A lack of clarity around black economic empowerment (BEE) assessments, a weak regulatory environment and confusion regarding the role of the State IT Agency (SITA) are impacting confidence levels in the local ICT sector.
This is according to Derek Wilcocks, executive director of strategy at Dimension Data, one of the keynote speakers at ITWeb`s IT Confidence Conference held at Gallagher Estate in Midrand today.
Investors, both locally and abroad, found it difficult to assess companies on empowerment issues, said Wilcocks, adding that he hoped the ICT charter, when finalised, would help here. While empowerment was certainly necessary in the long-term, it still often became "a pawn" in business negotiations. He said many BEE initiatives were not addressing real concerns, with several new empowered companies merely distributing value rather than creating value.
Long BEE process
His comments echo those of communications minister Ivy Matsepe-Casaburri, who told a mini-summit of the ICT empowerment working group this week that the sector needed greater innovation, infrastructure, applications, interoperability and coordination.
She said the process of formulating an ICT empowerment charter was taking longer than expected, and that the government was prepared to become actively involved in helping the sector to "bring the second economy on board".
Confusion abounds
Regulation in SA was weak, Wilcocks said, largely due to a confusing array of bodies having been appointed to implement, monitor and ensure legislative compliance.
As far as working in the government sector was concerned, it was difficult to engage with SITA and there was significant confusion around its exact function. "SITA needs to clearly state its role" with regards to its real purpose, said Wilcocks. He added that - in general - the rules of engagement when becoming involved in government procurement initiatives were "unclear" and that its tender processes were "complex and expensive".
"What the market needs to restore confidence is certainty," he said.
Commenting on changes in the channel, he said most software manufacturers were now going direct, and that margins in the hardware sector were extremely tight.
Distributors could still offer value, he said, either by representing several different manufacturers and developing efficiencies across several brands, or by offering technical and business advice, management and financial services.
In the past, distributors used technical product knowledge, strategic manufacturer selection and fulfilment to convince manufacturers they were best positioned to represent them. Now the emphasis had shifted to convincing customers they were best positioned to sell to them. This, said Wilcocks, had led to a need for significantly enhanced business and IT management skills among distributors.
Telkom now including new products and equipment in its offerings, and new entrants - such as the second national operator and Sentech - would "breathe new life into the market", he said, adding that the latter two were expected to make considerable use of the channel to grow their brands.
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