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July 2019


Developing technology SMMEs is critical

Jul 4th, 2019 Edit post


Micro, small and medium-sized businesses enjoy a lot of support among economists and for good reason. They are typically the core of growing economies: among OECD countries, SMMEs are responsible for up to 60% of GDP and employing at least as many of the workforces.

South Africa falls well short by comparison at about half of both counts, according to data from the Small Business Institute and Small Business Project. Yet that also suggests a silver lining: the SMME market has significant room to grow, just as one industry in particular needs that kind of groundswell.

A perfect match for emerging technologies

Demand for IT services, particularly around emerging technologies such as DevOps, security, artificial intelligence, analytics and business continuity, is ballooning. SMMEs are ideal: delivering such projects often require small but highly impactful teams, focused on specific parts within a larger picture or as a beachhead for digital enhancements to the business.

SMMEs are also much more attuned to the market, often because failure can mean their end. They have the flexibility and focus that larger outfits, particularly vendors, can struggle to provide.

“SMMEs would have the strong intelligence of the market in the space they play in, and the business astuteness they have makes them highly capable of delivering excellent service,” said Mbali Khumalo, Business Development Manager: Micro Focus at Axiz – the two companies jointly run an SMME programme. “The size of the business gives them an advantage to be nimble enough to dedicate efforts and focus on delivering strong solutions and excellent service for our customers.”

But there are limits as well. SMMEs struggle with market interactions, legal assistance, activations and other barriers. These can be overcome with the support of larger players. Axiz and Micro Focus have been pursuing such a relationship since May last year when they launched their SMME programme.

“For most, access to the market is a challenge and having strong brands as Axiz and Micro Focus assists them in this regard. Through understanding their strategy we are able to advise and assist on building a solid go-to-market strategy with the SMMEs.”

Sustainable SMME support

The programme was launched in collaboration with SITA, its focus on SMMEs helping modernise the state. But the programme also found traction in the private sector. What began with 6 potential SMME partners is at its anniversary fifteen strong and growing. Partners are helped with recruitment and training, as well as tackling the above-mentioned barriers. This was the clear purpose of the programme from the start, said Gary De Menezes, Micro Focus’ Country General Manager – Africa:

“I don’t think I’ve yet seen a sustainable SMME programme [prior to launching this programme], and when I say sustainable, I mean one that actually delivers value to the customers from the SMME partners. Not one that derives value from procuring BBBEE points from SMME partners. We took a different slot.”

That such a programme came into being was, frankly, because Micro Focus needed it. De Menezes said that since the vendor acquired HP Enterprise, the complexity of its products and solutions have skyrocketed. This is an issue affecting many vendors and solution integrators. As such – and both he and Khumalo stated this independently – this is definitely not about ticking boxes. It’s a strategic imperative: the market’s ability to offer and consume emerging technologies relies heavily on SMMEs, particularly in a market as strained for skills and graduate pipelines as South Africa.

Restoring faith in SMMEs

Yet SMMEs that deliver cutting edge and necessary services are not a new phenomenon. There is an unfortunate reputation for burning the market. Organisations looking for technology products, particularly ones that deliver long-term value and require matching investment, are skittish of SMMEs. But many of those failures were down to bad business models and poor SMME programmes:

“I believe that if you have the right business model, established at the beginning, and you have the right governance, you can eliminate most of the problems. But if you just have a programme that sounds good for a few points, so you give it to a project manager and throw some money at it, that doesn’t work.”

We can take two contemplations from this article. Any country hoping to build real and lasting value from emerging technologies needs SMMEs to carry that change across – so much so that it’s key to the deliverables of vendors and other large IT players. The other is that the way SMMEs are often approached and empowered in the market has not been working. Axiz and Micro Focus believe they have something that does – and so far the results are agreeing.