Internationally it is now Africa that is starting to dominate the new market stakes. Certainly there are other new markets opening up elsewhere in the world, but none that holds the allure and temptation of the African market. Tight profit margins are restricting business growth in the mature markets and attention is certainly being diverted towards Africa.
How real is the opportunity? How much risk is there? How much would we need to invest, and what are the timescales for a return on that investment?
Information Technology (IT) is now at the forefront of assisting us to understand these opportunities and making them more realistic in ways that weren’t possible even a few years ago. Where once IT was rigid and locked down, it is now flexible and full of choice. Much can be attributed to the success and innovation of cloud computing. Cloud computing is making it possible for businesses to be innovative and flexible without the burden of lengthy planning, procurement, and obviously the expense associated with new locations and new markets.
Connecting to someone else’s data centres, applications and services has now become the new normal. In 2016 – according to industry analyst Gartner – more than 50% of the money organisations spend on IT will be spent on and in cloud computing.
The evolution of IT into the cloud has allowed this industry to now become an enabler of economic development, and this is particularly significant when expanding into new markets such as Africa.
IT makes businesses fast on their feet
An organisation needs to be quick off the mark in order to take advantage of new markets. Innovation in IT – and a clever deployment of your IT resources – will influence your organisation’s ability to succeed quickly. In today’s commercial environment, a business cannot wait months for new infrastructure and services before it can start operating. The cloud has revolutionised time efficiency for an organisation to become operable. As an example, by utilising the new technology in the cloud, it is quite possible to establish a call centre operation in an African urban area in within days.
IT lowers risk
Usually it would take a rather hefty upfront investment in networks, servers and hardware in order for your organisation’s systems to become operationally efficient. IT implementation and intra-company IT projects were cumbersome and time consuming. And at the back of the board’s collective mind was that they’d probably have to swallow the same pill again in a few years to keep systems up to date. Cloud now means that organisations can have the IT capacity they need, and when they want it – a service on demand. Most importantly, organisations are only paying for what they need and use from the cloud, and the budget comes out of operational expenditure instead of tying up capital.
IT takes some of the risk out of moving into new markets, and that in turn brings economic development a step closer.
IT cuts costs
A big worry for organisations expanding into new territories is the extra expense of running a more stretched operation. New supply chains need to be built up, with people and offices requiring connectivity.
South African integrated energy and chemicals company – SASOL – is a great example of an African business that is expanding internationally. SASOL develops and commercialises technologies, builds and operates world-scale facilities to produce a range of high-value product streams, including liquid fuels, chemicals and low-carbon electricity. They employ some 32,400 people working in 37 countries. Their board members and senior managers were racking up hundreds of thousands of kilometres a month traveling to remote operations to meet with suppliers and clients. This was certainly not a great use of their time nor money, and just the type of scenario that would not incentivise their decision-makers to grow the company further. In any organisation’s case, any delay or upheaval in travel – such as that of volcanic cloud activity – would certainly weaken growth, and hamper expansion and economic development.
Now, instead of getting on planes to Houston, Hamburg, London and Calgary, SASOL executives are utilising video conferencing to conduct meetings with each other, their clients and suppliers. In a mere six months, SASOL saved themselves more than a million kilometres of travel plus 40 metric tonnes of carbon emissions.
IT brings remote places closer
As connectivity becomes more prolific across Africa, companies are introducing increased levels of automation into their process – especially in the energy, resources and heath sectors. Mining company Anglo American, for instance, practically operates everywhere – from hard-to-reach parts of Africa to the Chilean Andes. And now the company is integrating the De Beers diamond company – itself with operations in some of the globe’s most inhospitable corners – the challenges increase. But IT can find ways around it. Satellite and microwave technology is used for ship-to-shore video conferencing to connect diamond-mining vessels off the coast of Namibia with the mainland.
Connectivity in Africa remains the greatest challenge to economic growth of this continent. Africa has inherited disparate legacy technologies which has prevented true globalisation of its economies. Access to the internet is limited in Africa as a whole. However, connecting via the cloud can help Africa leapfrog these legacy technologies where applications can be piped in and provide end-to-end solutions.
Where before, Anglo American would have added extra bandwidth through ever larger ‘pipes’ to speed up applications, they can now choose a smaller pipe that can handle more because it’s more efficient.
Making economic development happen
All this tells us that IT can be used as a catalyst for economic development. The more IT evolves and innovates, the more it makes geography far less of an intrusion than it used to be. It also gets around the need for large offices. Today, more and more organisations realise their people can work just as effectively at home – or on the move – supported by ever more sophisticated applications and different options for connecting to networks.
The better, cheaper and more flexible technology becomes, the more options and opportunities it opens up.
First published by Kevin Taylor, BT Global Services on World Economic Forum