During 2000, the IT space was not an easy one to operate in. Companies had just experienced the vagaries and expense of Y2K and dot.coms were turning into dot.bombs faster than you could say ‘megabyte’. And yet, Nkosinathi Khumalo, co-founder of Mthombo IT Services (M-IT), his brother Lucky and friend Eben Clynsmith, chose that period to start what is arguably the top BEE IT company in the country.
Launched in Johannesburg with just seven people, today M-IT has a nationwide presence, employs over 280 people and lists SARS, AngloGold, Telkom, HP, the CCMA (Commission for Conciliation, Mediation and Arbitration) and some of the major casinos as its clients.
It’s an Impumelelo Top 300 Company and in 2004 it was voted the Top Black IT Company. Riding the wave of its success, M-IT last year merged with EOH, one of South Africa’s largest consulting, technology and outsourcing companies listed on the JSE’s software and computer services sector.
The company is proof that, as Nkosinathi Khumalo puts it, “Where there is crisis there is also opportunity.” Making the most of the opportunities that existed meant strategic targeting of services and potential customers. An in-depth analysis of the IT space in 2000 led the founders to focus on meeting the day-to-day servicing needs of clients as a multi-vendor service provider.
“We went for the ‘boring’ services, the ones we knew everyone would need. And we also knew that out of the 250 IT companies registered with the DTI at the time, there were only three black-owned ones in services,” says Khumalo.
“It wasn’t a unique start-up recipe but it was about being in the right place at the right time and understanding what customers had just gone through with Y2K. They’d spent a lot of money on it and wanted someone who could maintain and support the systems they had bought.”
Khumalo says that once M-IT was set up, careful targeting of specific prospects played an important role in getting the right clients; the team knew exactly who they wanted to sell to and went for quality instead of quantity.
“We targeted people who had mission-critical systems and who thus wouldn’t mind paying slightly more for excellent service. Businesses with 1 000 or more users would give us the right size clients and we also wanted those with a national presence as we had developed a nationwide footprint that could offer standardised and centralised servicing in different geographical areas,” explains Khumalo.
As CEO, Khumalo also headed up sales. “Sales is a probability game,” he says. “You need to get out there and talk to people.” Fortunately the people he targeted were experiencing problems with their IT systems and welcomed anyone who could solve their problem.
But where most salespeople do all the talking in meetings, Khumalo sat and listened. “When you’re selling services, the best thing you can do is ask one question about what problems the prospect is experiencing and then keep quiet, listen and take notes.
In the first two meetings, you might not say very much at all about your company but all the while you are gathering information pertinent to that particular client so you can formulate a solution that fixes their problem,” he says.
Targeting these clients was one thing. Signing contracts with them was another. “One of our biggest challenges initially was that we didn’t have a track record,” says Khumalo. But in spite of the challenges, the members managed to get clients to give them a chance.
More than that, they convinced clients to pay them upfront. “Cash is king when you’re small and this was one thing we didn’t budge on. When you’re in services, you need cash to pay salaries and we had to be paid upfront in order to survive,” he says.
It meant that they had to turn away some business, but in the long run the strategy paid off. “We kept good company by affiliating ourselves with credible multi-nationals like HP and Dimension Data and we never, ever compromised on quality,” he adds. “We also stayed focused. Throughout our years of growth, we’ve stuck to what we do best.” Following its recent merger, M-IT looks set for even greater successes.
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