At the beginning of 2001, the South African small and medium enterprise (SME) market had grown at a sustained rate of about 15% per annum. However, recent statistics indicate that the registration of new SMEs is stagnating, says Orrin Klopper, MD of netsurit.
On the upside, he says the acceptance of IT has grown extensively as a critical success factor in the SME business plan. "For many SMEs, this has given them the agility that is required to compete in the new South African economy."
Klopper says the overall level of computer literacy increased in 2001, resulting in a higher level of technology acceptance and utilisation by SMEs. Various factors contributed towards the increase of IT acceptance, but the most significant, he notes, is that more entrepreneurs and SME business owners are becoming Internet-savvy and are using the Internet as an effective communications and business medium.
Klopper says the best way for SMEs to maximise their IT investment and subsequent business benefits is by adopting a top-down management and implementation approach. "IT applications should be customised to enable individual staff members to meet their specified job requirements and performance criteria. This should be facilitated by on-the-job training and support, measurement and evaluation, as well as information sharing where use of the Internet is envisaged to increase."
Certain major technology trends emerged in the SME space during 2001. According to Klopper, one of the key trends is the realisation among SME decision-makers that their IT infrastructure represents their business`s digital nervous system and is much more than just a messaging and accounting platform.
He says another major trend is the use of e-mail as a one-to-one marketing tool with the result that many SMEs are using e-mail newsletters to communicate with their existing and potential customers.
"A significant trend that I noticed among our customers is the need for leased-line facilities that enable reliable Internet and e-mail functionality."
Klopper adds that SME IT decision-makers have generally learnt from their buying mistakes. The biggest lesson being that price is not the only deciding factor when it comes to selecting a reliable and professional solution provider. "Often it is a decision-maker`s lack of faith in IT that motivates them to procure a less expensive solution, resulting in an inferior system that will only exacerbate this lack of faith."
On the supply side, he says IT solution providers have learnt that the SME market has a unique set of business needs and requires the right set of skills to address these needs. IT suppliers have also realised that education and training packaged with customised solutions is imperative.
However, Klopper says many solution providers still build their businesses around product sales and align themselves with product vendors to strengthen their business. "The goal of any IT solution provider should be service-based with the ability to provide additional value. Huge benefit can be gained from partnering a service provider that is autonomous from product alignment and who gives objective consulting based on the actual needs of the customer."
Klopper predicts that two of the major challenges that will face the SME IT market in 2002 will be the current state of the South African economy and the stagnant growth rate of SMEs. He also anticipates that hardware sales at profitable margins will become even more difficult to achieve.
Netsurit`s role as a player in the SME IT outsourcing market has changed significantly to meet identified customers` needs and anticipated market changes in 2002, says Klopper. The company`s target market has broadened to include SMEs with 10 to 100 PCs as opposed to 5 to 50 PCs. Netsurit has also diversified its product and service offering to include hardware and software sales, network support, business technology consulting, development, training and leased-line services.
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