Instead of a shift to mainframes and big high-end systems and platforms, the media industry has largely benefited from the availability of cheap, entry-level consumer technology.

Publishing is benefiting from the shift to online, where content can be created on inexpensive personal computers, laptops and even mobile phones.

BMI-T public-sector consulting business unit manager Tertia Smit says that with the convergence, liberalisation and consolidation of the ICT sector, this market is becoming highly competitive and companies need to adapt to remain in the game.

Smit says that communications and media companies have a high percentage of knowledge workers.

BMI-T says the communication and media sectors’ ICT spend is driven by some large projects that are the result of convergence in these sectors, as well as the emergence of next-generation Internet Protocol networks.

Because of this convergence, it is difficult to look at the media industry in isolation. It is heavily impacted by trends in the communications sector.

In a talk at the University of Stellenbosch Business School earlier this year, Martin Butler, Information Systems Management lecturer, also pointed to convergence as a key.

“Increasingly we are seeing companies that once occupied very different spaces such as telecoms, entertainment and search engines beginning to encroach on each other’s markets.”

Technology companies are moving into the media space, media companies are moving into communication and vice versa.

South Africans are more reliant on mobile than fixed-line as a means to connect to the internet. This means that from a consumer point of view, there is a shift to mobility.

The media industry, therefore, has moved to ensure that content is available on mobile devices. Specific mobile websites are common, with content being tailored exclusively for the small screen.

In its Media Predictions 2010, Deloitte says that the impact of ICT on the media industry is being shaped by two factors.

First, the global economy. Deloitte says that making predictions for 2009 was easy – most economies would fall into recession. “In 2010, the picture is far more mixed.”

BMI-T says that the 2010 Fifa World Cup has helped ease the effects of the global economic downturn in media sectors. The SABC and Supersport have invested hundreds of millions of rands in readying themselves for high-definition TV. Both broadcasters have acquired outside HD units. The broadcasters have also invested billions in HD equipment and full HD studios.

Digitisation also continues to be a force, argues Deloitte. “It is contributing to a reinvention of the … media sector.

“This fundamentally simple transition – the conversion of analogue data into digital form and its distribution via digital networks – not only changes the balance of power within the industry, but can also reset the scope in other sectors.”

BMI-T’s Smit says that capital projects are also driven by the need for more bandwidth and platforms for integrated billing, content management and provision and more customer-driven applications.

Democratising media

Thanks to technology, media has evolved from just traditional media to include alternative media and citizen media. Alternative media can use the same technical platforms, but consider themselves an alternative to traditional media. And citizen media is content produced by private citizens who are not considered professional writers or journalists.

Citizen media is an interesting space. It allows people to have a voice, as well as gain fame, popularity, and credibility. CNN has iReporters, who report on local news they observe. If CNN is able to verify the story and likes the content, the story is featured.

While the concept of citizen media may not be hard to grasp, appropriate business models are. Citizen media has a similar dilemma as social entrepreneurship. Should business models be for profit, non-profit, or a mix? OhmyNews in South Korea has found a for-profit business model that works around citizen journalists.

OhmyNews has over 60 000 citizen journalists. Its motto is “Every Citizen is a Reporter”. Oh Yeon-ho, OhmyNews CEO, said at the LIFT Conference in Geneva in May 2010 that citizen journalists who make it are not those that do it for fame but are looking to make society better, interestingly enough.

OhmyNews’ business model combines citizen journalists with a team of staff writers, who edit content of, team up with, and support the citizen journalists. OhmyNews sends teams of staff writers and citizen journalists to report. Yeon-ho indicated that there are places to which citizen journalists cannot go, like press rooms, so there is a need for staff writers.

OhmyNews’ revenue model, however, relies heavily on advertising, accounting for 70 percent of revenue. OhmyNews has introduced new revenue streams like the 100 000 Club in which users pay about R70 per month for learning opportunities offered by OhmyNews. The goal is to reduce the advertising mix to 50 percent of revenue.

In the report Business Models and Road Maps of Citizen Media Type Applications by Information Society Technologies in 2009, it was noted that business models for citizen media platforms have not matured. This was based on research of the Dutch citizen media industry.

Typically, social entrepreneurs start “with a small group of trusted peers or organisations, who act as the (initial) prosumer part of the community,” according to the report. The audience is bound by a common interest, and “quality” content and conversation are essential.

The revenue models tend to differ from the global Web 2.0 platforms like Facebook and YouTube. Citizen media platforms use cross media business models, which include offline activities like training and on-demand media production.

In Africa, the concept of citizen media as a viable for-profit business model still lags behind for a different reason. In general, “socially” oriented endeavors are still seen as the space of non-profit organisations. This blind spot actually leaves a good opening for innovative entrepreneurs in Africa.

This article was commissioned by ITWeb/Brainstorm of South Africa.  It was co-authored with Hilton Tarrant.  Permission was granted to reprint.

Location-based services and personal tracking is also a trend.

Tracking vehicles in a fleet via GPS has become ubiquitous. Logistics companies are able to pinpoint exact locations of vehicles in real time, not only for security purposes, but also for roadside services, efficiency, as well as offence management. The full audit trail offers huge benefits for corporates.

Technology is being used by fleet companies to track the odometer reading reported by on-board computers to bill their customers on a pay-as-you-go or per-kilometre basis, ensuring fairness and objectivity.

There are specialist applications where customers in the cold chain, for example, are able to measure temperatures in real time. In the broader logistics industry, the application of ICT systems allows companies to safeguard vehicles and drivers, improve customer communication and fuel economy, lower maintenance costs, tighten regulatory compliance, increase asset utilisation and reduce their carbon footprint.

Local company MiX Telematics has pioneered the leveraging of the technology platform onto mobile devices. MiX Mobile is available for the iPhone, BlackBerry and Android devices.

It’s the first telematics company globally to enter the mobile app market, and “with its existing installed base of over 500 000 fleet management and vehicle tracking units worldwide”, this was the next logical step.

The applications allow users to find vehicles and “determine whether they are moving, at what speed and their exact location”. Users also have the ability to track a vehicle directly via text messages.

Using built-in GPS, users are able to determine the phone’s position relative to a specific vehicle.

“Historical information is available in trip reports that display the total mileage a vehicle has driven within the past 48 hours. Trips are plotted on a map in order to view an entire route, or just start and end points,” the company says.

Mobile operator SK Telecom launched its mobile telematics service, Mobile in Vehicle (MIV), last year. This service enables remote control of vehicles via mobile phones.

SK Telecom sees services in four areas: vehicle diagnosis and control, safety and security, route guidance, and entertainment services.

While mobile applications are a strong trend, Charles Tasker, MD of MiX Telematics, sees a number of other themes becoming prominent in 2010.

The reduction of carbon emissions is critical, he says. Fleet owners will use technology in order to have a clear understanding of the carbon footprint of their vehicles, in order to reduce it.

Location-based services (LBS) and personal tracking is another important trend, he adds, and is being driven by the adoption of the technology in the consumer space.

Tasker also sees a trend towards the substitution of “traditional” on-board computers by “fancy mobile devices that can communicate with vehicles as effectively”.

And, he sees more sophisticated, faster applications which put more control in the hands of users. Tasker believes this will be a key differentiator between telematics services.

The experience during the downturn in 2008 and 2009 meant that fleet owners were forced to increase their focus on the efficient management of their vehicles.

Tasker expects this trend to continue: “The efficient usage of existing fleets is driven by cost savings that can be achieved through the implementation of intelligent telematics, vehicle tracking and fleet management solutions.”

Across the continent

Transport Management Systems (TMS) is a growing software segment in the US and Western Europe. But with fragmented infrastructure in Africa, if and when will it become viable in Africa is the question.

Transport management systems are software-based solutions for managing transport. TMS can increase fleet utilisation and transport availability while reducing costs and the size of a fleet. Because TMS reduces costs, this segment grew more than other software segments in 2009.

Adrian Gonzalez, director of Logistics Viewpoints for ARC Advisory Group, says the market will grow 5.6 percent globally over the next five years, but this is down from a seven percent projection prior to the economic crisis.

TMS has been around for several decades, but it has been fragmented. More recently, TMS applications have become more process-oriented in line with enterprise resource planning (ERP) systems. The primary global markets for TMS are first the US, then Western Europe. Key vendors include Manhattan Associates, RedPrairie, Mercurygate, and Descartes. SAP and Oracle have also entered the market, hoping to leverage their ERP customer base, according to Gonzalez.

The TMS market in Africa, except for South Africa, almost doesn’t exist. Gonzalez says there are several reasons why this could be the case. First, the US and European markets are rife with opportunities. Second, Africa’s lack of infrastructure means that transport is very fragmented. Third, vendors have to dedicate resources to adapt their offerings to a new region. One vendor said that they receive inquiries from Africa, but do not have live clients.

How can the TMS market develop in Africa?

First, understanding of transport management has to grow. Vendors can educate and develop processes through the implementation of the software while increasing revenues by offering consulting services.

Second, TMS started as land-based transport management systems, but evolved to include air, sea, and rail. So vendors have a larger variety of transport sectors to work within. Logistics firms like the Bollore Group are prime targets. However, there are many other logistics firms and networks, as well as private and public fleets, of smaller size in Africa.

Third, vendors can innovate. A key trend in TMS globally is providing a software as a service platform, which, according to Gonzalez, has allowed a broader market to take advantage of TMS at a much lower entry price point.

In countries like Kenya, Ghana, and South Africa with better ICT infrastructure, vendors can create their own markets. However, it will take some creativity.

Imagine modernising the South African taxi industry, perhaps helping it to maintain or increase its viability? Another advantage to working with ecosystems like this is that transport can become a profit centre for the provider other than just providing the service to clients. The amalgamation of clients becomes a transport system on its own.

TMS can even be applied to more basic forms of transport. Transaid, a UK-based NGO, helps organisations develop non-software transport management systems. For example, they helped develop a bicycle-based patient ambulance system in Zambia. Imagine adding TMS tools that can be run across the mobile and mobile internet platforms.

TMS as we know it today has a long-term horizon before it becomes prevalent in Africa, but software as a service platforms and innovative business models may change that.

Constant change in business is seen as a problem. But what if it wasn’t a problem, but an opportunity?

The turbulent, fast-paced business environment is causing many organisations to re-think both operation and strategy. Many struggle to keep up with the pace, but the answer may not be in keeping up with it, but flowing with it.

Firms today are urged to flatten their organisations in order to more readily handle the consistent change. A better frame is seeing organisations as living organisms, which evolve and adapt.

The crux for business is adapting successfully. There is an entire field of science called complexity, dedicated to the study of complex adaptive systems (CAS) like businesses. Complexity is often confused with complication. Complication means difficulty, but complexity means many elements are woven together.

One principle of CAS is emergence. Emergence is the process by which CAS and patterns emerge from a multiplicity of simple interactions. Something reaching a tipping point or going viral on the internet is representative of emergence.

John Holland, father of the study of CAS and author of Hidden Order: How Adaptation Builds Complexity, shares that particular attention should be focussed on boundaries, shocks, and signals. Living organisms, including businesses and markets, have boundaries. As systems adapt, they push boundaries. Businesses need to adapt, so they need to push boundaries, or innovate.

Boundaries are also the points at which information, resources, etc., flow in and out of an organisation. Boundaries can be both formal and informal. The choice of with whom we share specific information is an example of an informal boundary.

While open boundaries are characteristic of systems, there are instances where boundaries are used to control flows in and out, if they are detrimental to the system. For example, negative external shocks like the sub-prime mortgage crisis in the United States that contributed to the global economic crisis.

Signals, or patterns, are building blocks of organisms. New signals, or emerging patterns, are really re-combinations of old signals, according to Holland. Signals can help organisations anticipate both positive and negative shocks. As businesses act on emerging patterns, they are adapting.

The concepts of complexity and emergence have led to new business practices, strategies, and technology tools. Yvonne Genovese, senior VP and distinguished analyst at Gartner, explains a framework for businesses to deal with complexity. Gartner’s “Pattern-Based Strategy” framework says the process that businesses need to follow is to identify patterns, model a strategy, then adapt instead of sensing and responding. Genovese says that it involves “culture, technical capabilities, and technology”.

Ronald Schultz, an expert on complexity in business and co-author of Open Boundaries: Creating Business Innovation through Complexity, says firms need to be able to view the entire landscape. To do so, firms orchestrate an environment that allows information and resources to flow freely. In essence, it’s finding the right mix of infrastructure and innovation. Too much infrastructure is characteristic of many firms today and why they struggle to adapt successfully. This is also a factor in the health of the culture, according to Schultz.

Schultz adds firms need “cue spotters”, a term coined by Michael Lissack, to orchestrate this environment. He says these individuals have the capacity to scan the entire landscape and identify cues, or signals, of emerging patterns. Cue spotters are “mindful and aware of things in front of and around them,” indicates Shultz.

War Room

From an organisational perspective, Genovese says that there are four core competencies that firms need to develop. First, firms need the competency to seek and exploit signals that may lead to a pattern, which will have a positive or negative impact on strategy and operations. Second, firms need a performance-driven culture that incorporates these leading indicators instead of just traditional performance frameworks. Third, firms need to develop agile operations that can work rhythmically with new models developed from leading indicators. And finally, there needs to be a greater degree of transparency across the landscape to allow better information and collaboration flows.

Both Schultz’ and Genovese’s input brings to mind a war-room, or ready-room, approach. In the military, there is a platform to take in information from every angle, determine what is significant, and develop courses of action.

That first step of taking in information from every angle involves looking at both current and emerging patterns. It is also important to be able to see patterns inside and outside the organisation. Because of technology like social media, the masses now have a voice. This arena outside an organisation is called collective intelligence or the “collective”.

Genovese indicates that the next two years are a critical period for firms to learn how to seek patterns. Baynote, a firm that specialises in the field of analysing emerging consumer behaviour patterns, has a technology platform to help firms do just that.

Jack Jia, founder of Baynote, shares that his own experience with an emerging pattern started the company. Jia was looking for the next business venture and did an informal survey with about 50 CIOs and CTOs, asking them to indicate what they would pay for, if provided. Out of a scale of one to ten, all rated information discovery as ten, except for one person, who rated it 11. Jia says: “That was my emerging pattern. It was right under my nose.”

He says that Baynote’s technology simulates how people seeking information behave. Instead of wading through infinite web pages, people will ask others until someone is able to help them identify the right resource
on the web. He says that the current model of relevance engines miss the mark. “It’s not semantic relevance,
but human-defined relevance that works.”

Built on this principle, Baynote’s Collective Intelligence Platform (CIP) helps clients get better rankings on search engines and provide better recommendations to their customers.

One Baynote client noticed that red appliances were appearing as a top choice of its website users, but the company didn’t sell them at the time. The client thought it might be a mistake, but decided to offer the products. In a short time, the red appliances became best sellers.

The CIP platform simulates the eyes, mind, and touch of humans. The core engines are the observer and affinity. The observer collects the information on consumer behaviour and affinity identifies the patterns within the information.

Jia says it takes as few as seven consumers demonstrating the same behaviour for Baynote’s technology to identify an emerging pattern. “The patterns are identified based on 24 heuristics of consumer behaviour, which allows us to tap into the invisible or ‘silent’ crowd.” Jia calls these emerging consumer behaviour pattern groups “micro” niche markets.

After an emerging pattern is identified, the CIP has different modules, called touchpoints, to act on the pattern. Some touchpoints are search engine optimisation and search engine marketing. Another touchpoint can automatically create websites targeted at “micro” niche markets. This allows firms to quickly adapt to potential emerging patterns efficiently and without human intervention.

Today’s evolving business environment and its complexity can seem daunting at times. However, the opportunities in emerging patterns can serve as a catalyst for innovation in any organisation prepared to take a chance.

Consumers are becoming increasingly identity-focused. Corporations will have to keep up to remain relevant – both as suppliers and employers. 

Diane Hessan, CEO of Communispace, a US company that does consumer market research, recently shared insights about consumers at the Milken Institute’s Annual Global Conference for global thought leaders. One of her comments was that consumers have found mental strength through the economic crisis.

Says Hessan: “Consumers are empowered and clear about what they are doing. People know where they spend money and how they define value for themselves. These consumers are very clear and very intentional. They do research and feel they have learned a lot.”

This is a new consumer paradigm. We are seeing the beginning of the age of identity. Consumers better understand their unique identity and what they value these days. They prioritise based on what allows them to live out their unique identities.

The principle drivers of identity-focused consumers can still be understood in the context of Maslow’s Hierarchy of Needs. Maslow says that needs drive individual motivation. Needs start with survival issues around food, water, and shelter. As people develop and move up the socioeconomic scale, their needs change from needs to connect with family and friends to self-esteem found through education and career. The final levels of actualisation and transcendence speak to people achieving mental and spiritual acuity. In other words, people become attuned to their unique identities and personalities.

The difference in the consumer markets moving forward is that an increasingly larger number of consumers will not prioritise based on needs indicating lack, e.g., self-esteem, safety, relationships.

They will focus on needs that allow them to fully live out their identities. As the old saying goes: “To thine own self be true.”

Tipping Point

This mindset used to be limited to individuals like artists and elites who had education and perhaps money, allowing them more freedom to explore who they were, according to Shoshona Zuboff in her book, The Support Economy.

The developed nations have been moving along this continuum for the last 50 or so years, but it’s possible that the economic crisis was a tipping point. This shift is not limited to Western cultures though, thanks to things like the internet, globalisation and democratisation. People have much more freedom and access to explore their unique identities even with limited means.

There is also an age dimension to this consumer market. The majority of them will be under the age of 40. By and large, they are young people who were born as the internet, globalisation and democratisation took hold.

These young consumers expect mutual, not hierarchical, relationships. That means they do not want to be pushed into something, they want to make their own decisions and co-create solutions. They will remove themselves from situations that do not create value for them, much more so than their parents did. This is a significant issue for employers.Employers need to see how to create value for themselves as well as this identity generation. Some call this talent management, but it’s more than that.

Successful employers will treat even entry-level employees as leaders in their own space and help them develop accordingly.

Employers will also have to shift thinking about turnover. This identity generation will come and go as they please. Money and perks will not hold them if employers have not connected with their needs. And even if they have connected, people will still leave much more readily for other opportunities.

So employers need to ask themselves: “How do we deal with continual change among our workforce?”

A New Age?

This identity generation can also parallel an age of entrepreneurs. A basic definition of an entrepreneur is someone who creates. Our societies will be filled with creative, ‘out-of-the-box’ people who develop disruptive solutions on a continual basis. They will be willing to take informed risks when aligned with a purpose.

While this identity generation sounds like selfish individuals, in actuality, because they understand themselves better, they become more aware and conscious of the world around them. Part of identity is having a purpose beyond yourself. According to McKinsey Consulting, this young generation, the youngest sub-group being the Millenials born after 1982, is actually more socially conscious.

Relationships are key for this generation. While it starts with a social dimension, these relationships become quite powerful as people come together more often for a common purpose or interest. However, they will flow in and out of groups or communities more readily.

Many view this as an online phenomenon, but it will also hit the real world. The grassroots strength in the Obama presidential campaign in 2008 and the Ushahidi story of citizens reporting instances of election violence in Kenya are just the tip of the iceberg.

And, it is not just a social or political shift. It is also a market and business shift. The control discipline of management science no longer works in a world with continual chaos, change, speed, and identity-focused individuals. Businesses need to be able to flow with the dynamics, not control them. IBM’s orchestration of its ecosystem has become a technology sector example.

While some may consider this not new, the significance is that, in the next decade, the identity generation will finally get a leading voice in the main markets across the globe just from sheer numbers. This will shift society, business and politics.

New Models

So what business models will work in this age of identity? The key is models that allow people freedom and growth in their identities. In practical terms, The Copenhagen Institute of Future Studies says that strategies should allow consumers to be a part of the creative process from beginning to end. The gaming market is an example. Players co-create by developing their own content in new ways of playing, skins, activities, etc.

Another strategy approach is to focus on what gives meaning to consumers. One way that Facebook enhances the meaning people derive from their relationships is through real-time engagement. Businesses should also look at business models that incorporate pull-versus-push and self-generating strategies.

African consumer markets have traditionally been disenfranchised from paradigm shifts because of the continent’s lack of development. As consumers rapidly adopt technology innovations like mobile phones, however, development, including human, tends to accelerate. Businesses focusing on Africa need to prepare for this shift, too.

The horizon for this shift in Africa may be longer, but a good gauge will be ICT patterns of usage three to five years after major ICT projects are completed. In the meantime, businesses can monitor patterns in markets where ICT access, penetration, and usage is more robust.

South Africa is the first market, but East Africa should also be followed as ICT infrastructure is rapidly developing there.

The age of identity is not just for consumers but businesses that can navigate it well. Businesses will have innumerable configurations for potential products and services with an ecosystem to bring them to market, allowing them to more readily sustain competitiveness.

I agree that western media has painted a particular view of Africa as needy, poor, corrupt, and in conflict historically.  But there are also those who do Africa a good service.

But to me this argument is no longer the primary relevant issue.  Now with the technology tools and the connected society, everyone is media.  That is called citizen media.  Individuals, groups, and organizations need to use this shift to make media that is appropriate for Africa.

The new configurations of media will be infinite, but open.  This is what we have to focus on.  There are still people who need to work with in traditional media who can help change what is being reported and how.  But most of us, whether professional media or public media don’t have to what for things to change, we can make the change.

I had a brief opportunity to share these thoughts and others at the Rwanda Convention 2010 (www.rwandaconvention.org) in Boston, Massachusetts on May 29, 2010.  And living  up to the potential in technology, I participated via videoconferencing from my home!

You can download my slide presentation – Evolving Media Presentation 2010 (37). 

Feel free to start up a conversation on this.

The Department of Defence admits its information communications infrastructure requires serious upgrades and replacements.  

IT in the public defence arena in South Africa can be summed up as a state of under-investment. While the US Military, arguably one of the most advanced defence outfits in the world, grapples with whether or not to allow the use of Twitter and Facebook across the army (it has allowed it), South Africa’s Department of Defence is dealing with what it euphemistically terms the need for “considerable investment” in information technology architecture.

In its annual report for 2009, it specifies the need for investment: “The information communications infrastructure requires serious upgrades and replacements while priority is given to information technology support to the flying environment.”

It has been working with the State Information Technology Agency (Sita) over the past decade to get the department into shape.

The Department of Defence operates over 500 separate information systems, with over a fifth of those defined as “major”. The department’s IT acquisition plan makes for sombre reading. Its budget for the 2009-2010 financial year was R200 million, out of a baseline allocation for the department from Treasury of R28.6 billion.

The money was allocated roughly equally to management applications, functional applications, common applications and an integrated information and communication infrastructure.

It had requested an additional R500 million from Treasury for information and communication system renewal over the past three years, but did not receive any allocation for that purpose.

In line with the rest of government, it’s rolling out the Integrated Financial Management System (IFMS). National Treasury says the IFMS project will “review and upgrade government’s transverse information technology systems”.

The objective is to enhance transverse – or general administrative – systems including financial management, human resource management, supply chain management (procurement) and related business intelligence.

Business process management outfit Ovations has been awarded a tender to implement service-oriented architecture at the department.

Private

Aside from the travails in the public sector, the country has a vibrant defence industry in the private sector.

Denel remains a sizeable outfit, and numerous weapon components are manufactured in the country. These companies are under the same pressures, from an ICT perspective, as any other industrial outfit.

The trend towards outsourcing certain functions is not as pronounced in the sector, because of the highly specialised processes.

Many argue that consistent research and development into new and highly specialised technologies is critical. Otto Schür, Denel’s Group executive: Technical, maintains that “with the Defence Force typically sourcing these technologies from suppliers in the industry, companies in this sector need to effectively remain ‘one step ahead’ of the enemy.

“This ‘new’ approach to national security has seen the defence industry sector focusing even more on accuracy, as well as advancing and enabling high-end technology.”

There is also a trend towards the commercialisation of military technologies, enabling certain product offerings to add significant value to the local security industry, among others.

A Natural Mix

Defence and security are critical issues for African nations, but Africa still accounts for less than five percent of the market globally. Key drivers for the defence market in Africa for the last several years have been the need to modernise, as well as the need to secure oil and gas assets.

A few years back, the market in Africa was projected to grow six percent to seven percent yearly. The economic crisis caused the forecast to slow to 2.6 percent through 2013, according to Forecast International.

The major country markets, excluding South Africa, are “Algeria, Angola, Kenya, Morocco, and Nigeria,” says Shaun McDougall, International Military Markets analyst for Forecast International. The African market can be delineated between more and less advanced economies. This delineation also defines the focus in ICT opportunities.

More advanced economies are looking at intelligence gathering, ICT and data networks, and securing the networks, while the less advanced economies are focusing on basic voice and data capabilities to support command and control structures, indicates McDougall.

In either case, ICT plays an important element that weaves itself through the defence subsectors, including aircraft, warships, ordinance, missiles, vehicles and C4I. C4I stands for command, control, communications, computer, and intelligence. It’s obvious that ICT plays a signifi cant role in the C4I space, but electronics are found in devices and equipment in all subsectors. As such, the development of ICT infrastructure is a strong contributor to the growth and potential of the defence market going forward.

According to McDougall, regional integration is another driver for ICT in defence. Even small countries are looking at how to improve command and control within the field, using communications. “Being able to participate fully in joint operations and interservice/ international training exercises is important,” says McDougall. For example, Nigeria opened its first advanced operations centre in Abuja in 2009. The centre allows officers to stay connected with soldiers deployed on domestic and international missions. Its capacity includes real-time video and data communications.

Another set of drivers, particularly in North Africa, is insurgency and border control. Due to this, some of Algeria’s focus is on intelligence, aircraft, and unmanned aerial vehicles (UAVs). “Aircraft and UAVs can include technology like smart weapons and advanced radar capabilities, defi nitely enabled by ICT,” says McDougall.

Nigeria is focused on managing the Niger Delta conflict.

Maritime defence systems are the key to protect the waterways and coast in the region. McDougall notes major vendors in the African defence market do not come from the African continent. Russia has a long history in sub-Saharan Africa (SSA). Today, many SSA countries are modernising ageing Russian defence systems. The United States defence industry is another major player. Europe is in the mix, with France’s defence industry working mostly the French-speaking countries.

China appears on the radar, but in niche markets, not major defence systems.

The need for defence, including ICT infrastructure, is there. But, African economies need to grow signifi – cantly overall to take on the funding requirements.

While the economic crisis at the end of the first decade of the 21st century has made the most headlines, there are more significant shifts afoot that will inform the future of business.

The years 2000 through 2009 represented not only a decade, but the end of a generation in technology.

In 1957, the Russians put the first satellite in orbit. In 1969, the first man walked on the moon, and the internet officially went online. Now, these technologies have converged in innovative ways and opened doors to average people around the world. People can use services like Google Earth to see and pull up information on physical locations around the world, combining satellite and internet technology.

In many ways, the first decade of the 21st century was also a transition decade. The transition, which is still underfoot, will fundamentally change both our economic and business environments.

Politically, the last decade started with the stalwart, unipolar power of the United States. It ended with an emerging configuration of multipolar power, inclusive of emerging nations. It has spilled over into the co-ordination of global economic policy changing from the G8 nations to the G20 nations, including South Africa.

Aligned with these political shifts are the dynamics of global demographics, which are setting the stage for the major consumer markets of the next 40 years. These markets are shifting to emerging regions like Asia and Africa due to fast population growth. While consumer demand should continue to rise globally, it will increase the fastest in Asia and Africa. In fact, the International Monetary Fund says that emerging consumer markets will serve as the new growth engine for the global economy.

This equation holds true in technology as well. The International Data Corporation’s “Economic Impact of IT” study says that emerging markets represented 21 percent of IT spending in 2009, but through 2013 will represent 50 percent of net new growth in IT spending.

Technology also serves as a catalyst for economies and an enabler of business. Each ten percent increase in broadband connections results in 1.3 percent economic growth, according to the World Bank.

A New Impetus

While these notes serve as a backdrop to the transition in the last decade, they do not reveal the real story of how technology is fundamentally influencing our economic and business environment.

John Hagel and John Seely Brown, authors of The Only Sustainable Edge: Why Business Strategy Depends on Productive Friction and Dynamic Specialization, theorise that the business environment is transforming from push to pull models for mobilising resources. Essentially, instead of organising resources in anticipation of needs, resources are positioned when needed. For example, cloud computing allows digital infrastructure to be used and scaled when needed. Pull models are more conducive to the chaotic and turbulent environments in which we live today, allowing for greater agility. The shift from a push to pull paradigm has been occurring for decades. It seems more apparent now, however.

According to the Shift Index 2009, by Deloitte, there are three key waves (The Big Shift) impacting our business environment. The first wave is the impact of an expanding digital infrastructure and public policy focusing on economic liberalisation. The second wave is the shift in knowledge, capital, and talent flows due to an expanding digital infrastructure. And the third wave is the impact created by the first two.

There is a ray of light for emerging nations and markets in The Big Shift. Thomas Friedman, in the book The Lexus and The Olive Tree: Understanding Globalization, says that there will no longer be a First, Second, and Third World, but only the Fast World and Slow World. The Fast World is a wide-open society.

In The Big Shift, African economies do not need to catch up to industrialised nations, per se, because the open playing field creates space for them to innovate.

The growth of the mobile market in Africa in the past decade is a perfect example. If Africa had waited for fixed line deployment, it would still have been catching up, but instead it is leading global markets.

D for Democracy

The Fast World/Slow World paradigm is evolving due to the democratisation of technology, finance, and information, which started in the 1980s. Democratisation of technology encompasses the innovations that have allowed hundreds of millions of people to communicate, connect, and exchange information, money, etc. Democratisation of finance means people have the power and information to invest.

Democratisation of information means that people around the world have access to information. In essence, the power to shape economies and markets no longer rests in the hands of the few, but is open to the masses, or crowds, around the globe.

From a practical business perspective, these forces mean the way we do business now and in the future will change. There are several evolving models that took root in the past decade.

Crowdsourcing is any sort of outsourcing that involves a large group of people, usually the public, to actively contribute to a task or project. Wikipedia is a prime example of crowdsourcing. In a business context, Goldcorp, a Canadian mining company, outsourced the task of identifying gold deposits in a concession to the public in 2000. Through this process, Goldcorp was able to find deposits worth $3 billion.

In Africa, crowdsourcing is a model well suited to mobilising people around development, political, or business projects. First National Bank (FNB) used crowdsourcing to solicit a business idea that would draw its wealthy customers to online banking in 2008. The selected idea garnered $2 500 for winner, Guillaume Martin.

Another operational model is crowdfunding. Crowdfunding is crowdsourcing applied to raising funds. Osterwalder Alexander and Pigneur Yves, authors of Business Model Generation, used a combination of crowdsourcing and crowdfunding to write and fund the book. The public was invited to serve as co-writers and investors at the same time. As people joined the project, they paid a fee that got them a copy of the book when released, allowed them to provide input as the book was developed, and get a royalty as the book was sold.

Locally, Eve Dmochowska has started a crowdfunding project for South African start-ups, which generated nearly R1 million in investments within its first few weeks of opening.

In another instance, digital democratisation and the cost of technology, e.g., internet bandwidth, reaching almost a “virtually” free state in the West, catalysed the “freemium” business model.

Chris Anderson, Editor-in- Chief of Wired Magazine, coined the phrase in his book, Free: The Future of a Radical Price. Freemium is where basic services are offered for free, while a premium is charged for special features. A typical application is magazines or newspapers that offer some online content free but the majority for paid subscribers only. Anderson expects, “freemium to cross over into other industries as part of a new industrial revolution”.

New Horizons

Will Africa win or lose in this new business context? It has the same opportunity as any other region to move in the new business dynamics, and it has several things going for it. Mobile and internet infrastructure development has gained momentum in the past decade, but there is still a lot to do. The continent has one of the world’s largest consumer markets and ample human capital, both of which are underdeveloped. And, of course, Africa has an abundance of resources.

The question is, will Africa leapfrog, as a whole, like it did with the mobile market? The next two to three years will see whether it rises to the challenge or falls behind the occasion presented in this decade.

The poster provides a stratospheric view of the evolving dynamic themes on economic development of the South African Development Community based on a historical and political streams.  This is just a starting point for an ongoing dialogue about how to increase economic opportunity even within the constraints of current systems.

You can download the poster Social Politics in Business in Africa (36).  And please, comment and provide insight below.

Pharmaceutical players need to be able to track everything.

Regulatory and legislative requirements are top of mind in the pharmaceutical sector.

“Our customers are coming under a demanding set of regulations,” says Keith Fenner, sales director at Softline Accpac. “This is a highly regulated industry.”

Ironically, Accpac hasn’t traditionally targeted the sector, largely because of the “complexities around the process or batch manufacturing, formulation management, weight calculation, potencies…”

Jane Thomson, MD of Softworx, says that “validation is very important”. Companies operating in “markets covered by the [US] FDA approval and the MCC regulations in Europe” have a lot of complexity added to their business, she adds. “When they do implementations, they have to have everything validated, right from the software to the processes in their business.”

There are also challenges around traceability, believes Fenner. “Everything from full-lot traceability and control to quality assurance” needs to be managed.

“At any point in time, you have to manage inspections and these things have to be process-driven.”

“It can’t be about ‘we decided to inspect this batch and not that one’,” he adds. “And it can’t be done on an Excel spreadsheet somewhere! Even the distributors have to be stamped and approved,” says Fenner.

A number of pharmaceutical players have made the decision to outsource their distribution function. Fenner says the split is about 50/50 among his clients.

Most of the manufacturing of pharmaceuticals takes place offshore, and Fenner explains that Accpac has mostly been “asked to help with complying in a warehouse world”.

“I’ve been reading in the market about guys starting to rationalise and focussing on what they are good at,” says Fenner.

His clients are saying things like: “My job is to get product into the country at the lowest cost possible to make the highest margin. How we push that out into distribution, we’ll leave other guys to figure out. Everyone is trying to streamline that process … but you cannot get around the complexities of the legislation and the regulations,” says Fenner.

“Our clients need to still have visibility into that supply chain … whether their stock is on consignment or sitting in a warehouse. They still have to manage the expiry dates.”

And for this, you need a collaborative supply chain.

Thomson says Softworx’s biggest client in the space, Aspen Pharmacare, has – like its peers – expanded rapidly over the past few years. The manufacturing and distributing of products in other territories adds “huge complexity into their supply chain”.

“Their business needs to be extremely responsive and flexible,” because of this growth, she says.

“They’re doing rollouts of their ERP systems in four to six weeks in some of their territories. So in terms of their ICT requirements, there needs to be a rapid response.”

Fenner agrees, saying: “The questions that are coming at us are around being responsive.”

Thomson also says that clients in the sector are looking to move some of their systems into the SOA space.

“We’re seeing on-use, on-demand type of software emerging now.”

And she says this is being driven by “local business in their desire to remain competitive and to grow market share.” Like other sectors, there is a lot of consolidation taking place in the industry. This is being driven by market forces.

It’s all about the customer right now.

The insurance sector is grappling with the same sorts of cost pressures evident in other industries, and “outsourcing is a trend” among most players, says Haydn Pinnell, MD of Gallium.

It’s not ‘simple’ outsourcing, however. There is a lot of demand for Gallium’s software and application testing services in the insurance market now “because of some of the pressures the sector is facing”.

Fierce competition means client-retention for insurers is critical, and companies require a “faster time to market with new, innovative services”.

This is “no different to anywhere else in the financial services industry,” Pinnell says. Adriaan Rossouw, account manager at business application provider Softworx agrees, and goes so far as to say that insurance has “almost become a commodity”.

The competition from banks and other financial services companies only serves to increase the pressure. “There is a big reliance on intermediaries,” explains Rossouw. “And historically they’ve been left to their own devices.” Now, insurance companies have realised that whoever controls the intermediaries controls the “share of wallet”, and insurers have begun opening up their systems.

“They need to give intermediaries access to their information, and better decision-making tools,” Rossouw notes. “This is a big drive going forward … by opening up systems to external parties”, insurance companies are going to be able to grow their books significantly.

“Insurers want to get a lot closer to intermediaries, whether they’re independent or captive.”

This obviously means a substantial number of external people accessing the company’s systems, a decision that has significant impact. Gallium’s Pinnell says that together with the mindset change around intermediaries, “traditional insurance players are having to re-engineer and relook at the way they are doing business with their customers”.

The rise of the direct (online) insurance players has almost forced this reaction. Insurers are becoming laser-focused on how they retain their customers, explains Pinnell. They want to do “better business, quicker”.

This re-engineering impacts on whether or not “they refresh or continue using their legacy applications and systems”. It also impacts on what technology they’re using.

“It’s all about the customer right now,” states Pinnell. Rossouw agrees: “It’s been very product-focused, not customer-driven”.

Within insurance companies, the allocation of people to product versus to customers is changing.

“There is a much bigger focus on the customer,” he says. “This brings with it challenges around systems.”

Traditionally, a customer’s spending on insurance is very much split into sectors. The challenge is to “bring that information together into one view of a customer,” says Rossouw.

“Insurers want to break down those silo walls” and this will help grow cross-selling of products and services. The Holy Grail is to “try to get a customer to spend all of their money with one insurance company, instead of splitting it up.” There is a delicate balance, however, between the drive to change the model, while at the same time containing costs.

Rossouw says Softworx hasn’t “seen too much in terms of deferring costs, but some of the roles within IT have been outsourced. “For instance, the BI role might be provided by external service providers.”

Pinnell says that even though South African financial services companies often do pioneer in terms of products and services, insurance, specifically, is subject to global influences. “We’re seeing stricter, tighter regulatory and governance-type requirements,” he adds. While global regulations are driving decisions locally, technology choices are largely driven per market, says Pinnell.

Some insurers are driving strategy from South Africa, others are being dictated to from their global owners/partners overseas.

Growing opportunities

The insurance sector in Africa only represented about 1.3 percent of the global insurance business in 2007, according to Swiss Re Economic Research. In the ‘South African Insurance Industry Forecast to 2013’ by RNCOS Industry Research Solutions, 85 percent of the current African insurance market is in South Africa. Both figures demonstrate the undertapped potential of the insurance market on the continent.

The industry faces major challenges, however, according to the African Insurance Organisation, including underdeveloped insurance organisations, a weak insurance regulatory environment, need for expertise in the sector, and lack of ICT infrastructure.

Even with the challenges, there is one insurance sub-sector – micro-insurance – drawing significant interest. Micro-insurance is insurance for low-income people. In ‘Insurance in Developing Countries: Exploring Opportunities in Microinsurance’, Lloyd’s estimates there is potential for 1.5 to three billion new policies globally. The Micro-insurance Centre estimates only four percent of Africans and less than one percent of poor Africans are covered by micro-insurance.

Major insurance companies like AIG, Zurich, and Swiss Re have entered the market. AIG was the first major player to enter micro-insurance in Africa, partnering a local microfinance institution in Uganda in the 1990s.

This interest will naturally lead to opportunities for the ICT industry. For example, the International Livestock Research Institute (ILRI) has developed satellite technology to assess weather conditions, such as drought patterns, which could lead to livestock deaths. This technology will help insurance agencies determine whether or not to honor such claims. Eric Gerelle, director of IBEX Projects in Switzerland, says there is a gap in the market for ICT providers. To deliver insurance products and services effectively on the ground, agencies of any size need a strong back office and ICT infrastructure.

Gerelle points out that small agencies generally take the wrong approach in developing their businesses. They start selling policies before developing the infrastructure to support the business process. In fact, they often do not have the requisite skills and knowledge to develop such an infrastructure.

According to Gerelle: “Software as a service (SaaS) providers will be the real winners in this space.” A SaaS platform can provide applications for many agencies simultaneously. Also, application developers might find opportunities to plug their solutions into a SaaS provider’s platform.

Gerelle says SaaS supports a federated model for the micro-insurance industry. Small agencies would get the ICT strength of major insurance agencies while maintaining the advantage of having knowledge of the local markets.

Asked how the mobile market would influence technology in micro-insurance, Gerelle is firm: “Mobile data and handsets are definite drivers for the market, but the key is creating the back office capability first.”