By Tracy Bolton, Director: General Business at SAP Africa
According to the World Economic Forum, SMEs contribute 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 through the utilisation of Cloud technologies. 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.
However, the pace of technological change is such that many SMEs are struggling to keep up. 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.
Here, a strong partner and cloud provider ecosystem can help SMEs navigate some of the trickier aspects of digital transformation at a cost point that is suitable to their business size and revenue. Large vendors are prioritising the SME market globally: more than 80% of SAP’s customers are now SMEs, and in the first half of 2017, more than 60% of all new SAP S/4HANA customers were from the SME sector.
Cloud providers supporting SME digital transformation
Digital transformation is imperative for modern SMEs, as it enables them to streamline back-office operations and processes and free up time and resources to focus on their core business. 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 companies’ 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.
Cloud providers play a critical role here, by taking on some of the responsibility for keeping up with the pace of change. This leaves SMEs to 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.
A scalable cloud platform with real-time analytics capabilities provides SME owners with accurate customer data to assist with customer retention and loyalty. The cost of acquiring a new customer far outweighs the cost of retaining one, so smart SMEs are leveraging analytics to create a single real-time view of their customers based on verifiable data. As the old saying goes: “Make new friends, but keep the old. One is silver, the other gold.”
Partners bring cloud, digital transformation to life
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.
Local conditions also play a key role: many SMEs 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.
To support and encourage this collaboration, SAP in 2016 launched the Co-Innovation Lab, which brings together partners and their ideas and links them to SAP experts who help develop their applications and provide support to commercialise and commoditise new innovations.
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 outstrip that of on-premise IT solutions, African SMEs should prioritise their journey to cloud adoption, lest they be left behind by their more nimble counterparts.