|Issue:||Africa and the Middle East I 2003|
|Topic:||Hardware vs. Hardship – The Reality of Technology in African SMBs|
|Author:||Olivier Suinat and Ross Swarts|
|Title:||General Managerand Telecoms Account Manager|
|Organisation:||Hewlett Packard, Africa|
Olivier Suinat is the HP General Manager for Africa. He is responsible for the overall business performance of the company across the continent, as well as with overseeing the effective integration of Compaq’s operations since the international merger of HP and Compaq in May 2002. Before holding this position, Suinat was the general manager for North, East and West Africa at Compaq – a company he joined in 1992 and at which he held several sales and marketing positions including director of e-Business and CRM; director of channel management and SMB; and manager of enterprise alliances for Compaq’s enterprise computing group. Before joining Compaq, Suinat was a trade attaché for the high technology sector at the French Embassy Trade Office in New York. He holds an MBA from Columbia University and a Masters in Business from Ecole Superience des Sciences Economiques et Commerciales (ESSEC) in France. Ross Swarts is the Telecoms Account Manager for Southern, East and West Africa at HP. He is responsible for all HP business development and solution delivery at telco operators across the region. Swarts manages HP’s relationships with the systems integrators and independent software vendors that work in the African telco space. He is also the Microsoft Alliance Manager for all vertical markets (telco, financial services, oil and gas, and government) in Africa. Before joining HP in 2000, Swarts was a business, process and project management consultant in the South African IT industry. He has been heavily involved in import/export commodity trading throughout Africa. And he has operated and managed his own mechanical engineering company. Swarts hails from a mechanical engineering background and is a member of the Institute of Marketing Management (IMM).
Popular perception often sees businesses in Africa using obsolete technology, having almost no ICT skills or knowledge, and only the most rudimentary of education. Anyone operating in Africa knows that nothing is further from the truth. The small to medium business market is booming there. The technology being used includes the latest mobile devices, powerful servers and the most innovative applications. The implementation of this technology is having a profound impact on bringing Africa into the mainstream of global business.
When looking at the reality of technology in small to medium businesses (SMBs) throughout Africa, it is not safe simply to suggest that high speed broadband access will deliver major business benefit to this sector of the market. It would be more prudent to look at how far SMBs have progressed along the road to the adoption of information and communication technology (ICT); where they are going how effective broadband access could potentially be and what programmemes are in place to ensure that future generations are sufficiently technology-literate. Before we enter that discussion, though, it’s important to draw clear lines of distinction between the needs of the SMB market and the needs of the general populace for basic ICT education. The SMB market in Africa is well catered for by local and international ICT solution providers, systems integrators, resellers and support organisations that specialise in designing solutions that streamline business, promote growth and help bolster profits. Governments can play a supportive role by creating market conditions, which promote the growth of SMBs; as a result, they contribute significantly to their local economies. And the people at these companies are generally highly ICT-literate to boot. The need for ICT education of the urban, peri-urban and rural populace is the principal domain and responsibility of governments, NGOs and similar organisations. Programmemes and initiatives are being put in place to encourage the diverse use of technology from an early age, where appropriate. It is here that ICT solution providers play a supportive role, providing technology and services that make these initiatives a reality. Popular international perception often blurs the lines between these two issues, creating the image of African professionals operating with outdated technology, substandard ICT skills and little or no basic mathematic or comprehension literacy. Nothing could be further from the truth. ICT Realities and the SMB Market in Africa Faced with the same challenges of developing a product, serving a market, developing business and supporting customers as companies in other parts of the world, African SMBs adopt internationally recognised business models. Of course, there are certain regional variations, but ostensibly what is practised in the US, Europe, the Far East and Australasia is practised across Africa. This clearly means that certain forms of technology are fundamental to SMB success on the continent. Network infrastructure and cabling, routers and switches, servers, storage, desktops, printing and imaging solutions, mobile devices and effective communications are all key. The supply and demand chain is clear. But the interesting fact is that few African companies face the challenge of installed legacy infrastructures that require large investments to upgrade or change … as a result, the technology used is invariably the latest (or close to) that’s available. We note this point because of the perception, once again, that Africa lags behind the world in terms of technology. How can it? If an SMB is looking for a router, hub or switch that’s critical to the business, would old or second hand technology be up to the task? If an SMB needs to upgrade its storage or server systems, is it really an option to run with low capacity disk or computers based on pre-Pentium processors? The answer is, obviously, no. And even if this kind of technology were chosen, what reseller would be offering it? Generally speaking, African SMBs are also gaining greater access to the levels of funding that are necessary to invest in or maintain their ICT infrastructures. Many solution providers serve these markets not through overseas offices but via direct and indirect local presences. So local pricing, delivery and support contracts are often available to SMBs, thereby keeping costs down. HP, for example, has offices in Kenya, Morocco, Nigeria and South Africa; distribution partners that cover almost all territories in East, North West, southern and West Africa; and a vast number of value-added resellers supporting end-user SMBs on the ground. Maximising ICTs in SMBs The question remains, though, as to how SMBs can use their ICT systems more effectively. The Internet is one of the most obvious places to start. While the Net does not fundamentally change the way economies grow it does heavily influence the way business is conducted. A sound online business strategy offers African SMBs access to pan-African or international markets that would previously have been out of reach . It’s here that ‘access through broadband’ could come to the fore. As interaction with companies in the US, Europe or the Far East increases, SMBs in Africa will have to find faster ways to upload and download information to and from customers. The demands for a solution like broadband access would therefore increase – and the supply of already-available technology could begin. This supply and demand issue is really all that governs the adoption of broadband in Africa. For example, a number of licences to provide broadband services have already been sold to private sector companies in Nigeria. These companies are yet to resell those services because the demand isn’t really there – if it were, broadband access could be an almost instant reality. The ability to network and share information – and streamline business processes – is another area that SMBs are addressing. Many inexpensive solutions and services such as comprehensive messaging, business management systems and specialised business applications are out there in the market. They can be integrated with SMBs existing systems. And they can leverage whatever online business strategy is already in place. Mobile devices are another aspect of ICT that’s rapidly gaining adoption by SMBs across Africa. The potential exists for the latest notebooks, PDAs and cellphones to become ubiquitous parts of a SMBs ICT arsenal, primarily due to the advances in mobile networks (we’ll look at that a little later). Taking all this into account, it’s possible to see how a clothing manufacturer in Kenya could source its raw materials from the Far East or Australasia. The company could select from online catalogues, download images of fabric examples, place orders, co-ordinate delivery and execute payment using simple, streamlined ICT systems. A motor manufacturing operation in Nigeria could follow a similar procedure, selecting parts from all over the world using online graphical interfaces. A small scale financial services provider in Morocco could bring global business practices into its operation using the latest ICT – going as far as including technologies such as touch screen monitors and mobile banking, among other things. With solid ICT systems and high-speed access where necessary, the possibilities for SMBs are practically endless. “This supply and demand issue is really all that governs the adoption of broadband in Africa. For example, a number of licences to provide broadband services have already been sold to private sector companies in Nigeria. These companies are yet to resell those services because the demand isn’t really there – if it were, broadband access could be an almost instant reality.” A word of warning amidst all this positive potential thought. The African market is a haven for ‘grey’ products that have been shipped in bulk from the Far East, Europe or the US and literally dumped on local markets. These products are sometimes genuine, sometimes not and they are almost always priced below market rates. However, they don’t come with support contracts, warranties or spare parts guarantees. Thus, SMBs looking to purchase from resellers of grey market stock should be wary of the long term cost implications of taking cheap, unsupported technology from an unauthorised dealer. It’s also important to remember that while we can postulate solutions for SMBs, all ICT choices are driven by what the companies need at the time, not simply what’s latest and greatest. If the demand is there, the supply will be there too. The Driving Force of Communication Systems Much of what we have suggested above is predicated upon the existence of a reliable communications infrastructure to serve the markets in question. As a result, communications systems are a key concern in many African countries. You only have to look at the major developments in fixed line and GSM infrastructures in the DRC, Ghana, Kenya, Mauritius and Nigeria (as just a few examples) to recognise that. The number of established Internet Service Providers (ISPs) that SMBs have direct access to is growing. Internet cafes are also rife – for example, there are over 1000 in Dar es Salaam, Tanzania, alone. However, problems of pricing and quality of service do still plague the fixed-line telco market. While demand has skyrocketed, it has yet to reach the levels where service providers can significantly reduce the cost and improve the quality of the service. The technology to provide high speed and reliable communications exists and in some cases is already deployed in Africa – it’s just that the economies of scale are not quite there. That’s partly why the mobile market has taken off so successfully. Faced with below-par fixed line communications infrastructures many countries in Africa – and, by default, the SMBs that operate within them – are turning to mobile devices for their business needs. The market for pre- and post-paid cellular services has skyrocketed over the past two or three years, and service providers are rolling out vast networks to cater to this demand. That’s all positive. Some changes to telecom legislation and regulation could yield even more potential benefits for the SMB market, though. The key issue is that of deregulation. At present, telco regulators and a country’s ministry of telecommunications create the framework within which mobile operators can provide services. They deal with the state of the physical infrastructure (or lack thereof) that supports a mobile telco provider’s business. Often, they monitor the price of mobile services; the geographic spread of the network that operators need to build; and the level of competition in a particular market. In a market that is deregulated, the operating conditions would be more flexible. Governments, regulators, operators and other private sector companies would work together to create a positive business environment in which mobile telco services could prosper – a free market economy, of sorts. “Regulators would agree on a standard framework for operation relax price controls; set and monitor quality of service levels, ease the network expansion criteria that operators are required to meet and assist with roaming and interconnect issues for local and international mobile-mobile and mobile-fixed line connections.” In this environment, governments would focus on stimulating market conditions so they are attractive for local and foreign direct operator investment. Regulators would agree on a standard framework for operation; relax price controls; set and monitor quality of service levels; ease the network expansion criteria that operators are required to meet; and assist with roaming and interconnect issues for local and international mobile-mobile and mobile-fixed line connections. The result would be the gradual integration of fixed and mobile networks that creates a backbone, which benefits urban and rural telco users alike. In a free market economy, market conditions balance the price of services based on a willing seller, willing buyer principle. Mobile operators cannot overcharge, as they will have no customer base. They cannot offer poor quality of service for the same reason. They can focus on good service in specific geographic areas because they are not tied to having a certain number of nodes in certain regions by a certain date. And in a free market, private and public sector bodies regularly put their heads together to evaluate the state of the market, the services that are being offered and ways of making investment more attractive. Developments of this nature would surely benefit SMBs as it would pave the way for the high speed, lower cost and reliable communications services that serve their business. ICT-Literacy – Challenges, Responsibilities, Solutions Looking at the need for ICT familiarity and literacy in Africa, the education of the potentially economically active populace is directly linked to the future success SMBs – after all, future generations fuel the growth of those companies. As mentioned earlier, the ICT education of the general populace is the principal domain and responsibility of governments, NGOs and similar organisations. Programmemes are being developed to help bring ICT to children at school and at university level. Also urban computer centres and ‘digital villages’ are being built; ICT is really starting to become part of daily life for people who previously had no access to it. Suppliers and solution providers – as well as the SMBs we’ve been talking about here – can play a key role by supporting the programmemes and initiatives with technology and services. A great example would be the digital village created on the campus of Knust – the university in Kumasi, Ghana. The University of Pennsylvania collaborated with HP, Knust, CIS and the government of Ghana to create a high speed campus area network that linked Knust departments with computer centres in the surrounding environs. The number of people now potentially able to benefit from exposure to this technology is vast. There are also programmemes that take specially-designed technology out into the more rural areas of Africa. PCs and satellite communication systems that are driven by solar power are entering schools and communities in less developed areas. The positive impact is already being seen … and it’s only a matter of time before this becomes more commonplace. The Future for SMBs in Africa Clearly, the future for technology in the SMBs market in Africa – and that of the general populace – is bright. Governments, NGOs and private sector companies can all collaborate to stimulate what is already a burgeoning market. And high-speed broadband access can become a reality should the demand be there. What needs to be acknowledged is that all technological advances have to be mapped to the needs of the SMBs or communities in question. It’s not about forcing the latest gadgets onto a region nor is it about attempting to revolutionise a way of life, it’s about the value that it has brought to people’s lives through the prudent, pointed implementation of information and communication technology.