South Africa is poised to become a smart nation, as described recently by the acting CEO of the State Information Technology Agency (SITA) Ntutule Tshenye: delivering digital services to all citizens, introducing innovative technologies that make government business processes smoother and finding the best solutions to ICT challenges in public service delivery.
This is the vision for the public sector, but it appears across the country’s socioeconomic picture. Businesses are adapting to the new possibilities and citizens are coming to grips with the benefits offered by digital technologies.
Yet, while the country is on the right trajectory, it’s still got a long way to go. From realising digital strategies in a tough economy to closing the digital divide, the promises of the industry 4.0 era will only pay dividends once more has been accomplished. SME technology providers are particularly well-placed to get us there. But this requires more support and development for them.
“It’s important to look at avenues to activate the South African economy,” says George Masemola, Business Unit Manager at Axiz. “SMEs are widely regarded as the growth engines for modern economies. They can increase employment and grow GDP. But they must be capacitated with skills and other forms of support.”
SME growth engine
Faith in SMEs is well placed. Economies featuring strong growth almost inevitably have a vibrant SME community heating it. Globally, 95% of enterprises are SMEs and they are responsible for up to 70% of formal employment. But South Africa lags behind these trends: its SME sector employs 47% of the workforce. It also contributed around 20% to SA’s GDP – a figure that again lags well behind international norms.
For many, this represents an opportunity, one that will require different types of support. The most cited barrier is the policy environment, says Masemola: “State policy must support SMEs. There are already some policies, but those aren’t enough. There also needs to be better execution of policies. But we are seeing improvements under the current Presidential administration, such as rising seven spots in the WEF competitiveness ranking.”
Yet he doesn’t want this to come across as a problem for the state alone: “There can be more buy-in from the private sector. If more of them realise they can rely on SMEs to provide services to them – especially technology services – then it will really stimulate SME growth.”
Delivering technology services to South African businesses used to be the reserve of large providers, with SMEs focused on lesser projects. But the shifts in the market – such as the cloud, consumption-based costs, integrated platforms and commodity services – are letting SMEs participate in high-end and large digital projects.
In other words, they are poised to make a difference. But there are still challenges to overcome.
Several barriers stand in front of technology SMEs. According to Masemola, these range from technical requirements such as skills to business capabilities such as access to market and trust-building.
SMEs can collaborate as one player in a project with larger technology providers. They might operate as an SME consortium or focus unilaterally on a customer project. This gives an idea of the different types of relationships an SME has to build to participate in SA’s digital channel. Most SMEs have a service to offer, but they struggle to establish those relationships.
This is where the larger channel players can make a big difference. Says Masemola: “The market is more services-orientated, which is good for SMEs. They can be more agile and stay close to the customer journey. But they can fall short in several ways, such as experience, capacity, ability to scale, finances, technical skills, business skills and sales skills. They might need coaching around contracts or someone to facilitate meeting customers and build trust. These are things larger players such as distributors and OEMs can help with.”
Some market leaders are proactively chasing this responsibility. For example, Axiz has established an SME programme that has been addressing all the above-mentioned issues. SME partners are vetted and then introduced to a supportive environment where coaching, support and trust-building pipelines are available to them.
By establishing criteria and frameworks with different OEMs and vendors, the programme gives SMEs opportunities to upskill and also meet suitable partners to collaborate with. This extends to private sector customers as well as the public sector, facilitated by a special framework agreement with SITA.
“The programme is a platform to cultivate trust,” says Masemola. “Those procuring technology services should know that an SME represented by our programme is reliable and suited to the project at hand. The SMEs involved get to develop the skills, performance and experience required to satisfy the market. It bridges the gap between what the market needs and SMEs can provide.”
Such programmes are critical if we expect SMEs to excel and add fuel to the South African economy. We can take hope in the market’s momentum and the excellent work done by these programmes. As more stakeholders get involved, it can pave the way for the emergence of Industry 4.0.