Enterprise
Automating HR processes
Calyn Yap 
Kakitangan.com wants to grow its customer base by four to five times in the next six months to a year, says Khoo
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Human resource (HR) departments should ideally be focusing on employee performance management and retention, rather than paperwork.

However, most SMEs believe the most important HR tasks are handling payroll or processing leave applications. Many do not even realise that HR functions should encompass more critical work.

Part of this problem is that while automation plays a key role in freeing resources for more important business activities, most HR software providers do not serve SMEs.

Coastal Hectare Sdn Bhd (Kakitangan.com) founder Effon Khoo says: “Out of 10 SMEs, eight will tell you that payroll is the most important HR work, and the other two will say it is leave applications. This is not right.

“Small companies struggle with paperwork so much they don’t realise the really important HR role is something else.”

Khoo says spending more time on payroll does not add value or contribute to the bottom line of a company, and it should be cut down to a minimum.

Instead of channelling resources to time-consuming paper-pushing, these companies should, at the very least, focus on employee performance management and retention.

In Kakitangan.com’s experience, smaller companies are keen to explore such initiatives but are bogged down by day-to-day HR operations and paperwork.


Automation

Khoo stresses that performance management and retention are just a small portion of what the HR department can do when freed from the operational bottleneck.

This includes setting up HR-related standard operating procedures and other human development efforts.

“When HR has additional budgets, it tends to employ more people, and most companies are hiring because they’re constantly losing people.

“Automating the day-to-day work will save a lot of time for them to focus on retaining staff and making employees feel part of a company that has hope for the future instead of being a ‘dinosaur’,” he says.

Since the core HR software – which includes leave applications, employee database and birthday reminders – is free-of-charge, the challenge lies in monetising such software.

As such, Kakitangan.com tweaked its business model such that it continues providing the core services for free but upsells other features.

Khoo says although SMEs usually do not budget for HR software, there are lots of other areas they’re willing to spend on.

Hence, his company upsells additional features onto the products they regularly buy, such as in payroll, medical and expenses claims.

In early June, his company launched a claims and reimbursement system that allows submissions and approvals of related transactions to be done electronically.

It also launched a premium HR information system that enables users to upload and download HR-related electronic documents and for HR managers to keep track of changes in employee profile information.

Other products include its fee-based systems for payroll. All the products are based on monthly or yearly subscription.

As pricing accounts for stretched SME resources, the full-featured payroll and expense claims systems are offered free to micro companies with not more than three employees.

This is followed by a tiered pricing system based on the number of employees in the SME.

“Based on our model, we need a large customer base to cash in, and that is why we need to grow fast.

“Nonetheless, we believe our model helps to liberalise HR, payroll and expenses for small companies,” Khoo says.


Social impact

Khoo says Kakitangan.com is always open for growth and investment opportunities.

Hence, its equity crowdfunding experience has brought on board a number of investors that believe its solutions help small companies.

In the next six months to a year, it is looking to grow its customer base by four to five times and plans to introduce several new products that are in development.

Some of these include the introduction of more features for its existing products such as sending notifications on foreign worker visa expiry.

The vision, Khoo says, is to create mass social impact by helping SMEs increase productivity by 20% monthly.

Eventually, Kakitangan.com wants to serve 60% of the country’s 900,000-strong SMEs, which form 98.5% of all business establishments.

Accordingly, he says there is no rush to enter overseas markets when there is still much to be done for local companies.

“We are a sustainable business based on volume, and we’re heading towards profitability as we grow our customer base. It’s not a very ‘sexy’ business and it’s something we have to put a lot of hard work into.

“Revenue generation is one thing, but the impact we want to make is a different matter altogether.

“We believe that when we make such an impact on society, the company’s employees and investors are financially rewarded in turn,” Khoo says.


Providing SMEs with affordable solutions

Online SME human resource (HR) software provider, Kakitangan.com was established in February 2015 and now has about 15 staff handling 7,500 clients.

Kakitangan.com was established in February 2015 and now has about 15 staff handling 7,500 clients

Last year, it raised RM1.5 mil through equity crowdfunding (ECF) via PitchIn’s platform.

On inspiration, its founder Effon Khoo says it was his experience as the general manager of a smaller Nasdaq company in Beijing that prompted him to create a solution for HR woes.

He had found it a struggle to manage administrative and HR processes and realised other companies were facing the same problem.

“People are becoming the most important resource in an organisation, but we’re still treating talent the way we’ve been doing last century, and it’s a common issue.

“Talking to SMEs, we found that they’re applying for leave at the most basic level, with Excel and paper, and handling that with an HR system was their top request,” he says.

Khoo then decided to rally a team comprising talents from Microsoft, Facebook and Zalora to build a solution to address the problem.

While Kakitangan.com is not the first HR software vendor in the market, it especially caters to SMEs. 

The reason is that although there is demand from smaller companies, there was a lack of existing solutions in the market to cater to their needs.

He says: “HR software is costly, and SMEs don’t have the money for it. It’s an open secret that vendors realise SMEs are not the market to sell to [as they don’t have huge budgets] and move on to serving bigger companies.

“It is hard work day-in day-out to help companies to change. Ultimately it’s about the value you’re giving them.”

The first hurdle Kakitangan.com had to tackle was whether it can get SMEs that are cash-strapped and wary about technology, to adopt its solutions.

This is why it released the first version of its HR software in July 2015 for free.

It sought feedback from three companies using it, and in the following months, Kakitangan.com worked to improve its offering and make it more user-friendly.

As a result, Khoo says the software was co-designed by small companies. In just five months and without any marketing, 1,000 companies signed up to use its software.

While its first year was focused on its flagship free HR software and its improvements, the second year transited to Cloud and integration with its payroll system.

Khoo says the results validate his belief that there is demand for such products, but pricing was too high previously.

Now, companies just have to turn to Kakitangan.com for affordable HR software solutions, he says.


This article first appeared in Focus Malaysia Issue 244.