Cooperative Models bear fruit for Liquid Thought

Cooperative business ventures are an emerging trend in South African among IT and telecommunications companies providing complimentary services to the mid-market.

The cooperative model - unlike the "co-opetition model" promoted as part of re-intermediation of IT services and business processes a few years ago - is driven by the formalisation of alliances and partnerships between autonomous entities. These IT companies are usually small or medium-sized businesses offering niche products and services to the local and global mid-market clients.

There are several drivers for the cooperative model, one of which is the targeting of the mid-market as a means for large IT vendors and smaller IT service providers to increase their market share. It is in the mid-market that competition for IT products and services has let to new strategies of taking end-to-end IT solutions to companies which are price sensitive and in need of flexible business process integration services geared towards growth. One mechanism is for large global IT vendors to partner with smaller niche operations in a local market - a channel to market embodied in the certified partner programmes rolled-out by the likes of Microsoft.

The channel also works to the advantage of the local agent. Zulfiq Isaacs, Managing Director of Liquid Thought, points out that "their alliance with Microsoft provides leverage to approach clients with confidence, offering a joint service that promotes operational efficiency internally and ensures vendor support." Liquid Thought is a black empowered IT service provider of enterprise solutions to the South African mid-market and Microsoft Certified Partner.

The global vendor-local partner model demonstrates how a cooperative model can translate multinational companies' go-to-market strategy to local market demands. In the South African market the definition of the mid-market does not fully match the understanding of the term in the global market. The local mid-market is what common policy parlance in South Africa calls small, medium and micro enterprises (SMMEs), specifically focusing on those businesses with a staff of between 20 and 200. In the global market, mid-market clients are seen to have 100 to 1000 employees.

Staying with the global-local theme, a further driver toward cooperative business models are overseas mid-sized IT service companies looking to enter the African market via a South African footprint.

According to Ahmed Hassan of the United Kingdom firm, Meridian Actuaries and Consultants offering IT services and solutions, the factors seen fostering this move are: UK government policy toward Africa, an openness to open source solutions within the government and mid-market sectors, telecommunications regulations in South Africa are showing patterns similar to that of the UK, access to IT resources through local alliances, supporting transformation within the local ICT industry, and the opportunity for outsourcing development with the benefits of a reduction in the total cost to the overseas company.

"It is for these reasons that Meridian has formed an alliance with Liquid Thought as its South African partner," said Hassan. The two companies are working on joint open source project in the travel industry and Meridian outsourced their website development to Liquid Thought.

In the local market the move toward cooperative business models is largely driven by changing pace of technology and the need to secure expertise that can deliver business solutions to clients. Partnerships between niche service and product providers, especially among IT SMMEs and between SMMEs and larger ICT providers, enable a more flexible and customised approach to the implementation of integrated IT solutions to the mid-market.

For example, Liquid Thought has strategic alliances with Integr8 IT and Enterprise Connexion, among others, to provide mid-market clients with end-to-end IT solutions. This cooperative strategy is also paying dividends with the trend toward the convergence of voice and data services offered by network operators. Liquid Thought has recently partnered with Vodacom to develop 3-G mobile services that enhance network efficiency for end-users.