A fresh approach to IT, a vibrant entrepreneurial spirit and an appetite for success were the ingredients for the creation of a new black economic empowerment (BEE) company, Reagola, in 2005.
Two young technicians involved with Woolworths` IT had a vision of doing things differently for corporates. Rather than suppressing their enthusiasm and entrepreneurial flair, Woolworths embraced it, put its money where its mouth is and helped to create a now burgeoning BEE IT company.
Instead of sending the budding entrepreneurs out into the big bad world on their own, Woolworths helped to nurture the company from the start. Reagola employees had access to Woolworths` technical training and human resources department, and Woolworths assisted the company with its business strategy.
Critically, Reagola was given a significant portion of Woolworths` outsourced IT business, ensuring cash flow for the company right from the start.
While Woolworths` approach was progressive and far-sighted, the creation of Reagola has significant spin-offs for the retail giant. Outsourcing a chunk of its IT needs to Reagola has helped Woolworths` to fulfil some of its BEE requirements. Also, the relationship with Reagola saved the IT department R3.7 million on head-office desktop support alone in the 2006/7 financial year.
According to Gerhard Roux, chief information officer at Woolworths, the partnership is clearly win-win. "Woolworths used its corporate muscle to set Reagola up for success, and Reagola in turn worked with the IT department to find innovative ways to deliver on our IT needs more cost-effectively," he says.
Innovation is at the heart of Reagola`s approach. Working closely with Woolworths, Reagola devised the new remote-support model for head office desktop support, as well as a new IT support model for stores in the Western Cape, which saved Woolworths 7.5% on maintenance costs in 2006/7.
According to Fareed Regal, CEO of Reagola, the secret to its success is its agility and relentless focus on people and customer service. "We can make decisions quickly and implement projects in a short space of time," he says.
"We continuously plough investment back into the company and our people, and have created a dynamic culture in which people have the opportunity to speak their minds. Our engineers are young yet highly skilled and self-motivated. We are all committed to providing outstanding customer service - and this is what we do."
According to Regal, Reagola has taken the lead from Woolworths and is implementing a similar empowerment model with its suppliers. Seventy-two percent of its spend goes to small and medium-sized BEE companies. "Our success would not have been possible if we didn`t get a kick-start from Woolworths," he says.
"In our own way, we are doing for others what Woolworths did for us. It is a brilliant success formula."
The trickledown effect of the Woolworths/Reagola approach will ultimately have a significant impact for true BEE entrepreneurship in South Africa. This approach is a solid example of how corporate South Africa can work with entrepreneurs to create benefits for both parties, and at the same time stimulate true empowerment. In fact, the model pioneered by Woolworths and Reagola could become the blueprint for successful BEE entrepreneurship in South Africa.
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