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Finding opportunity amid adversity
Joe Faddoul: We used to rent computer hours form the American University of Beirut and Université Saint-Joseph

The Daily Star/Hasan Shaaban
Joe Faddoul: We used to rent computer hours form the American University of Beirut and Université Saint-Joseph The Daily Star/Hasan Shaaban
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BEIRUT: When he started BML Istisharat as a consultancy firm in 1972, Joe Faddoul barely had startup capital. Today, his company is one of the globally top-ranked banking software providers, selling to major banks in over 30 markets.

It has been homegrown qualities – resiliency, pioneering and adaptability – that made all the difference, Faddoul tells The Daily Star from his company’s offices in Downtown Beirut.

Like many successful companies in Lebanon, BML Istisharat’s road to achievement has been marred with difficulties and challenges.

Only three years after the company’s formation, the Lebanese Civil War erupted, sending what was a booming economy into chaos and setting up physical and physiological barriers to business.

Having won several consultancy contracts with European firms before the war, the company had no option but to completely alter its business model after international partners exited Lebanon.

But with the challenges of the Civil War also came opportunities, Faddoul says.

“When the war started no one consulted with anybody anymore. The only line of business that persisted was the niche inventory and payroll analysis. They were some of the first business applications of computers,” Faddoul says.

Back then computers were bulky and the size of a large room. In Lebanon there were only two available, at leading private universities.

“We used to rent computer hours form the American University of Beirut and Université Saint-Joseph and conduct analysis on behalf of firms. That’s how we started shifting from a consultancy firm to an information technology company.”

In the late 1970s, as the Civil War escalated, banks had to follow their clients, opening branches across the country. Computers had become smaller, more affordable and banks started deploying them at the local branch level.

The computerization of the banking industry brought the need for core software, which performs essential banking operations including recording transactions, interest calculations on loans and deposits, customer records, balance of payments and withdrawals.

BML Istisharat had fully transformed into an IT developer specialized in the banking and insurance sectors. The fact that the banking sector was the only one spending on IT amid the Civil War left no doubts that Faddoul bet wisely.

Even working in that industry, things were difficult. In the mid-80s, an engineer walked into Faddoul’s office complaining that his LL3,000 salary was “not worth the paper it’s printed on.” His hand-picked programmers had started to leave.

Lebanon reeled under the hyperinflation and Faddoul needed to pay employees in hard currency. Exporting products was the perfect solution and luck was on his side again.

Venturing into Paris, it did not take long before BML Istisharat won its first contract.

“Instead of going directly to the end user, I went to the big IT companies including IBM, Oracle and Hewlett-Packard and demonstrated our innovative products. They endorsed it and started selling on our behalf,” he says.

The first client IBM sent to Faddoul was Citibank, one of the world’s biggest banks. Leading French bank Banque Populaire and insurance company Assurances Générales de France followed along with a long list of majors.

Exporting to Europe was not only highly profitable but opened the door to Middle East markets, where international reputation was a prerequisite. By 1995 BML Istisharat had also tapped the U.S. market with their insurance software.

Built on a flexible and adjustable platform instead of hard-coding, the software attracted clients all over the world and fitted banks regardless “if it was in as London or Timbuktu.”

For the last five years, Istisharat’s revenues have been growing at an impressive 16 percent. Exports account for some 60 percent of revenues, Faddoul says.

The company’s achievements culminated, Faddoul says, in the annual rating of International Banking Systems ranking Istisharat’s banking software eighth out of 34 systems for universal banking and 14th out of 78 in all categories.

Southeast Asia will be Istisharat’s major growth focus in the near future. Partnering with a Malaysian distribution company, the most interesting growth will be in the huge, yet immature, banking market of Indonesia.

Asked about how BML Istisharat can compete with global IT firms, Faddoul explains that his company follows a business strategy similar to Mao Zedong’s “People’s War.”

Instead of going directly to large-scale projects, the company first endeavors to excel in small profitable projects that naturally pave the way for bigger endeavors.

“When you are small and weak, you don’t make a battle with a professional army positioned in a plateau,” Faddoul said. “You hit and run and occupy the villages. The big cities will fall to you by themselves,” he said.

A version of this article appeared in the print edition of The Daily Star on February 14, 2013, on page 5.
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