This is an interview Angel, founder of Sappience, gave for Investor.bg. The original text in Bulgarian was published by Investor Media Group and can be found at investor.bg
Investor.bg: The first product of Sappience is an asset management application. What is important to know about this area in general?
Angel: – When we talk about this business domain, it’s actually about the management of physical assets.
In many cases it is confused with stock management and on the other hand overlaps with financial asset management.
So, let’s make an initial distinction and point out that here we are talking about physical assets within or outside the company. The purpose of this type of management is to cover the entire life cycle of an asset – from the initial idea of the need until the moment we write it down, sell, scrap or lose it and then we analyze what happens in this life cycle of the asset. Asset management has become increasingly urgent in recent years for a variety of reasons. In search of options to maximize the margins, companies start to look around in other directions, beyond their ERP systems. Thus, asset management, which is not a new science, is becoming more urgent and applicable.
For the first time in 2014, the ISO 55000 Asset Management Standard was released. For comparison, many standards for quality and other process management have been imposed since 2000. The concept of asset management has three directions – risk management, performance of the asset itself and the associated costs. Many companies that take an asset in the form of a service believe that they eliminate all these things and they are transferred to the service provider and they roughly must take care of everything. That’s not exactly true. Taking something in the form of a service rather solves specific problems related to price and expense, partially solves other maintenance problems, but any other risks of bad performance, control, abuse, loss, etc. they ultimately remain with the company. Switching to something “as a Service” model does not eliminate all the care you need to take in the entire asset management concept.
How did you come to the idea of this business application?
– We talked with a lot of companies back in time, and it was a domain that was not automated and properly managed. It was a process that hasn’t received much attention, not to mention its digitization. The first steps in the digitalization of the business are linked to very different processes – management of production activities, customers, finance. So, we gradually realized that need for asset management – has arisen – an area that so far has been very neglected by most companies.
There are companies that are asset-oriented. For them, the assets are a major source of revenue. Such are, for example, leasing companies or those renting construction or agricultural equipment. For them, the assets they operate with are revenue stream.
They, in one way or another, have found a solution to this issue. Others haven’t. In asset management we talk about small items passing through computers, tablets, storage and industrial equipment, vehicles and we can even get to the buildings, complexes, etc.
All these factors led to the release of Asset Insider, our solution for asset management.
Given the level of complexity of the ERP systems, is there an option for integration between the asset management solution and a similar system?
– Integration is almost mandatory because an asset is reviewed from many perspectives. Let’s say that a company is focused on asset management. No matter what department the assets are located in, or whether they are provisioned to customers in one form or another, the company is still responsible for them. But an asset is subject to other processes in the company, such as financial management. If the asset is a fixed asset, it is depreciated, entered in the general ledger, in the balance. This asset must be identical in the various applications used by the company.
Applications for asset management exist on the market for quite some time. Every day, however, come new technologies such as the Internet of Things, sensors, Artificial Intelligence and Machine Learning, and our goal is to bring these technologies in the applications to enable better management of assets and this to happen according the best practices. This includes automated integration with other systems and directly with the assets.
Is there a data that stays with you when a company uses your Asset Management app, or it is kept only by the complay?
– In this case of cloud service and Software-as-a-Service, the data is in place where only the company, our customer, has access, plus the people to whom it is exposed by the approval the company. For example, there are cases where the company can open the application to the business environment – to their suppliers, partners or customers.
What kind of business model do you rely on?
– We are fully working on a subscription basis model. What we are distinguished from many other applications on the market that ultimately sell software as a service. But in most common scenarios the customers “get what they see”. In our case, based on low- code concept, it is possible the customer or Sappience to make additional extensions and customizations in the app, without impacting standard functionality. If in a month we release new update, this client will also get the new functionalities, and this in no way will affect his custom functionalities.
There are still few companies in Bulgaria that are not aware of what digital transformation is and you are turning to the business, talking about technologies such as machine learning, artificial intelligence, etc. Can you easily explain to them that such applications would been beneficial?
No. Perhaps half the inquiries that come to us are either from companies outside Bulgaria or from foreign companies that operating in our country and where for one reason or another, at the corporate level, this is already advanced in the concept of digital transformation. There is a scale that divides digital transformation into six stages, starting from the first in which the business thinks it is doing well without doing new things, to the sixth stage, in which the companies are always experimenting with new technologies and are at a level where they do not look at innovation from the outside, but find a way to reflect it in their business processes. Maybe the critical phase where we get a conversation with customers is when they’re in third stage. Then they know what a digital transformation is, have no strategy what to do with it, but they are ready to try and see what can happen.
Speaking of offering Software-as-a-Service, what are your biggest concerns – that the investment will not pay off, that they do not fully understand what they will receive?
-Proving the return on investment is difficult to measure on both sides. The customer does not have enough data collected at the moment, to take it and transform this data into ROI model.
Is there a way to achieve better measurability?
-There is, but it requires enough good readiness by the customers, historically accumulated data plus a slightly deeper analysis. In addition, we need the customer to let us go further down the process. So, at a preliminary stage we can dig deeper. That’s not easy. The trust between a customer and a supplier must be at a very high level. Not everyone is open to giving such information.
Is Bulgaria the focus market for Sappience or are you just based here?
-We’re based here. The presumption is that it is much easier to reach the market in our country, which however is not quite so in terms of the feedback we receive. Rather, Bulgaria is part of the focus, but it is not at its core.
Which markets do you have an appetite for?
-We aim at the Benelux countries, we have talks in Australia, where the topic of asset management is very advanced. In Australia is one of the two world NGOs that deal with this topic. Other countries, such as Kazakhstan and Azerbaijan, are also interesting. US also, but the competition is very high, and it will be difficult to work simultaneously with two countries such as Australia and the United States considering the time difference.
How many people are behind Sappience?
– Currently five, but at the beginning of this year we plan to hire more. We plan to double the team until the summer.
Do you plan to launch new products this year?
-We’ll probably build another one. The initial idea was to launch a second product by the end of 2019, but we saw that in terms of asset management there is potential and more opportunities to work on, that’s why we decided to further develop them and add more value to the first product than to make two basics apps without being impressive.
Thanks for reading! Stay tuned!