Role Model

The man who saw to­mor­row Rahul Me­her,

CRN - - CONTENTS - AB­HI­JEET MUKHER­JEE

MD, Leon Com­put­ers, walked away from the PC busi­ness way back in 2007 be­cause he saw no fu­ture in it. He continues to be ahead of the times

Rahul Me­her, Man­ag­ing Di­rec­tor, Leon Com­put­ers, al­ways wanted to pur­sue his own busi­ness. His fa­ther was the CEO of Aarey Dairy, Mum­bai, but the son ven­tured into the IT busi­ness in 1996 and started Leon Com­put­ers as a sys­tem builder.

To­day, the Pune-based com­pany is a name to reckon with for its man­aged ser­vices and soft­ware so­lu­tions, es­pe­cially in the man­u­fac­tur­ing sec­tor.

The be­gin­ning

Af­ter com­plet­ing his BE (Elec­tron­ics) from Pune Univer­sity in 1994, Me­her worked for two years in prod­uct de­vel­op­ment for a con­sumer elec­tron­ics com­pany, then as a sales ex­ec­u­tive for an IT firm where he picked up the nu­ances of busi­ness.

Me­her started Leon in 1996 with an ini­tial in­vest­ment of ` 3.5 lakh which was bor­rowed from his fam­ily. He op­er­ated from his out­house in Pune. “We started as a sys­tems builder as­sem­bling PCs for the SOHOs and SMBs which could not af­ford branded PCs in those days.”

In 1997 Me­her made changes in his strat­egy to get into the en­ter­prise seg­ment. He stopped as­sem­bling PCs and tied up with Com­paq which gave Leon ac­cess to SMB and en­ter­prise cus­tomers. “We ac­quired more than 15 SMB cus­tomers. Our first large deal was to sup­ply 250 PCs to Alfa Laval which gave us a big boost. Around the same time we also in­vested in a 2,000 sq ft of­fice in Pune.”

2003 was a turn­ing point for Leon fol­low­ing the HPCom­paq merger. “With Com­paq we could sell only PCs. By con­trast, the HP port­fo­lio was huge, and it gave us the op­por­tu­nity to pitch more prod­ucts and so­lu­tions to large cus­tomers. We be­came so­lu­tions-cen­tric and be­gan

“We ex­ited the PC mar­ket in 2007 at a time when PC sales con­trib­uted 70 per­cent to our ` 16 crore topline. Our topline shrunk very sig­nif­i­cantly, but I wasn’t both­ered”

bag­ging large deals from large cus­tomers who were ear­lier out of our reach,” re­calls Me­her.

He takes great pride in the fact that Leon was among the first few part­ners in 2007 who de­cided to ven­ture out of the PC mar­ket. “To­day we see a lot of part­ners get­ting out of the PC busi­ness say­ing there are no mar­gins. We made that de­ci­sion in 2007 at a time when PC sales con­trib­uted nearly 70 per­cent of our ` 16 crore rev­enue. We saw our topline shrink very sig­nif­i­cantly, but I wasn’t both­ered. It was im­por­tant to in­vest in fu­ture busi­ness mod­els rather than get stuck with box sell­ing only be­cause it gave you topline.”

Fol­low­ing its exit from the PC busi­ness Leon be­gan fo­cus­ing on new tech­nolo­gies—vir­tu­al­iza­tion, stor­age, net­work, se­cu­rity and soft­ware. It also ven­tured into man­aged ser­vices. “To be­come so­lu­tions cen­tric we tied up with Mi­crosoft, EMC, Check Point and VMware,” in­forms Me­her. “We ex­panded into man­aged ser­vices, and de­vel­oped stor­age, backup and se­cu­rity com­pe­ten­cies. We also started in­creas­ing our fo­cus on the au­to­mo­bile in­dus­try. We won a cou­ple of large stor­age, vir­tu­al­iza­tion, backup and archival deals from leading au­to­mo­bile com­pa­nies. This gave us the con­fi­dence that we were on the right track.”

The com­pany also in­vested ` 16 lakh in set­ting up a PoC lab for vir­tu­al­iza­tion, stor­age, archival and backup. To be more rel­e­vant to its cus­tomers Leon felt it was im­por­tant to build soft­ware de­vel­op­ment and cus­tomiza­tion skills, and there­fore in 2010 the com­pany started a soft­ware so­lu­tions di­vi­sion. “The first cus­tom­ized soft­ware we de­vel­oped was for an auto com­pany to man­age its shop floor ac­tiv­i­ties, and we in­te­grated it with the MRP/ERP,” says Me­her. “This was de­ployed on cus­tom-made hand­held de­vices. The prod­uct was such a hit that we bagged eight projects around it worth ` 30 lakh-`40 lakh each in the same year.”

Cur­rent busi­ness

The last two years have seen Leon con­sol­i­date and strengthen its so­lu­tions and ser­vices busi­ness. “We used the slow­down to con­sol­i­date our in­ter­nal or­ga­ni­za­tion,

build new skillsets, and op­ti­mize our ser­vice de­liv­ery. We stayed away from projects where we sus­pected pay­ment to be an is­sue,” says Me­her.

The com­pany saw flat growth in FY2011-12 and FY2012-13. “Our topline re­mained stag­nant at ` 17 crore, but we saw slight im­prove­ment in our mar­gins due to our fo­cus on ser­vices and ad­vanced so­lu­tions,” Me­her in­forms.

The man­aged ser­vices busi­ness has been the big­gest fo­cus area. While it con­trib­uted only 20 per­cent to the topline it con­trib­uted 40 per­cent to the bot­tom­line. “In the past 18 months we have seen our man­aged ser­vices busi­ness al­most dou­ble from ` 2.5 crore to close to ` 5 crore,” Me­her says. “We have started new ser­vices such as client and server backup in ad­di­tion to end­point man­age­ment.”

In the past 12 months Leon has in­creased the num­ber of man­aged end­points from 15,000 to 25,000. In­forms Me­her, “Last year we bagged a 3-year ser­vices con­tract worth ` 4.5 crore for man­ag­ing 8,000 clients and their backup, ap­pli­ca­tions and voice net­works. It’s a very com­pre­hen­sive con­tract, al­most like a com­plete out­sourc­ing con­tract.”

Soft­ware has been an­other per­former for Leon, con­tribut­ing nearly 25 per­cent of the rev­enue. “The soft­ware we de­vel­oped in 2010 has seen sev­eral ad­vance­ments and has to­day be­come a full-fledged shop floor man­age­ment so­lu­tion that al­lows the cus­tomer to con­nect with its OEMs, to an­other shop floor, or to the com­pany’s ware­house. It man­ages the flow of au­to­mo­bile parts as per re­quire­ments. Our cus­tomers have saved ` 7 crore-`8 crore an­nu­ally with our soft­ware,” Me­her says.

Sys­tems in­te­gra­tion continues to con­trib­ute 50 per­cent to its over­all rev­enue.

In the last 12-18 months Leon has won some com­plex sys­tems in­te­gra­tion projects. One such project, worth ` 4 crore, from a man­u­fac­tur­ing com­pany, was to mi­grate its DR site from Sun to an IBM plat­form.

Leon also con­cluded a vir­tu­al­iza­tion project for a US-based com­pany to con­sol­i­date 150 servers to six

“In the past 18 months we have seen our man­aged ser­vices busi­ness al­most dou­ble from ` 2.5 crore to nearly ` 5 crore. We have started new ser­vices such as client and server backup”

servers and mi­grate them from one data cen­ter to an­other.

Fu­ture busi­ness

Leon aims to garner rev­enue of ` 20 crore in FY2013-14 and ex­pects to grow at a CAGR of 25 per­cent over the next three years rid­ing on the growth of its man­aged ser­vices and soft­ware so­lu­tions, and by adding new ser­vices such as cloud, cy­ber se­cu­rity and an­a­lyt­ics.

The com­pany al­ready has a cou­ple of soft­ware de­vel­op­ment projects in the pipe­line to de­velop soft­ware for man­u­fac­tur­ing au­to­ma­tion projects. “We are con­stantly work­ing on im­prov­ing our soft­ware plat­form and in­clud­ing more fea­tures for process au­to­ma­tion. We are tweak­ing our shopfloor man­age­ment soft­ware for new ver­ti­cals such as tex­tiles, chem­i­cals and phar­ma­ceu­ti­cals,” adds Me­her.

Leon is bullish about BI so­lu­tions and has put in place a team of four to plan its mar­ket strat­egy. Be­sides, Me­her is bet­ting on cloud com­put­ing. “In 2014 we ex­pect to mon­e­tize the in­vest­ments we have made in ac­quir­ing skillsets and ed­u­cat­ing our cus­tomers in cloud com­put­ing. We are presently work­ing with IBM and Mi­crosoft for cloud com­put­ing, and plan to add more ven­dors to the list.”

Leon has plans to build ex­per­tise in cy­ber se­cu­rity ser­vices. “We would also like to fo­cus on big data,” Me­her re­veals. “We are work­ing on a strat­egy to pro­vide value added ser­vices in the next two years.”

On a per­sonal note

Me­her likes to in­volve him­self in so­cial work and finds time for the ed­u­ca­tion of so­cially de­prived chil­dren. He is cur­rently as­so­ci­ated with Ro­tary In­ter­na­tional and is work­ing on a project to pro­vide lit­er­acy to de­prived chil­dren across 15 coun­tries. He is also de­vel­op­ing ed­u­ca­tional soft­ware for these chil­dren in dif­fer­ent lan­guages.

He is also an ea­ger reader, and spends a good deal of his time read­ing. “I love to read spir­i­tual and lead­er­ship books. At present I am read­ing Imag­in­ing In­dia by Nan­dan Nilekani.”

Me­her loves driv­ing and spends time go­ing on long drives with his fam­ily. “Driv­ing is one of my pas­sions, so I take 2-3 days off my busy sched­ule to drive to nearby places.”

He is also a great fan of Lata Mangeshkar, Kishore Ku­mar and Manna Dey, and loves to hear their melo­di­ous num­bers when­ever he is not work­ing.

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