Bahram Boutorabi, the chief executive officer and technology chief of local Internet company Creative Digital Technology, talks with Jennifer Foreshew about e-commerce and global business opportunities
* IN the past year, your company has grown from about 15 staff to more than 50. What is behind this rapid growth?
The growth has mainly been due to the take-up of e-commerce technologies as a mainstream business solution in Australia.
We have also created a new group that will be focused on emerging technologies for the next six to 12 months. As part of our vision to go forward we decided that we would be creating these new technologies and solutions for people that are adopting e-commerce technology so they can evolve and grow their businesses. While I can’t talk about what we are doing, we are really focusing heavily on R&D.
* Exactly how much are you devoting to R&D?
It is fair to say that over 70 per cent of our resources goes to R&D. Obviously we are not a large company, but that is quite a big chunk of our revenue.
We intend to be there and assist our clients and the market to move forward, therefore we need to make heavy investment in those areas.
* You have got some clever technology in the area of secure payments over the Internet. How has it been received in the market?
We have had a very, very good response in Australia. But we are seeing demand from the international market.
We exhibited at Internet World in New York recently and visited the headquarters of Visa International demonstrating some of our technologies along with a number of large players in the US market, including banks.
The response we get from the US at this point in time is that we are possibly about six to 12 months ahead of the US market in the technologies we have to offer.
* Did any thing firm come out of those meetings?
There are very good signs but I can’t really comment at this stage.
But Internet World was a great experience for us. It was our first exhibition outside of Australia.
One of the prime reasons for us to go to New York was to see ourselves and compare ourselves in a real international market.
The first lesson we learnt there is that these guys simply spend millions and millions of dollars on marketing. In a company where over 70 per cent of the revenue goes back into R&D, certainly we couldn’t afford to do that.
So we understood immediately we needed to lift our game. Hence, we are going to the market to look for venture capital to assist us.
The second lesson was that while we have to have broad appeal in the Australian market — covering a variety of technologies that enable companies to utilise Internet-based business — in the US it is very different: companies simply specialise.
* So what are your overseas plans? Is there a listing in the wings?
There are definite plans for international expansions with the US being the first one on the map.
Our plans are to establish our offices in the US before the end of this calendar year. We already have one person in the US and a second person is going there.
I will be following that group to oversee the establishment of it and to make some contacts in that market. We have approached US-based people that will potentially run the US arm of the company.
But I think an IPO needs to come naturally. I think there is enough substance in the company to be confident that when we go through that process we are going to be successful.
Therefore we don’t need to count on when the market is ”hot” because above and beyond that we can offer substance and value to the market.
So, would we be looking at an IPO? Definitely. But we want to do it well. We have seen recent IPOs both in Australia and overseas that haven’t been a good experience. Spike in Australia was one of them.
* What observations can you make about the e-commerce market here and in the US?
There are two distinct camps in the Australian e-commerce scene: the technology camp, and that is companies that provide e-commerce technologies to the market; and the creative camp, companies that traditionally come from a marketing background and have seen the market demand for e-commerce and hence are attempting to penetrate it.
* The products seem to be rolling out thick and fast now. What has prompted this?
To the market it looks like they are rolling fast, to us it has been a long time coming. When we started in 1992 it took us three years to roll out our first product into the market. The product rolled out was in its third version.
In other words, it took the market a long time to catch up.
We have since been developing a lot of technology but we wait for the market to reach the point where they can accept it.
We have recently seen the market become more demanding in what they require.
We see that businesses are awakening to the fact that e-commerce is going to play a major role in the future and hence we are now taking these new products into the market.
* What support is there for small companies like CDT in Australia?
There is effective support on paper which creates good numbers for government. But effective solutions to our problems? There is very little [support].
We have seen Australian public companies going to buy Canadian companies to bring technology back to Australia. We know of Australian banks going to international markets looking for solutions that already exist in the local market.
I think we only have to blame ourselves in not marketing what we have to offer.
But generally speaking government has not yet focused to the extent of saying “this is the position we want to take in the global market”.
I believe as a country we need to decide what our future is going to be before we can focus on it.
It is fine to say to all government departments: you have to get involved in e-commerce, and that mandate is in place.
But what we are really losing sight of is this not being a world of e-commerce and “e” in general e-business — e-commerce is somewhat of a transitory step towards the “g” business and that is global business.
Australia is going to have to play a role in the global market. We don’t know what that role is going to be and unless we determine what that role is going to be we will never be able to focus on it.
* Will the tax changes help?
They will definitely help. To date, the existing infrastructure and the existing business models do not recognise the value companies such as ours can bring to the market and hence we are not being looked at as potential value for the country as a whole, including export potential and having technologies and solutions that have global implications.
* Why is authentication so critical to e-commerce?
We are aware that most of the use of e-commerce today goes back to the business-to-business relationship where companies believe they can utilise these technologies to manage their relationship with their clients and business partners in a more effective way.
But a problem being faced by businesses today is the fact of not being able to positively verify who is on the other side of the line. With the Internet it is difficult to legally bind people unless we can positively authenticate them.
So authentication has become a necessary element of any business. The Internet will always be less reliable than in the physical world.
* Should business be unifying e-commerce with electronic bill presentation and payment?
Clearly, we have seen a trend where previously we had standalone systems covering different parts of our businesses. We are seeing an aggregation of all of these under one central umbrella.
We need to bring these together to have value-added offerings to people we do business with, to enable them to pay their bills online while reporting to them how their products are doing.
* Who do businesses trust and who is neutral enough to offer an effective e-commerce platform?
That is a very good question. I would have liked to have seen more activities obviously coming from Australian financial institutions, because they already have a trust role to play in society.
And government can play an effective role.
Unfortunately, we haven’t seen an innovative approach from either one of these.
* What is the role of smart cards and electronic wallets online?
Smart cards do offer an alternative to some of our current business processes by being able to carry electronic or digital certificates, enabling people to be uniquely identified. So, while the person using an e-mail can be anyone and can not be positively verified, when you hold a physical smart card within which you can hold your digital certificate or signature that can be an effective authentication mechanism.
In the future, we will see more smart cards coming into the marketplace. In fact, we are very, very active in that area. Obviously we will see the current Eftpos system disappear because most of these [smart cards] will replace them.
I don’t think there is a clear definition for what is an electronic wallet. There are Web sites that capture your personal details and enable you to re-use them again and again and these are being branded as wallets.
From our point of view, a digital wallet is really the enabling technology that allows me as a consumer, or as a business, to do what I do over the Internet in an easy and secure fashion.
CDT today is in its third generation of electronic wallets, called ”hybrid” wallets, where the wallet resides on the device you use.
We are working on electronic wallets on smart cards, on GSM cards. We believe and the market believes that electronic wallets are going to be part of everyone’s daily life as is a browser now or e-mail.
* What role does CDT want to play in the future of e-commerce?
What we want to do is be the vehicle that enables financial institutions and major corporations that are facing the challenge in this global environment to go across the bridge.
Our role is as an enabler. We provide ways for them to get across e-commerce and develop new models and make sure that as the dynamics change, they have a successful future ahead of them.
* How do you see the company evolving in the next two years?
We plan for a growth that will see the company go to over 200 people within the first quarter of next year; an aggressive growth that enables the company to penetrate the international market.
More than anything we want to focus on providing good technology and good solutions and grow organically, so that we can be in the business in years to come.