By Gilbert Saggia, Managing Director: East Africa at SAP Africa
African small and medium enterprises (SMEs) are facing unprecedented disruption. While large global disruptors have claimed most of the news headlines, SMEs face the same threat from disruption as their larger, more established peers. Of the companies featured on the Fortune 500 list in 1955, only 12% were still on the list in 2015. The rest were acquired by a larger competitor, filed for bankruptcy, or simply faded away into relative obscurity.
Technology is driving sweeping changes across entire industries, unseating market leaders in a matter of months. As the likes of Kodak, Blockbuster, and RIM can attest, the cost of not adapting to disruption is often outright business failure. Digital transformation is therefore imperative for modern SMEs, as it enables them to streamline back-office operations and free up time and resources to focus on their core business.
According to the World Economic Forum, SMEs contribute to around 80% of the African continent’s employment, driving the creation of a new middle class and fuelling demand for new goods and services. Of late, SMEs have also seen a levelling of the playing field with their larger competitors: in a recent IDC study, more than 70% of SMEs that have adopted cloud services said their highest expectations in terms of benefits were met or exceeded. In a separate study, two out of five SMEs saw their smaller size as an advantage over bigger companies as it allows them to move faster and take advantage of emerging opportunities.
Cloud supporting SMEs as key economic drivers
Most SMEs simply don’t have the manpower to deal with peripheral issues and have a hard-enough time keeping up with the pace of change. The increased complexity of the IT landscape, driven by new technologies and solutions coming into the market at a staggering pace, is also easier for larger companies to manage as they can afford to invest time and resources into understanding how these technologies will impact their business. Smaller companies struggle to do this, instead focusing more on the day-to-day operations required to survive.
Fortunately, cloud platforms are providing SMEs with access to IT applications and capabilities that was once the reserve of large enterprises with deep pockets. These democratised technology and services are levelling the playing field as businesses leverage the cloud to reduce costs, boost productivity, and respond to customer demand with speed and agility through a range of digital transformation initiatives.
Partners on the journey to the cloud
Cloud providers also play an integral role: by taking on some of the responsibility for keeping up with the pace of change, SMEs can focus on their business models and how they translate the availability of cloud services into business outcomes. SMEs no longer need IT departments, servers, and other expensive hardware. Even IT skills can be outsourced to trusted partners, who can equip SME owners with the technology tools they need to make their businesses more successful.
Partners also provide insight, products, and services that create business impact and so help SMEs become better placed to survive and thrive in a disruptive environment. Exponential technologies such as machine learning and blockchain further force a partnership approach: the time it would take for an SME to fully understand the intricacies and business value of machine learning would put them well behind competitors who leverage the knowledge and expertise of their partner networks.
SAP’s partner network, for example, has access to a range of tools and global industry best-practice guidelines that can bring the business value of technology to life. By utilising templates in the SAP ecosystem, partners can quickly customise solutions by switching on and off the components that they need, speeding up the delivery of ROI to the customer.
Increasingly SMEs also want to work with a solutions partner that understands their unique on-the-ground challenges, and want to build long-term relationships. However, SMEs still want the peace-of-mind of working with a big, stable brand. The ideal value ecosystem therefore consists of large solutions providers offering scalable cloud platforms, supported by local partners who can innovate and localise the solutions for specific SMEs or use-cases.
Cloud providers evolve to support SMEs
It’s not all on the partner though: SAP’s partner network has access to a range of tools and global industry best-practice guidelines that can bring the business value of technology to life. By utilising templates in the SAP ecosystem, partners are able to quickly customise solutions by switching on and off the components that they need, speeding up the delivery of ROI to the customer.
Technological disruption is also changing buying behaviour, creating new engagement models, opening-up opportunities for new business models, and enabling real-time decision-making built on accurate market and customer insights. Sitting at the centre of this is the SAP Cloud Platform, which forms the foundation of innovation within the modern business. In a market as diverse as that of the African continent, the ability to provide adaptable solutions that can meet a diverse set of needs is key. Partners who can guide their customers in how they leverage technology to create innovative business models – for example, per-patient-per-bed invoicing at a hospital, or everything-as-a-service solutions provision – are better placed to explore new commercial opportunities with their customers.
While large vendors are providing SMEs with unprecedented access to digital technologies, many SMEs face unique challenges or opportunities that require specific solutions. Providers are no longer only selling standard solutions packages: today, this is only the starting point for a process of customisation and personalisation. Here, a strong partner ecosystem is invaluable in helping SMEs unlock the potential of their digital transformation. External partners can innovate and build upon the platform provided by larger solutions providers such as SAP, combining new applications with standard solutions to create entirely new value-generators.
We believe this is the best way to support Africa’s growing SME sector. As we head to the crossover point – now predicted to be 2020 – at which IT expenditure for cloud services outstrips that of on-premise IT solutions, African SMEs should start engaging with vendors and partners who can fast-track their digital transformation and journey to the cloud, improving their competitiveness and providing some peace of mind that their business can withstand the forces of constant disruption.