Publication: Figyelő (Business Week, Hungarian edition)
Date: August 24, 2006

Portal Partner

Enterprising university students founded the IT firm which is today the only Hungarian presence in the market for integrated corporate portals, successfully competing against international rivals.

"What do you mean, 'internet'?" – professors of the Budapest University of Economics, Department of Future Research asked Sándor Kiss back in 1993 when he requested permission to write his introductory seminar paper on the social effects of the World Wide Web.

While admittedly arbitrary, the above example shows at least one thing: what the university had to offer at the time did not exactly meet this student's expectations or needs. The fact that Sándor Kiss went to a very special high school also played a role of course.

"The Anglo-Saxon mentality of the Karinthy English-Hungarian bilingual high school gave me tremendous momentum – later on, universities and colleges just did not have a motivating effect on us," says Kiss recalling the feeling he and his friends shared.

This yearning to break free from what seemed like a backward environment was in part what motivated Sándor Kiss, along with four of his classmates, to found Sense/Net Ltd. in 1995. Their early days were reminiscent of American companies launched in garages, with the difference that their headquarters was set up in an empty flat, rather than a garage, without as much as a telephone line. The university years were a time of learning also as far as the company was concerned; their projects in those days included website and content development.

The company split eventually, and the two branches went their own ways: two of the owners sold their share, and founded Mirai Interactive Ltd., which focuses on interactive marketing and online communications. Sándor Kiss, Tamás Bíró, and László Malahovszky were interested, however, in web-based document management and business applications – this became the core business of Sense/Net.

EXPANSION. After finishing their university studies, the founders had the right experience and had a clear-cut vision – but at that point, the Hungarian IT market was still under-developed; that presented a real hurdle. Fortunately for them, the dot-com bubble was inflating in the United States and Western Europe: between 1999 and 2001, more than half of the company's revenues came from outside Hungary.

These years were spent acquiring new knowledge. They realised that as they work to create different applications, they often use the exact same solutions. Initially, copying sufficed – but they soon decided developing standard products would be a wise move. "This presented several advantages: the client's trust increases if he sees the product working well elsewhere; and if we solve a problem once, we solve it for all the users," says the managing director.

Based on feedback, it also became clear that rather than focusing on content management programs or other, specialised applications, the company should work to create an entire framework, which could be used to provide solutions to all the problems – even brand-new ones – a client corporation might face.

Following continued improvements, the integrated business system Portal Engine 5.0 did just that. And it was a real off-the-shelf product: given access to the proper documentation, retailers could continue to develop it.

The first system developed using Portal Engine 5.0 was the integrated intranet and internet interface of the Budapest Mayor's Office; the engine has also of course been put to good use elsewhere since. Among others, the Hungarian Financial Supervisory Authority's public website and the integrated internal-external systems of the Budapest Gas Works Co. and the Hungarian Power Companies Ltd. (MVM) are also based on this system.

In the case of MVM, Sense/Net delivered the portal engine as a subcontractor of Axelero; the client continues to be satisfied with the operation of their system, which services the internet, the website and two microsites. "The biggest advantage of this integrated solution is the easy-to-use interface and the fact that is customisable," says the head of the company's communications department. Ágoston Tringer speaks of an excellent relationship with Sense/Net, and says the provider is quick to adapt to their needs, and has implemented several upgrades since the system was launched last spring.

BIG LEAP FORWARD. Sense/Net has never been slow to expand – several times it has featured prominently on Deloitte's Central European Technology Fast 50, a list of the fastest growing IT firms of the region; the owners have nonetheless decided to support further growth with venture capital. The U.S. venture fund Primus Capital Partners, specialising in Hungarian technology firms, acquired a minority stake in the company last year. (Majority ownership is divided equally among the three owners.)

Sándor Kiss says the move was necessary to reinforce an "ownership mentality" in the management of the company. "It is a whole different ball game to be explaining results to investors and not just to yourself," says the managing director, adding that the three owners have become much more result- and growth-oriented since the move. And this shows: following last year's revenues of 181 million HUF (US$0.9 million), this year's plans call for some 250-300 million HUF; for much of it, the funds are already available and the contracts have been signed.

The most noticeable result of the investment is intensive structural growth: Sense/Net's staff has doubled in the last year, and now numbers 35. This transforms the earlier two-tier organisational structure to three tiers: in between the owner-managers and the developers are managers who are not owners, and who take over the management of individual projects from the founders.

Sándor Kiss explained in great detail where things stand now as far as the organisational structure is concerned. He admits this is his favourite area – not surprisingly, as he believes he is personally geared more toward the humanities than the sciences. In addition to HR duties, he focuses on his role as managing director as well as on strategic planning. In the latter, he is assisted by Tamás Bíró, who specialises in marketing and product development. The third founder still with the firm, László Malahovszky – while keeping his ownership share – does not work at the company on a daily basis.

In addition to intensive growth, plans are to shift the present balance of activities: product development and related license sales are to be spotlighted. Kiss understands the difficulties – in this sector, a company can only become a retailer if it offers added value, and this makes building an international network difficult. The Hungarian market is too small in terms of licensing; the managing director says they cannot hope for more than 50 million HUF from activities in this field.

Of the current retailers, the Austria.com group has gone the farthest using Sense/Net's framework; following further developments, it now serves as the joint platform for German, Hungarian and Romanian portals with a combined visitor total of several million.

Profile

32 years old. A graduate of the Budapest University of Economic Sciences, specialising in marketing and information management. Managing director of Sense/Net Ltd. since he was 21 years of age.

Unmarried; his girlfriend is a psychologist. In his free time, he plays the guitar, goes paragliding, plays soccer or reads.

Corner Stones

Solving problems instead of tasks: they don't just mechanically serve the client – they dig deep to find out where the client really wants to go. In the majority of cases they are able to find more effective solutions. This increases clients' trust exponentially.

Vision: The firm has a pronounced vision of the "workplace of the future": employees turning on their computers see a completely custom-tailored surface bringing only news items and tasks deemed relevant, saving much time.

Fun environment: The company's trademark is fun: deadlines are taken seriously, but there is table football and comfortable places to sit in the office. There is a sense of openness and honesty toward clients. This often leads to a truly friendly relationship with business partners.

Consultants: They try to learn from others' mistakes – therefore, they work with a large number of consultants, they support their staff members' training, organize coaching and mentoring programs at the company and make plenty of professional literature available to employees.

Considering special needs: One of the secrets to their success is that they take into consideration the special needs of the Hungarian market to a maximum. All parts and components of their products are available and work in Hungarian; and individuals with the same names can be ranked according to position.

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