May 19, 2020

IT enterprise in Africa

South Africa
IT
Cloud Computing
Manufacturing
Bizclik Editor
4 min
IT enterprise in Africa

While European software markets were particularly hard hit by the recession in manufacturing, retailing and consumer goods, African markets were far less exposed to the global banking crisis. “All our emerging markets did better in the downturn than our mature markets,” says Henrik Rasmussen, SVP and head of EMEA industries at SAP, the leading global enterprise resource planning (ERP) developer. “African markets actually grew in 2009 compared with 2008. In 2010 we expect emerging markets to realize more of their potential, while the mature manufacturing economies will recover more slowly.”
 
Though South Africa is still counted as an emerging market by SAP, it has come a long way towards joining the world’s leading industrial economies, and is the catalyst for potential in the rest of the continent. This has not gone unnoticed by the global IT industry says Professor Barry Dwolatzky, Director of the Johannesburg Centre for Software Engineering at Witwatersrand University. “In the last 15 years we have seen many of the big commercial packages like SAP, Oracle or PeopleSoft coming in and winning huge slices of the financial services and public sector business.”
 
South Africa has been surprisingly innovative, says Rasmussen. While the big beasts will always derive the lion’s share of their revenues from their US and European heartland, after India and China, Africa is where the fastest growth will be seen. “And you could claim that the greatest growth now will come outside the installed base in South Africa, from the SADC and other African countries.”
 
Localization or globalization?
 
The big challenge to software providers in these markets is localization, he believes. “How do you make sure you support local registration and how do you make sure you have proper translation of what you deliver to the market? And how do you comply with all local rules? That is definitely the biggest challenge in these countries.”
 
Another ERP provider doing well in Africa is IFS. Founded in Sweden IFS’s component-based Applications, software is finding a ready market in the construction, oil & gas, power generation and technology sectors. Its biggest customer is MTN, the giant South African telecommunications firm which recently signed a sponsorship deal with Manchester United, and a large part of its success can be put down to “interoperability”, says Antony Bourne, Global Industry Sales Director. “Companies rarely set out to replace all their software in one big bang. They like our ability to live with other systems.”
 
Libya’s electricity utility GECOL is another big IFS customer at the other end of the continent. It first installed IFS ERP in 2003 and upgraded it to provide support for business critical activities from capital projects and maintenance to cost reduction, HR and financial management.
 
Innovation through necessity
 
South Africa learned self reliance during the sanctions era, and hasn’t forgotten it. Though it has proved a fruitful market for global software it would be wrong to underestimate its home grown innovation, says Dwolatzky. “Being cut off for all those years was a great opportunity for the local ICT industry to reinvent a lot of wheels.”
 
There is a group of companies with global clout, like the $4 billion Dimension Data, Business Connections and GijimaAst, all in the communications space. Their growth underlines the message that the big opportunity for Africa lies in IT innovation. “The two things on people’s lips are cloud computing and software as a service or SaaS.” Business software like Salesforce.com has grown in popularity because it is purchased on a subscription basis and hosted off site. For the time being, installed systems will keep these newcomers at bay for one reason only, the limited bandwidth in Africa compared with the rest of the world.
 
India and Latin America have huge cables or ‘pipes’ connecting them to the world wide web. “We still have quite expensive and slow internet connectivity,” says Prof Dwolatzky, “and though cloud computing generally is becoming quite an attractive option, its take up is constrained. That will change later this year and next as new cables are installed.”
 
What will happen then? According to the cloud ‘purists’, on-premises ERP is a dying delivery model, while applications in the cloud are at the forefront of progress, says Anwen Robinson, Managing Director of UNIT4 Business Software, which has developed cloud applications managed on its installed Agresso ERP software. “While it’s hard to say exactly where the market will go, a broader choice of delivery options and the buyer’s market to review ‘more options’ is clearly a certainty.”
 
Determined to capitalize on the 2010 World Cup, South Africa has invested massively in its infrastructure. The boost this has given to industry, added to its vibrant software sector, will ensure it a lead in the continent’s future IT development.

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