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24 Sep 2015 00:00
Ivan Epstein, chief executive of Sage AAMEA
Small, medium and micro enterprises (SMMEs) in South Africa may face more than their fair share of hurdles and administrative burdens, and there may well be a number of environmental factors — for instance, the stuttering economy and Eskom — that hamper productivity and growth. However, technology is playing a significant role in helping SMMEs to compete on a national and international level and to overcome many of the issues that they face on a regular basis.
Technology increases exposure to new markets, lowers the barriers to entry, cuts costs and allows entrepreneurs from all backgrounds and ages to bring ideas to life.
“Small businesses are seeking enterprise-level continuity and delivery so that they can provide world-class service, regardless of their size,” says Rindhir Singh, product manager at Internet Solutions. “Continuity needs to be a top priority for any business owner and with pressures like increasingly congested cities, high data costs and load-shedding coming into play, SMME business owners are increasingly seeking sophisticated, enterprise-level solutions that can be adapted and adopted earlier in their companys’ development cycle.”
While most SMMEs face financial constraints that limit their adoption of the very latest and greatest in technology implementations, the evolution of cloud technology and publicly available — and reliable — solutions has given them far greater scope today. These days, SMME owners can access technology with enterprise level capability without the previous complexity and cost.
“Technology, in particular tailored software suites, has opened up fresh business models that enable SMMEs to use IT systems to access services on demand from the best possible sources,” says Jannie Marais, product manager: CaseWare: IFRS and IFRS for SME frameworks, CQS Technology Holdings. “Moreover, once initial investments are made, they often afford SMMEs greater returns and empower them to maximise the growth of their business.”
The issue of affordability is the most critical for SMMEs, but the right investment has the potential to streamline expenditure and save money over the long term. A recent study commissioned by Microsoft and undertaken by the Boston Consulting Group found that ICT gives smaller businesses the edge, whether they are in a developing or mature market.
The study of 4 000 SMMEs in the US, Germany, China, India and Brazil found that entrepreneurs who were early technology adopters increased their annual revenues 15% faster than their competitors.
“Even the smallest business can benefit from robust technology,” says Ivan Epstein, chief executive of Sage AAMEA. “Having the right systems in place also gives the business the control it needs to make informed decisions. Sure, you shouldn’t spend your entire budget on technology, but you should have the basics, like accounting, payroll, productivity software and a website.”
A startling number of small businesses don’t have these tools installed — research by Clutch has found that 25% of SMEs don’t have websites and that 10% have no plans to create one. When you consider that Pew Research has found that in the US 80% of the population has a desktop or computer and that 64% are on a smartphone, not having a presence online is the same as using a horse and cart instead of a car. SMMEs may not have the budget to tick every IT box from the start, but owners do need to invest in the basics and have a plan in place to take advantage of solutions that use mobility and the cloud.
“To survive, SMMEs have to be flexible enough to adapt their products, services and processes to better serve client’s needs,” says Dr Raj Naidoo, director at Enermatics Energy.
“Historically, companies would need an IT department to develop inven
tive solutions, but with hosted cloud services, companies have radically changed the way they do so. SMMEs can leverage the cloud to redefine processes and offer unique value to their clients.”
Thanks to the ability to host services and solutions in the cloud and to take advantage of third party service providers, SMMEs can now access almost every technology that was originally only the remit of large organisations. The cloud is a powerful tool that any SMME owner can use to run the business more efficiently and gain access to the same markets as the large enterprise.
“The primary driver to date for cloud adoption in the midmarket has been around operational agility,” says Jim Browning, Small and Midsize Business Research, Gartner. “The cloud consumption model is positively impacting time and resource utilisation. Midsize organisations — with 100 to 2 500 employees — are reporting that they are delivering certain IT services to the business with reduced effort from IT, allowing freed-up resources to be reassigned to activities that return higher value to the organisation.”
According to Gartner, the most common infrastructure services used in the cloud include email hygiene, backup, archiving, web filtering and other security controls. The most used applications include CRM, email, web conferencing, file sharing and HR, and organisation investment plans for 2016 are focusing on disaster recovery and extending data centre capacity. Browning is also quick to point out that while cost is a driver for cloud adoption and it does reduce upfront capital investment, there are some unexpected expenses — migration costs, moving applications to the cloud, network costs.
“Many businesses are overconsuming cloud services and essentially spending more than they need to when using them,” he says. “In order to optimise cloud spending, organisations need to develop a cloud clean-up policy and rarely, or never used, data should be deleted from the cloud.”
Investment into technology and the cloud needs to be done in such a way as to ensure that processes are streamlined, not complicated. Most SMMEs do not have internal IT departments and this presents its own set of concerns — the same report by Boston Consulting Group found that the main concerns of SMMEs were data security (42%), reliability (36%), malware (32%) and privacy (31%). Investment is good, but make sure that it is done with the right people and for the right reasons.
“Most start-ups and SMMEs don’t have IT staff who can drive new technology opportunities, so obtaining the services of the right implementation partner is crucial to overcoming these challenges,” says Tracey Newman, Small and Mid-Size Business Director at Microsoft South Africa. “The cloud gives companies of any size access to capabilities and services that previously were available to only the largest enterprises and at a fraction of their historical cost, on a ‘pay-as-you-go’ basis.”
Thanks to cloud-based platforms for email, phones, storage, CRM, documentations and collaboration, tiny businesses can harness the best and most efficient software and workflows through payment models that fit their budgets. Technology has the potential to mitigate the challenges faced by SMMEs as they undergo rapid growth and development.
“Normally the business owner would be met with a host of decisions and admin: which software to commit to, which hardware to commit to, how much capacity, how to fund and more,” says Sacha Matulovich, sales and marketing director for Connection Telecom and chief executive of FatBudgie. “With cloud-based platforms, the SMME can trial, implement, scale up, scale down and cancel without having to make any long term commitments or worry about hardware, funding and maintenance.”
What technology can provide businesses, beyond the benefits already outlined here, is time. Time to focus on core business processes and clients and products rather than on internal issues, admin and systems — and this is perhaps the most valuable commodity of all in the modern marketplace.
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