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PRESS COVERAGE Clear day at the border BY DONALD RUMBAIL
RAJIV MANUCHA'S software has automated one of the hoariest business tasks: clearing imports through customs. It not only speeds up the process, it dramatically cuts costs. "We don't sell software, we sell import solutions", Mr. Manucha says of the technology he launched five years ago. Now the entrepreneur faces a challenge common to many innovators: He must continually improve his product to keep ahead of rivals, who are flooding into the market. His Toronto company, MSR Inc., not only competes with other software makers, but with customs brokers, whose traditional business is undercut by clients' ability to do their own customs clearing on PCs. Mr. Manucha and his key manager, vice-president Maria Sheppard, rely on two strategies:
"They are very prompt to answer any complaints or questions we have," says Mark Trylinski, customs administration supervisor at Sony of Canada Ltd., which has cut customs-clearing expenses by 80 per cent. "They also accept client feedback and, where feasible, incorporate these ideas into their software." CUSTOMS AND HABITS Founder: Rajiv Manucha, 42. HOW IT WORKS Every client's call to MSR is logged so that each customer file contains a full record of its communication with the company, including any complaints and MSR's response times. These details are transferred to MSR's R&D people (if software changes are needed), or to sales and marketing, or to top management when necessary. The company also tracks customers' needs through surveys, focus groups and informal conversations. These strands are pulled together at monthly meetings that focus on potential improvements. Once an improvement is put in place, MSR sends the software to customers by modem. The updates not only keep MSR's product at the leading edge – they generate revenues. Customers pay 12 per cent of installation costs for annual maintenance programs that include the customs regulations and fee changes. Based on installation costs of $8,000 to $30,000, maintenance fees range from $1,000 to $3,600 a client. None of this would have happened if Revenue Canada had not decided to switch to an electronic format for processing its clearance procedures. In 1988, it introduced CADEX (Customs Automated Data Exchange), which allows goods with bar codes to pass through customs in minutes. When the bar code is scanned, a screen displays details of the precleared shipment and a profile of the importer, The goods can be cleared without a border inspection. About 97 per cent of customs clearance is now done through CADEX, about a third of it using software like MSR's, Mr. Manucha says. THE HISTORY Mr. Manucha didn't plan a career in customs software when he quit IBM Canada Ltd. in 1982 after six years as a systems engineer and salesman. He noticed that people who sold computer services made much more money than those who sold machines, so he set out to develop customized software. Four years later, he began to abandon that, and started making standardized PC software for customs brokerage. The reason: Customers were knocking on his door asking for the product. But it was a struggle staying afloat. Mr. Manucha paid himself a salary of $12,000. "I was single," he says. By the end of 1989, MSR had developed its basic product without borrowing a cent. "I tend to believe that if you need financing, there's something wrong with the business model. A software firm that is making a go of it shouldn't need financing." Since topping $1-million in 1990, sales have grown an average of 30 per cent a year, and are forecast to hit $7.4 million for the fiscal year ending in April. Among MSR's 600 clients, it counts such major importers as Sony, Honda, and Bell Canada. Mr. Manucha, the son of a former trade commissioner for India, also owns a normal customs brokerage that serves the 5 per cent of MSR's clients who aren't comfortable with in-house administration of customs processing. In addition, he has built an alliance with a major freight forwarder, MSAS Cargo International (Canada) Inc., in Toronto, which has purchased MSR's software and helped in its development. Tim Speed, president of MSAS, says traditional customs brokering could disappear in the future, but many brokers are diversifying into automation and consulting. He figures MSR has six major competitors, including both customs brokers and software companies. WHAT NEXT? MSR is planning to enter the U.S. market, but it may need a new approach. In Canada, the company grew in
tandem with its resources. "We don't want to trickle into the U.S.," Mr. Manucha says, raising the
possibility of an initial public offering. Joking aside, he does see his duties more as leadership, not execution. He shares this role with Ms. Sheppard, ' who acts as the brake to Mr. Manucha's accelerator. He produces a steady stream of ideas and initiatives, which Ms, Sheppard silts and sorts, keeping the practical ones. About 40 per cent of his time is spent in hands-on sales or technical matters. With the rest, he works on company "vision," building a structure, overseeing hiring, and advising managers. Meanwhile, Ms. Sheppard leads major projects and acts as the repository of corporate knowledge. "Sometimes it's not clear who is the boss," Mr. Manucha says. "It can be her as much as me." |
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