When Martin Procházka founded OKsystem in the 1990s, he wasn’t even remotely thinking about reaching a billion-level scale. Today, he’s already sensing new opportunities abroad.
You can read the entire interview in Czech online at the CzechCrunch website; below is the complete transcript.
When Martin Procházka sets his mind to something, he really sinks his teeth into it and doesn’t let go. So, when he was looking for ways to clear his head amidst the rapid growth of his company, he started running. Just a few kilometers wouldn’t have satisfied him, so he went straight for marathons. And it’s the same in business. Over thirty years, his company OKsystem has become a significant supplier of IT solutions for both the public administration and the private sector and, with a few exceptions, has seen steady growth. In the year Martin Procházka celebrated his 71st birthday, its turnover is expected to surpass one billion crowns. “In connection with our activities aimed abroad, the goal is to increase turnover significantly,” says the founder.
The Czech company is venturing abroad partly because the domestic market is starting to feel too small. Its main HR software solution is primarily targeted at medium-sized and large enterprises, of which there are only a few hundred in the Czech Republic at most. Nevertheless, the backbone of OKsystem’s business continues to be the supply of key information systems for the Ministry of Labor and Social Affairs and labor offices, a relationship that dates back to the 1990s. Its involvement in public administration hasn’t been without turbulence, but even after last year’s tender, the company, based in Prague’s Pankrác district, remains the main supplier.
In this extensive interview, Martin Procházka also describes the very beginnings of his business, which took shape in the 1990s, when he and his colleagues drew on their previous work at ČKD Praha. There, they had exceptional access to modern computers. Sports have accompanied the founder of OKsystem throughout his life as well. In addition to running, which we’ve already mentioned, he also started playing tennis at forty, with the same fervor that characterizes him. “Until then, I couldn’t play tennis, and now for thirty years I’ve been taking part in various amateur tournaments, and when we choose a holiday, we pick hotels with tennis courts,” he laughs.
I have correct information that you want to exceed one billion crowns in turnover soon, right?
Last year we had a record turnover of over 800 million crowns, and indeed we expect to surpass a billion this year. Our economic performance is strong, and our key projects are continuing—the largest of them is the system for labor offices under the Ministry of Labor and Social Affairs. In the light of various other state digitalization initiatives, this system is now cited as a positive example. We’re pleased to have the opportunity to prove our capabilities and introduce the latest technologies into the labor office system so that people can apply for services online, even from mobile devices.
You’ve been developing the system for labor offices for a long time, and it hasn’t been without issues…
We’ve been working on this system for thirty years, and that naturally attracts attention and sparks debate—among the media as well as politicians. This increased interest is partly fueled by our competitors and is also somewhat tied to the election cycle. Under the Public Procurement Act, systems like this must be put out to tender from time to time. In the last thirteen years, we’ve experienced two periods when, after a successful tender, we were replaced by competitors who were supposed to create a brand-new system. In both cases, about two billion crowns were invested without any results, and the ministry returned to our solution. Last year, following an open tender, we secured the project’s development for another three years.
The labor office system is crucial for your business, but it’s far from the only thing you do. What does OKsystem rely on today?
We have experience with large-scale systems for medium and large enterprises and organizations. We employ about 500 people and focus on diverse projects. The public sector still accounts for two-thirds of our turnover, but our long-term goal is to grow as fast as possible in the private sphere. We also plan to expand abroad because, given our current turnover and volume of orders, the Czech market has become too small for us. The number of potential users of our main HR solution, OKbase, is limited—only a few hundred companies.
What about the competition? There are many other big players in this field.
In the area of HR systems, we have three Czech competitors, and SAP is also a rival, offering a similarly oriented solution. However, our system is more sophisticated and tailored to the specifics of Czech legislation. Often, large corporations use SAP for financial accounting and our system for HR. There is integration between the two systems, which simplifies information sharing.
OKsystem is now fully in your hands, but it wasn’t always like that. Eventually, you decided to buy out the original partners. What motivated this decision?
The main driver was the fact that among the descendants of my three partners, there were no successors willing or able to continue. For many years, I held the largest stake at 35 percent, but not a controlling majority. At one point, there was even talk of selling the company, but that fell through at the last minute.
So you took the reins into your own hands?
At that time, I exercised my preemptive right to buy out my partners’ shares. I’m an idealist in this regard—I’ve always believed the company could outlast generations. That was my dream, and I’m happy to be making it happen.
If that planned sale had gone through back then, it never would have happened, right?
You’re correct. I didn’t want to prevent my partners from selling, though I wasn’t thrilled about it. Investors usually want a 100 percent stake. Interest in OKsystem still continues; every month, I turn down several offers from Czech and foreign investors.
Today, your two daughters also figure in OKsystem’s structure. I assume that was part of the plan when you took over the company?
My decision was driven by two factors. First, I realized I was approaching seventy and understood that my capabilities were time-limited. It was crucial to have a successor ready. Around that time, Vítězslav Ciml, a technologically oriented manager of the new generation, emerged within the company. I felt he had the qualities to become the CEO.
The second factor was family succession. Over time, my daughters expressed interest in participating in the company’s management. They don’t have IT backgrounds; they studied economics and today occupy significant roles: one is the CFO, and the other manages HR and operational matters. All three of them are just over forty, so they have many years ahead to move the company forward. I wouldn’t have been able to push the company so far on my own.
What is your role today then?
For the first three years after appointing the new director, I came to work every day. Gradually, I transferred more responsibility to the new leadership. Today, they handle all operational matters themselves. We still consult on significant and strategic issues, but I’m pleased that the company will continue without requiring my full involvement. I enjoy being part of the company in an advisory role and focusing on what really interests me, such as branding, strategy, and international activities.
What are your further goals? When you started thirty years ago, did you have a milestone in mind, like becoming a billion-crown company one day?
Back then, I never imagined we would grow to this size. Except for one year, we’ve been profitable for 34 years, and with minor fluctuations, we’ve grown in both turnover and headcount. But I never expected we’d reach this level. However, the billion-crown turnover isn’t that crucial a milestone for me. In light of our activities abroad, the goal is to significantly boost turnover. I believe that if we can apply our know-how in the U.S. and Europe, we won’t just see growth in tens of percent but a multiple of our current turnover.
How do you plan to achieve such numbers?
There are several paths. In the U.S., for instance, we are involved in the VacayMyWay project, which could be a competitor to Airbnb or Booking.com in the short-term rental market. Even a small percentage of the global turnover in this sector would significantly impact our results. Other directions for our international ventures include our Checkbot application for monitoring and analyzing industrial robot work, the generalization of our HR digitalization experience, and custom software development.
How did you get involved in the VacayMyWay project?
Through a group of American entrepreneurs who own and rent out properties in Florida. They were dissatisfied with the conditions offered by existing platforms like Airbnb, so they designed their own system that’s more advantageous for property owners and clients alike. When they were looking for a development partner, we were connected by one of our former employees. It all started during COVID, and all communication took place online. Initially, we were only supposed to implement their designs, but soon we took over the complete development of the entire system. In eighteen months, we successfully launched the project and even became investors. In addition to a financial investment, we did part of the development in exchange for shares. We first met in person only this year at a conference in London. Today, through our U.S. subsidiary, we are co-owners of the project, and I serve on the board of directors.
We’ve reached your current American adventure, but your beginnings, your studies, and your early career are equally interesting.
When I was studying, there was no faculty or specialization in computer science, so I studied technical cybernetics. Only in my final year did the Faculty of Electrical Engineering at the Czech Technical University (ČVUT) open a specialization in automatic computing machines. Computing was still in its infancy—we learned programming languages like Algol and Fortran and worked with mainframe computers. I did my thesis at ČKD Praha, where I had access to a Hewlett-Packard desktop computer. Personal computers were just on the verge of emerging, and IBM introduced them a few years after I finished my studies.
After graduation, I started working for ČKD, where I stayed for fourteen years, which seemed like a very long time back then. Then came 1989, and soon after, we founded OKsystem. So, over my entire life, I’ve effectively had only two employers.
You were among the first who got in touch with new technologies at that time, right?
At the ČKD Praha computing center, which was the largest in Czechoslovakia at the time, we had access to Western technology thanks to foreign contracts, including British ICL computers. We used computer networks whose import was under embargo, but they somehow reached us. When 1989 came, we were well-prepared for the technological changes that followed.
In computer networking, the American company Novell from Utah dominated. Microsoft had no network solution or database server yet; they introduced these products in the mid-90s. Our experience at ČKD gave us a solid foundation on which to build OKsystem. We leveraged our knowledge of PC networks and ran professional training courses. We became the first authorized Novell training center in Eastern Europe, training administrators from all over Czechoslovakia and abroad.
And that brings us to the first major contract at the labor offices you mentioned…
The early 1990s brought a new opportunity. There was a demand for software and computer networks, especially Novell networks, which became the backbone for the newly established labor offices. They had the basic infrastructure but lacked application software. We analyzed what such a system for labor offices should look like, and in 1993, we won our first contract for this institution.
Two years later, we competed for a follow-up contract for the state social support information system against major players like IBM and APP Systems (a Czech Oracle distributor). For this project, we partnered with the American company Compaq, which wanted to supply PCs and servers to the Ministry of Labor and Social Affairs, while we planned to develop the software. Although we prepared the offer at OKsystem, it was submitted under Compaq’s name. Thanks to this collaboration, we won a contract worth billions of crowns, and since we proved ourselves, we no longer needed a global company as a cover. Our initial successes led to other key projects.
In recent years, the Ministry of Labor and Social Affairs (MPSV) has been pushing significant digitalization. How’s that going?
Our application software for labor offices has evolved into a large-scale project that is now undergoing digitalization. As I mentioned before, we had competitors historically striving to secure this major contract. One criticism was that our system was outdated and that we held a monopoly. After so many years of operation, the system indeed needed an overhaul, but modernization kept getting postponed.
We repeatedly heard that the ministry wouldn’t update our system because a new supplier would take over in six months. Only in the last three years has the situation moved in the right direction. We got the chance to modernize our system and adapt it to current technological possibilities.
There’s a lively debate about digitalizing public administration and key systems. Why is it so hard for the state?
Often, the complexity of such projects is underestimated, especially given the four-year election cycle. Usually, the expertise doesn’t come from the minister directly but from a deputy or IT director. If the leadership isn’t sufficiently knowledgeable, they may have unrealistic expectations. They might think the current provider could be easily replaced, and everything can be done cheaper and faster.
Politicians often promise a new, modern IT system in a year or two, but that’s not realistic. Fundamental innovations to large-scale systems take longer than one electoral term. It’s essential to start systematically, invest enough funding in modernization, and entrust it to a qualified provider, not a bidder who views the project merely as a lucrative contract and promises miracles at unrealistic prices and deadlines.
What’s the solution, then?
For large-scale information systems—be they in banking, state social support, or building permits (currently a hot topic)—it’s necessary to build on existing solutions and ensure data migration. Major financial institutions also modernize their IT systems roughly every ten years. They certainly don’t hold new tenders every four years to hand the system over to whoever offers the lowest bid.
Such projects require teams not of individuals or dozens of people but hundreds of specialists who have long been involved in the design, development, and maintenance of the system. If every four years the entire project were handed over to a new supplier promising miracles at minimal cost, it couldn’t end well. Continuity is absolutely crucial for such extensive and significant systems.
You also have no guarantee that you’ll be developing this project forever.
Of course not. Last year, we secured system development for another three years through an open tender, but there’s no guarantee that we’ll continue in the next period. The current IT leadership at the MPSV has experience with similar systems in banking and energy. They understand what such a project entails and work with realistic plans. The digitalization of labor offices is so far developing promisingly and has yielded excellent results. But we’re not relying solely on these contracts; we’re expanding and diversifying our activities.
When we talked about why OKsystem got significantly involved in supporting tennis or floorball, you told me that without your personal passion for sports, you would never have taken on such activities. Do you still have that enthusiasm for sports?
I’ve been athletic since I was a kid. I played competitive table tennis, swam, did judo, played football, and skied. I only started running regularly when I was looking for a way to clear my head and relax. Managing OKsystem’s rapid growth wasn’t simple at one point. For four years in a row, we tripled our revenues annually and quickly exceeded 100 million. It was a very demanding period for me personally.
So you started running…
Yes, running and playing tennis. I couldn’t play tennis until I was forty, but I decided to learn it deliberately. And when I decide on something, I go all in (laughs). When I run, I run marathons; when I play tennis, I go to tournaments. For thirty years, I’ve participated in various amateur singles tournaments and mixed doubles with my wife. We choose hotels with tennis courts for holidays and go to tennis academies in Croatia every year. The family had no choice—my daughters got tennis rackets for Christmas when they were in high school, and my grandchildren have had a tennis coach since they were little.
What about marathons?
I started the company at thirty-seven, and ten years later, approaching fifty and with OKsystem still growing, I set a goal to run a marathon. In the end, I ran six Prague marathons, a dozen half-marathons, and various shorter races like 10K events or the Velká kunratická.
Do you have any unmet goals in this regard?
I ran a half-marathon last year. This year, I had some knee trouble and regretted not being able to run again. A few years ago, I thought about running a marathon in New York, Boston, or London, but I’ve given up on such ambitions now. I turned 71 this summer, so overall health, the condition of my joints, stability, and the company’s prosperity are more important to me now than chasing more marathon goals.