Wednesday, June 30, 2010

Building up SA's SME's

The small to medium-size enterprise (SME) market in SA has tremendous potential, and Microsoft sees this market segment adopting new technologies at a faster rate than any other.

This is the view of Mark Reynolds, director of small and midmarket solutions and partners at Microsoft.

Historically, SA's SME market faced two challenges that prohibited large-scale technology adoption, says Reynolds, namely affordable bandwidth and the relative cost of technology.

He adds that these two challenges are now being addressed. “Firstly, bandwidth is coming into the country, resulting in lower costs and the introduction of uncapped offerings.

“Secondly, our exchange rate has been favourable in reducing the cost of technologies produced in international markets, as well as hardware prices being reduced as technologies improve and there is more competition in the market.”

Gois Fouche, financial director at HP, agrees with Reynolds. She says the cost of bandwidth and rates cellphone operators charge are still prohibitive. “People use what they need. The convergence of technologies to the mobile platform has given SMEs the opportunity to leapfrog into this new space.

“There is a large choice of technologies available, and choosing the right technology can be a costly choice,” says Fouche. She explains that SMEs usually have limited budgets, and adopting the wrong technology can mean they don't have enough capital to move to the right technology.

Equity initiatives

“Microsoft is aligning its programmes and investments in SA to support economic development, social advancement, and greater dynamism in the local software ecosystem,” says Kethan Parbhoo, equity equivalence lead at Microsoft.

He refers to the Equity Equivalent deal, which sees Microsoft taking a high-risk, high-reward approach to create a new model for entrepreneurship.

“The size of the deal is R472 million, and the success of the programme will hopefully come to associate broad-based black economic empowerment (BBBEE) with real entrepreneurship, job creation, business development and skills enhancement,” he adds.

“We're looking at areas like safety and security; healthcare; education; and consumer, mobility and cloud computing, and hopefully growing the market for all players in the process.”

But Fouche says initiatives should focus more on the knowledge of technology and target the skills shortage.
“Our equity equivalent deal, HP Business Institute, was started in 2006, with the execution of SME skills development in the ICT arena.”

She says the aim is to take a small number of SMEs over a seven- to 10-year period. “There is a long-term intervention in the companies with a focus on developing the corner-shop PC company into an IT company.”

Fouche explains that HP provides capacity by looking at the skills a company has; the skills it needs, and then facilitating the adoption of those skills into the company. She highlights that the skills sets can be both technical and leadership-based.

Starting small

“From a market perspective, Microsoft focuses on a number of key areas where we can add value to our customers, and the SME space is certainly one of them,” says Parbhoo.

He highlights that Microsoft's BBBEE programme and its focus on the SME market are not mutually exclusive, adding there are many skilled partners that focus their business models on the SME market.

“It is an open secret that the industry has been slow on the uptake of true BBBEE and is seen by government as lagging behind.”

He says the design of their EE programme was structured around fundamental questions: What does the market need? What's the greatest impact we can possibly make? What are government's priorities? “We wanted to do something different, and create a benchmark for other ICT companies to aspire to.

“We're looking to create intellectual property and solutions that will differentiate these companies in the market. So they're not the usual suspects at all, they are existing small businesses with a passion for technology, and we are looking to catapult them to the next level,” says Parbhoo.

“The development of skills is the enabler, while the driving factor is the growth of business, which provides access to more markets, value-added services, or allows SMEs to enter into a market niche,” Fouche concludes.

IT Web

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