Karangkraf reduces fixed costs by 25%
14 December 2004, Microsoft SME Business Mind
Kumpulan Karangkaraf is today one of Malaysia's leading publishers, producing 33 titles and virtually cornering the local market in women's magazines, as well as teenage, children, parenting, health and fashion publications. Kumpulan Karangkraf also publishes a number of respected titles covering IT, economic, social and political issues.
But it took a lot of blood, sweat and tears over the years, reminisces Syamil Fahim bin Mohamed Fahim, Kumpulan Karangkraf's Executive Director. In this inaugural issue of SME Business Mind, Fahim shares his insights, joys and pains on how the publishing house rose from its humble beginnings to what it is today, as well as how it plans to remain at the forefront in today's competitive business environment.
What was it like in those early days?
Kumpulan Karangkraf started in 1977 with our first publication, Sejarah Melayu. We were then operating out of a small office with a team of 20 people. Our Managing Director, Tuan Haji Hishamuddin Yaacub spearheaded the team, and competition was very stiff back then, as it is now. Hardly what you would call a success story in the making, but we were young, hungry and very excited about our prospects. You have to remember that the late 70s was exciting times. We'd just lost Elvis Presley and Bruce Lee, John Travolta and The Bee Gees were the rage with Saturday Night Fever.
On the home front, Tun Hussein Onn was leading the country. We were on the brink of change. And at Kumpulan Karangkraf, the world was our oyster.
What were the challenges you faced in running the business?
High fixed cost, too few titles, low sales. At the same time, we were still new to running a business. We weren't very efficient in our resource allocation and utilization.
For example, the tools that we have today to share and manage information just didn't exist. So there was very little collaboration within and among departments. Important data and information, which could improve how we worked, was not being shared. On hindsight, not having that information at our fingertips reduced our productivity and efficiency immensely.
We also had more people than we needed for a simple job – in our IT department, for example, we had 10 people uploading documents to a centralized location at one stage. Clearly, there was room for improvement.
The bulk of our fixed costs was going into paying for redundancies. We knew that we had to change this if we wanted to grow.
What actions did you take to improve collaboration and save on resources?
Our first step was to increase and improve the interaction between departments, to get the communications channel flowing. We needed to talk to each other more! Second, we had to streamline and allocate resources for maximum efficiency and productivity.
And so, in 2003, we turned to information technology (IT). A portal was developed, and after a trial period, it was rolled out to the entire company, from human resource and marketing, down to accounts and circulation. By the end of 2004, editorial teams had also began using the portal.
So now that you've made that leap, what's your verdict?
I should have done it sooner! Implementing technology has delivered value with fast return on investment. Kumpulan Karangkraf enjoyed rapid productivity improvement in our various departments, and the solutions have been easy to learn and use. Everyone is happier with the change. We've been liberated from outdated and redundant processes forever.
What are your expected long-term benefits from the solutions you've implemented?
Through the improved work processes, it has changed the way we think, expanding the possibilities for us in terms of what Kumpulan Karangkraf can achieve.
What's next in terms of business expansion for your company?
Currently we have 300 people and 33 publication titles. Our plan is to expand publication and increase circulation, and we expect revenue to increase by 30%.
On hindsight, what would you do differently?
Probably that we would have been quicker in embracing change. I think we recognized that we needed to change, but change is scary. We weren't very sure, and it's easier to stay in our comfort zone. But the price of inertia is high, and we knew the long-term impact if we didn't change our processes to improve productivity and efficiency. Not only on the business, but also on our people. We risk losing star performers to a more progressive company, with better prospects. I'm glad that we took that leap of faith.
For the complete story on Karangkraf's journey into IT implementation, please visit http://www.karangkraf.com.my
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