Databyte managing director Frederick Micallef has decades of experience in the software industry so you can imagine how surprised he was to learn that two product sectors he thought were saturated were actually ripe for new approaches: human resources and managed warehousing.

Five years ago, when the company was celebrating its 25th anniversary, the other founder – Joe Ross – decided to retire from the business, keeping a non-executive position on the board. They decided to bring on board Kenneth de Martino, with whom Databyte had collaborated on other business, and Kevin Camilleri, a lawyer who had moved to IT. The time had come for the company to reinvent itself, helped by an advisory committee made up of specialists.

“We could see that the future was going to be Cloud – so we set about creating a Cloud infrastructure,” he explained.

It was not an easy decision. It took five man-years to get the infrastructure set up, and there were times when as many as four people were working on this – ultimately – non-productive work, so sales went down.

“It was a struggle to maintain our cash flows,” he recalled.

However, he believes that taking the long-term view was the right thing to do, as the company is now poised to launch both HR and managed warehousing software, with products that are scalable enough to reach international audiences.

Not that long ago, going global would have seemed a bit of a dream… The company first made its mark providing software for local clients. Up to 15 or 20 years ago, clients had no option but to go to a software provider. However, the scenario today is completely different, with an abundance of software available ‘off the shelf’, typically as volume-driven packages with a very competitive price tag.

“The dependence of clients on tailor-made applications started to shrink, which was a concern for us – but also an opportunity because the clients who did want our services had very sophisticated requirements. Instead of providing mainstream products like inventory and accounting, which is what we did for our first 10 years or so, we started developing very specific products which were not available on the market,” he explained.

One of the first sectors where Databyte made a name for itself was managed warehousing software for clients who stored third party inventory. They started off with a hospital in Libya who had not been able to source their requirements from anywhere in the world. In 2008, Databyte provided them with a system which managed the blood laboratory, integrating all the diagnostic equipment. Mr Micallef sees great potential in this sector: “I was at a logistics fair two years ago and went to see what was available on the market. I found two applications, which were more than 15 years old! If we have an application on the Cloud, then we could certainly do something with it internationally.

“And there is a pro-logistics sentiment in government which is permeating down to industry. We are already talking to someone who is preparing to invest in a 10,000 square metre warehouse, and we would be the IT foundation for this organisation.”

With HR, the missing factor in existing systems was integration: most companies have payroll systems and leave systems – but they do not always talk to each other. The solution was to build a system of pick-and-choose modules, all of which can plug in to one underlying layer.

Taking the long-term view was the right thing to do, as the company is now poised to launch both HR and managed warehousing software...

“As things stand at the moment, there may be a person who applied for leave but the company would not know whether he or she should punch in or not as the two systems do not talk to each other. On the other hand, with out system, if your name is spelled wrong in one, then it will be spelled wrong in all of them!” he smiled.

The company identified eight modules, four of which will be rolled out this year, with the others planned for next year – all under the brand name of Workforce.

“We visited companies in the 150-250 employee range and they expressed interest, mostly in the online leave system, which allows people to plan their own leave, see their colleagues’ bookings and so on. I have never in 30 years had a product where eight out of 10 expressed interest and we then actually sold to six of them. That is a very good hit rate!

“The other challenge was putting HR – which by its very nature is so confidential – on the Cloud. Five years ago, eight out of 10 clients that we spoke to were not willing to put their HR systems on the Cloud. Today, six out of 10 have no objection whatsoever,” he said.

Databyte Managing Director Frederick Micallef. Photo: Steve Zammit Lupi

The company tested its Cloud infrastructure with a simple app:  a visitor registration system.

“It tracks who has visited your company, rather than asking them to sign an ugly copybook! But there are benefits like knowing when they last visited, who they spoke to, who is on the premises in case of an emergency… even who parked badly!” Mr Micallef explained.

Success brings with it attention that is not altogether unwelcome – including investors willing to share it.

Mr Micallef admitted that Databyte has so far financed everything internally – which takes its toll on financial performance. The time has come to consider other options, although he stressed that the company – which currently employs 12 people – was keeping an open mind, ranging from mergers to joint ventures and product take-overs. A public offering is also possible, thanks to the Malta Stock Exchange’s product for small businesses, Prospects.

“Prospects is more in reach of companies our size. But we need to understand the dynamics of these financing options. At the moment, we are more focused on the technology and the deliverables and there is no particular urgency to go to the market. I would rather do so once we have successfully made some headway,” he pondered.

In the meantime, the Cloud version of their payroll module is in the final stages of rigorous testing by accountants and auditors.

“This is the fourth version of our payroll system. Many companies have a high turnover in payroll departments so you do not want a system which has a lot of clutter but rather something which is easy to use and intuitive.

“We were never strong on audit trails but these are now very topical as people want to know if an entry has been changed and by whom and when. We may actually have gone over the top with this but I would prefer to have too much than too little!”

It is also launching a time and attendance system using bio-metric recognition devices – fingerprint, hand geometry and face recognition. Next year it is going to launch an extension to the HR database where one can store certificates and qualifications, disciplinary warnings and some medical information for emergencies such as next of kin. It also has rostering and scheduling modules, and a performance appraisal module, which he described as the biggest challenge.

“We have already been asked to develop more modules for HR – such as recruitment, as this is becoming very complex especially for companies which need to start the process internally before going externally.”

It is, however, hard to keep your feet on the ground when there are investors knocking on the door – the latest a German investor who was intrigued by the warehouse management system.

“Probably because of our size, we tend to get a little bit cautious with investors, let alone if they are foreign. But when you look at the sheer size of the market, things start to make sense.  We may be small but our functionality is enormous.

“I am very enthusiastic. And I want to send a sign of positivity across the company: that is how you gain ownership, commitment and motivation of the team.”