Czech Business Weekly
By: Pavla Kozakova, 09. 05. 2006
Look at Czech Business Weekly Article
Adastra is eyeing new territories in Europe and North America but the Czech-Canadian business intelligence and data warehousing provider doesn’t want – or need – to rush the expansion, say company president Jan Mrázek and CEO Jan Červinka.
Adastra has between 60 to 70 percent of the data warehousing market in the Czech Republic and Slovakia and doesn’t feel that there’s much space for its future growth as it’s limited by the size of the market, according to Červinka. Apart from its offices in those countries and Canada, Adastra has opened one in Germany. It’s also prepping to enter the United States, Russia, Ukraine, Bulgaria, Austria and the United Kingdom but has set no deadline for opening these new offices.
Jan Mrazek
Born: Sept. 12, 1961, Prague
Education: 1986, engineering degree from the Faculty of Computer Science, University of Economics in Prague (VŠE); 1992, Ph.D. in operations research, faculty of management science, Hagen University, Germany
Work history: since 2000 owner and president of Adastra Corporation; 1996–2000, director of business intelligence, Bank of Montreal, Canada; 1995–96, senior architect, InforWorks/Rapp Collins, Canada; 1992–95 senior consultant, Terren Corporation, Canada; 1990–91, assistant professor, Hagen University, Germany; 1986–89, lecturer, University of Economics in Prague (VŠE)
dastra’s modus operandi for entering a new market is always the same – first, win a big project, then implement it successfully and build on its success to secure more projects, before opening a new office and hiring local specialists. Apart from focusing more on international growth, Adastra is expanding its portfolio in two areas: business consulting and application development.
Jan Červinka
Born: Dec. 9 1968, Prague
Education: 1992 electrotechnical faculty of Czech Technical University in Prague (ČVUT)
Work history: Since 2000 owner and CEO of Adastra Corporation; 1994–2000, director of Speedware, Czech branch of Canadian IT company; 1992–94, business development manager in Softpro selling and implementing information systems
Červinka: We’re leaving these things open. We’re trying to make strategic steps in a way that will leave the horizon open for us in countries where we’d like to be. And whether we’ll be there in a year or three years and in which succession; it will be fixed only when the immediate need arises. That we’re currently making steps to enter Ukraine doesn’t mean that we’ll be there next year; maybe we will be there in five years.
Q: How long has Adastra been in Germany?
Červinka: The first attempt to enter the German market happened four years ago but it didn’t work out. We tried to hire local people and, after basic training, send them to work. Some two years ago we started again, this time with our own reliable method.
Mrázek: I call it the method of Adam’s rib. We send our experienced consultants to the country to start the office, and gradually hire local people and exchange them for the ‘imported’ consultants, after we give them training in one of the old offices.
Q: You recently won a data warehousing project in London. How big is this order and who is the client?
Mrazek: It’s an insurance house, I can’t reveal the name yet. It’s planned to last till the end of the year and started in January. The whole project is worth £ 1 million (Kč 41.25 million/€ 1.45 million).
Q: Is the order big enough for you to open an office there?
Mrázek: It’s good to be open-minded, but it’s too early to say at this stage.
Q: What other markets are you interested in? How about entering Russia?
Mrazek: I just returned from Bulgaria and I wasn’t there on vacation. And we are also showing our teeth in Ukraine, through our partners.
Cervinka: Those are interesting territories because we are well equipped, linguistically, for these [fellow Slavic] countries and they are geographically relatively close. In addition the know-how that we have is just not available in these countries yet.
Q: Do you plan to open a branch or office in another country by the end of 2006?
Cervinka: No. Next year it’s possible; this year it’s only very difficult to imagine.
Q: Where it will be? In Ukraine?
Cervinka: We’re leaving these things open. We’re trying to make strategic steps in a way that will leave the horizon open for us in countries where we’d like to be. And whether we’ll be there in a year or three years and in which succession; it will be fixed only when the immediate need arises. That we’re currently making steps to enter Ukraine doesn’t mean that we’ll be there next year; maybe we will be there in five years.
Q: In which countries you would like to be?
Červinka: Ukraine, Bulgaria, Austria, Russia, the U.K. ... We would like to enter these markets either with our partners or clients, many of which are entering these markets.
Q: How big a market share do you have in Canada?
Mrázek: As far as data warehousing capacity, we have the largest one on the market, including the competition form big companies. But the fragmentation of the market is huge and competition fierce. There are about two or three companies smaller than Adastra that are similar to us – they are also technologically independent.
Cervinka: The prices on the Canadian market are pushed down by competition and aren’t much higher than here in the Czech Republic, but salaries are higher. So the margin that you can work with is smaller, which also influences the way companies operate.
Q: Are you considering entering the American market?
Mrazek: We’ve been considering it for five years already.
Q: With what results? What is the most difficult part of entering the market?
Mrazek: In many ways when you cross the American-Canadian border you won’t notice differences other than that the road signs are in miles instead of kilometers. But the market behaves differently and there are two main reasons why we keep postponing the entrance.
The first one is the deflated dot-com bubble, which drained the American market of investment significantly. The second is the considerable drop of the U.S. dollar. Against the Canadian dollar it dropped by more than 30 percent, so the market isn’t lucrative anymore. In addition there are legislative issues that make it more difficult to enter and work within the U.S. The country is creating some kind of barrier and it’s much easier for us to enter the U.K. than the States but I hope it will change.
Cervinka: The U.S. is obviously losing its competitiveness [by such behavior]. In general, it has become a location where fewer and fewer international conferences are organized because it’s difficult to enter the country for people from certain countries. The country is behaving in a hostile manner and it’s not good for it.
Q: You already decided that the new U.S. office will be on the East Coast?
Mrazek: Pretty much. Once we open the office there it will be supported for the first two years from our Canadian office. In addition, many of the banks have headquarters on the East Coast. The question is whether the right place would be Boston, [Massachusetts]; New Jersey; or Philadelphia, [Pennsylvania]. We are already legally present in the U.S. but you can’t open our office door there yet.
Q: You concentrate on big customers. Do you plan to change the strategy?
Mrazek: No; there are still enough big ones. We talked about geographical growth but possibly the biggest growth potential lies within the current customers. Those are big companies and they need so much business intelligence and data warehousing applications, modifications and expansions that if we only grew with our current clients it would give us enormous space for future growth.
Cervinka: Our legacy customers bring in between 75 and 80 percent of our revenues. Last year, 78 percent of our income came from customers that we already had the previous year and which spend over Kč 5 million with us. We have around two dozen clients who create 80 percent of our revenue and getting new clients is significantly more expensive for us than to work with current customers who still have growth potential.
Q: What do they need?
Cervinka: They have data stored in systems from various suppliers and each system has a different architectonical solution. Only by connecting these systems can the company utilize the information that it has fully. Banks, for example, have a different system for credit cards, debit cards, company accounts and loans and when customer comes the clerk sees him only as debit card user, for example but not as owner of a company that also has account with the bank. But that is just one aspect.
Q: What is the other one?
Cervinka: Prevention of fraud. About 10 percent of paid insurance goes to frauds worth billions of crowns. Those who repeatedly commit fraud are the most dangerous. They leave traces in the data structures and with the help of the algorithms we can detect a significant percentage of them. We introduced it here last year and there are only two insurance houses that are starting to use it. But these are only pilot projects.