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Fibre begins to take over from ADSL at SMEs

In 2003 there was a massive technology shift from dial-up to ADSL. According to a SME Survey, another shift is on the horizon, but this time from ADSL to fibre.

The massive technology shift from dial-up to ADSL as the most common form of connectivity among small and medium enterprises is about to be repeated. Except that, this time, the shift will be from ADSL to fibre.

This is one of the major early indications of SME Survey 2018, in partnership with Intuit QuickBooks, which has achieved its target of interviewing 1 400 business decision-makers.

SME Survey is the original and largest representative survey since 2003 to measure the forces shaping SME competitiveness in South Africa. One of the great success stories is the manner in which it has tracked the rise and fall of comparative types of Internet connectivity.

According to Arthur Goldstuck, principal researcher for SME Survey and MD of World Wide Worx, the Survey has been in a position to track connectivity trends from the arrival of ADSL in this market in 2003, the same year the Survey began. As a result, it was ideally placed to track the transition from dial-up to ADSL that occurred among SMEs from 2003 to 2009.

“Because we were able to track adoption rates from the outset, we could demonstrate perfectly the rise of one technology and the decline of the other. We are now at the stage where we are beginning to witness the decline of ADSL, as it is replaced by fibre to the home or office. The interim SME Survey 2018 results therefore present a fascinating story of history repeating itself with regards to technology replacement,” he says.

“ADSL usage peaked at around 70% in 2009 and remained at this high until 2015, when fibre arrived. The latest figures from the Survey indicate that ADSL usage has now dropped to 56% among SMEs, while fibre has increased to 23% – this is exciting, because it means that the adoption of fibre is taking place even more rapidly than the adoption of ADSL did 15 years ago.”

Such rapid adoption is being brought about, says Goldstuck, by the rapid rise in availability of fibre across urban areas, coupled with the falling price of the technology. In conjunction with this, the increasing uptake and use of bandwidth-intensive technologies by SMEs has resulted in a perfect storm that is driving this desire for technology replacement.

“The switch from ADSL to fibre is being driven by much the same reasoning as the earlier move from dial-up to ADSL. In effect, when SMEs see a clear value proposition, one which can translate into the phrase ‘no-brainer’, they are more than willing to embrace it rapidly. On the other hand, when it has to be explained or demystified – as seems to have occurred with the concept of the cloud – they tend to stay clear of it for far longer. However, with fibre the value proposition is so obvious that SMEs are clear about how it will improve their business, and so adoption is taking off.”

“This is a huge shift and is extremely exciting for SMEs and accountants in South Africa,” says Wendy Walker, Head of Marketing at Intuit QuickBooks. “We have witnessed how the use of technology such as the cloud has reshaped and reinvigorated businesses across the globe and we have no doubt will we will see the same impact here. Whether it’s evolutionary or a new disruptive innovation, SMEs are always looking for technology that will help deliver better services and products, and of course, greater returns for their businesses. That’s what we are here to provide.”

Goldstuck  goes on to explain, that with fibre, the cost to speed relationship is vastly improved, while the quality of the connection is also higher, since fibre doesn’t have the same level of contention – the number of people using the same connection – as ADSL. This means, generally speaking, the speed you buy is the speed you get.

“Another aspect that differentiates fibre fundamentally from ADSL is that any service provider can supply connectivity and services over fibre. This is very different to the South African ADSL market, where there is essentially still only one provider for the technology. This diversity has clearly helped open the market, thanks to the increased competition.”

A key benefit SMEs obtain from switching to fibre, says Goldstuck, is that it enables SMEs to operate online without any of the performance and quality constraints they may have faced before. This means that their communications are significantly improved, enabling them to utilise solutions like video-conferencing and social media platforms to further their business. It also gives them more confidence in using the Internet for transactional purposes, thanks to the quality and speed of the connectivity.

“This quality and speed, coupled with much higher bandwidth caps, is opening these small businesses up to greater levels of collaboration and a range of new business possibilities,” he says. “Ultimately, fibre expands the vision of small business decision makers, while levelling the playing fields with large organisations in terms of access and collaboration. Furthermore, once SMEs get to grips with the many possibilities offered by fibre, they will be more confident in aiming for a higher digital level and will more fully embrace cloud platforms and solutions. This, in turn, means they will be well placed to compete more directly with big enterprises.”

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Cybercrooks eye smart buildings

In countries like the United States, the growth of smart buildings is estimated to reach 16.6% by 2020 compared to 2014, although this expansion is not limited to the US but rather is taking place on a global scale.  This growth is largely due to the fact we live in a world increasingly permeated by technology, in which process automation and the search for energy efficiency contribute not only to sustainability, but also to cost reduction – a goal pursued in all industries, public and private alike. Naturally, the construction industry is no exception, says Carey van Vlaanderen, CEO at ESET South Africa.

Smart buildings use technology to control a wide range of variables within their respective environments with the aim of providing more comfort and contributing to the health and productivity of the people inside them. To do so, they use so-called Building Automation Systems (BAS).  With the arrival of the Internet of Things (IoT), smart buildings have redefined themselves. With the information they obtain from smart sensors, their technological equipment is used to analyse, predict, diagnose and maintain the various environments within them, as well as to automate processes and monitor numerous operational variables in real time. Ambient temperature, lighting, security cameras, elevators, parking and water management are just some of the automatable services currently supported by the technology.

To put the possibilities of this smart infrastructure into perspective, is the example of a smart building in Las Vegas where, two years ago, they decided to install a sophisticated automation system to control the use of the air conditioning (keeping in mind Las Vegas has a hot desert climate and very little rain), so it is turned on only when there are people present. This decision led to a saving of US$2 million during the first year after the smart system was installed, due to the reduction in energy consumption achieved by automating the process. Marriott Hotels implemented a similar system across the entire chain that is expected to generate an estimated US$9.9 million in energy savings.

Another example of automation through smart devices is that of a supermarket in the United Kingdom. The store installed a smart system in its parking lot that generates a kinetic energy from the movement of cars passing through it, and then uses that energy to power the checkouts.

At first glance, we may not see any security risk in these smart buildings.  It is likely, however, that at some point the entire smart network is connected to a single database, and that is where the risk is. Particularly if we consider that many IoT devices are manufactured by different suppliers, who may not have paid due attention to security considerations during their design and manufacturing process.

Possibility of a smart building being attacked

The risk of a security incident taking place in an intelligent building is linked to the motivations of cybercriminals, who mainly seek to achieve economic gain through their actions, as well as to impact and spread fear.

There are already some tools such as Shodan that allow anybody to discover vulnerable and/or unsecured IoT devices connected publicly to the internet. If you run a search using the tool, you can find thousands of building automation systems in its lists, complete with information that could be used by an attacker to compromise a device. In February 2019, around 35,000 building automation systems worldwide appeared in Shodan within public reach via the internet.

This means that someone could take control of a BAS after finding it through a search.  If, for example, a criminal used Shodan for building automation systems to attack, they will find IP addresses. If they copy those IP addresses into the address bar of a web browser, in many cases this will bring up an interface for gaining access, where they need to enter a username and password. If the password is a default password of if it can be cracked easily through a brute force attack, the attacker will gain access to the system monitoring panel, which contains information similar to the companies located in the smart building.

Once the attackers have access to this public information and can monitor, for example, how the air conditioning works, they could make a phone call pretending to be from the maintenance company and say they are going to send a technician. At the same time, the attackers could request remote access, which would give them access to the server and allow them to control the building. Once they have control, they could alter the building’s heating or air conditioning or adjust the way any of the other automated systems operate and then demand payment of a ransom in using a system that allow them to remain anonymous, such as cryptocurrency, in exchange for not shutting the building down.

Siegeware: a very real threat

Cybercriminals are already carrying out such attacks when they have the opportunity. This kind of attack is siegeware, or “the code-enabled ability to make a credible extortion demand based on digitally impaired building functionality”

In conclusion, the low cost of IoT devices for buildings and the advances of technology for building automation systems is leading to changes with an impact on security. This drive toward automation and the use of smart devices to gather data – in order to give a building’s users more comfort and to make more efficient use of resources such as energy – is also leading to increased security risks. As a result, the possibility of a cybercriminal launching a ransomware attack on asmart building is already a reality.

Considerations to keep in mind

There are a number of security considerations and requirements to keep in mind:

  • Review the devices’ security specifications and work on the basis of the ‘security by design’ concept
  • Set a suitable budget for security
  • Choose partners that have knowledge of security issues
  • Install software for managing vulnerabilities
  • Ensure cooperation between the different areas and/or departments

For operational issues:

  • Update the devices regularly
  • Implement a replacement plan for when devices’ support life cycles end
  • Exercise a precaution in respect of connected devices
  • Monitor connected devices

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How we can break out of the productivity/technology trap

The tyre industry is a microcosm of the dilemma in which South African manufacturers find themselves, writes JACQUES RIKHOTSO, MD at Bridgestone

Many of South Africa’s industries have been built on the back of abundant cheap labour. Mining is the obvious example, but the manufacturing sector has also been shaped by thefact of cheap labour. For many years, cheap labour was arguably a huge advantage, enabling us to become a world-leading mining country and also to create significant agricultural and manufacturing capabilities. But, in the end, it has had the unintended consequence stifling investment in equipment and masking a skills deficit that will be very hard to overcome.

To understand the dynamics, it’s as well to begin by reminding ourselves that productivity is, at the crudest level, the relationship between output and input. Humans are still the most important input contributors, and so labour costs are a significant factor in the productivityequation.

In South Africa and other developing economies, labour costs are low whereas in thedeveloped world, they are high. South African manufacturers (and miners and farmers) have thus typically used more people to produce the same amount of units than a European or American manufacturer would do, while still managing to compete on price and often on quality. However, the much more expensive labour costs in the developed world, while causing short-term pain, have always meant that the business case for investing in the latest technology to make those expensive humans even more productive has always been strong.

By contrast, the business case for investing in up-to-date equipment has been weak in South Africa. If more output was required, more people was typically a cheaper answer than better equipment. We have therefore remained a fairly labour-intensive market, which is good given our unemployment issues, but raises two specific and daunting challenges:

We need to make major investments in equipment. In my industry, I would venture to say we are 15-20 years behind developed countries when it comes to the deployment ofequipment. This was not too much of a problem for a long while because the old equipment was still cost-effective and could turn out the products needed at the right quality and price. However, tyre technology has now moved on to such an extent that the old machines simply are not capable of producing the new generation of products. Radiallised Agricultural/Underground Mining Sector Tyres and light weighted tyres for electric cars, for example, represent significant advances in tyre design. Current machinery cannot be adapted to produce either them; a substantial investment in new equipment will be necessary.

Another factor is that the industry dynamics have changed over the past few years. Theadvent of cheap, mass-produced tyres from the Far East means that in many instances, fleet owners are not retreading existing tyres but rather purchasing these cheap ones new. To compete, local tyre manufacturers need to move upwards on the Technology Cost Curve by investing in technology is less electricity-intensive, deploys minimum labour and requires maintenance in order to compete with high-volume producers.

The other consequence of competing with lower cost producers is the need to write down older retreading capacity and invest in more modern equipment.

Because our investment in equipment has been so low for so long, we are not talking about incremental investment but something much more significant in many areas at once.

This massive new wave of investment will not be restricted to manufacturing equipment. High-tech data-driven modern equipment associated with the Fourth Industrial Revolution will also require factory layouts to be revamped in order to accommodate new IT infrastructure and robotic capacity, as is already being used in the developed world.

This is essential if we are able to compete in the longer term.

We need to make major investments in skills, both at the corporate and national levels. Investments in new technology will create a need for a new generation of skilled operators. The new machines require totally different skills—hard-won dexterity with gears and levers is making way for skills on touchscreens, the ability to type and, crucially, to read and action screen-based instructions quickly. Sadly, many of the cadre of experienced operators will not be able to reskill and companies will need to give serious thought to their future.

However, in Bridgestone’s experience, the younger generation of operators often has thepotential for reskilling on modern machines, and we are already busy with that process.

Being part of a global group is a massive advantage, because our regions are all at different stages of industrial development, and some have undertaken a similar journey into the modern era. Our Japanese factories, in particular are industry leaders in tyre manufacture. We can therefore rely on previous experience and, most important of all, cansend key employees to acquire the necessary training and experience at one of our sister facilities. Such a person can then be used as a champion within the company, to train colleagues and promote new ways of working. In our experience, such an approach does work, but it takes time and effort.

South Africa’s status as a manufacturing country has been in the balance for some years thanks to our lack of investment in new technology, but there is no doubt that a strong manufacturing sector is critical in rebuilding in the economy. To re-ignite our manufacturing, we have to escape the technology/ production trap.

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