a per member per month scenario.“To encourage business owners to go with our solutions, we decided to share risk.
By including all services in one figure, our partners could fix their IT costs. The variable bottom line was replaced by a fixed top line. We linked our growth to the success of our business partners and smoothed our cost infrastructure by having our suppliers buy into the same model.
“This risk-based billing model proved to be one of the company’s biggest differentiators. Large payments for software, followed by even larger financial outlays for implementation services, as well as regular upgrade and maintenance fees, are standard in South Africa.
“This just doesn’t make business sense,” say Firth. “So we share the risk with our partners. We don’t charge them for the product. Billing is calculated on a monthly per member or per policy fee, based on volumes. We use a sliding scale to reduce marginal costs, which includes all the upgrades and any new value-added systems.”
The monthly fee covers all costs relating to the system: the software, database licences, implementation, training, data conversion, ongoing support and product enhancements. From a user perspective,risk-based billing provides a guarantee that the service provider understands the users’ business and technology needs.
“Although our systems are tailored for specific market sectors, such as healthcare, life assurance and employee benefits, they have been created according to a common design that ensures ease of use and accessibility for the end-user. They have also been designed to support later additions and are easily managed and time-efficient, which translates into peace of mind for users.
They also give users the ability to offer their own clients improved service and quicker turnaround times.”In 2001, MIP developed the Astra framework which was chosen as the backbone for US company Progress Software’s opensource Web enablement initiative.
The framework is being deployed by partners worldwide. MIP used a Department of Trade and Industry (DTI) grant to develop Astra2, which beat entries from more than 30 other Progress developers around the world. Immediate benefits were a 71% increase in turnover in 2001, and growth of offshore revenue to 35%. “We completely repaid the DTI in taxable revenues within the first year of developing the product,” says Firth.
Firth says MIP understands industry challenges and uses these to develop its software. “It means that the software is appropriate for the industry and we can best advise on implementations and customisations to meet specific partner needs.
We are partners, not suppliers. The only way we can grow our business is to grow our partners’ businesses.”The company maintains an innovation incubator where some of the top technical skills in the country are allowed to be creative.
One of the highlights for Firth was receiving accreditation for MIP’s medical aid administration system from the Registrar of Medical Schemes,“One of our user partners, Genesis, was the only administrator to get unconditional accreditation in the first round. MSO, our managed care partner,also won unconditional accreditation in the first round for the managed care accreditation process.
That’s proof for us that local software does work and is a huge feather in our caps because that is the core of our business.”Firth’s biggest challenge has been trying to convince business that local is actually lekker. “Thank goodness for the registrars who have changed our financial services industry so much that it has become increasingly difficult to take an overseas application and implement it here.
Another challenge we face is implementing BEE in a young firm. The cost is vast and there is a high turnover of good, young black professionals.”With more and more international software companies being excluded from financial services industry tenders, the outlook for MIP remains sunny. “We have just been through a consolidation phase and we are now looking forward to extensive growth. A core aspiration for us is to spread our wings onto the global market.”
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