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How ICT can weather economic storm

With the weak Rand and interest rate hikes, most industries are affected – and ICT is no exception. But, the economic situation provides the opportunity to look at business processes and find ways to better service customers, writes GERHARD MALAN, Financial Director at Rectron.

South Africa is in for a tough few years, if economists are to be believed. Our economy, weak Rand and recent interest rate hike are affecting industries across the board – and ICT and ICT distribution are no exception. However, our economic situation also provides the opportunity for us to relook our business processes and find ways to better service our customers.

Weak Rand results in expensive technology

A snapshot of the ICT industry in South Africa currently shows that because the majority of products are imported, the weak Rand has made technology more expensive. Since the start of the accelerated depreciation of the Rand, resellers have reported that bigger capital outlays are being delayed for fear that the currency will further weaken. And while the demand for high end equipment is still there, it has decreased to give way to a larger demand for more affordable entry- to mid-level equipment.

This trend isn’t exclusive to South Africa. Although most developed countries have not had to deal with rising interest rates, they have been dealing with a relatively flat economy, making distribution more competitive across the board. Every business trading its home currency against the US Dollar has had to relook its approach to manage its foreign exchange risk.

That said, local vendors are doing what they can to keep their pricing as stable as possible, while foreign vendors are introducing some great initiatives to help protect us against our weakening currency.

An opportunity to rethink how we do business

Simultaneously, while everyone is experiencing the squeeze, it’s a great time for the ICT industry to correct our inefficiencies and cut unnecessary expenses. When the economy is strong, it’s easy to overlook these things, but now’s the time to place the emphasis on return on investment – every expense should be able to have a measureable return. It’s also an optimal time to outperform competitors who might be missing out on the change in how the market is spending.

Of course, beyond these benefits, there is a very real need for businesses within the ICT industry to maintain cash flow. Keeping tight control over budgeted expenses and working capital should put a stop to overspending and uneconomical activities. At the same time, proper risk management when it comes to security, debtors, inventory, cash and insurance is vital. Businesses that are prudent in spend and organised in chaos will come out much stronger and grow much faster when the market turns.

Finding solutions for the customer

From the customer’s perspective, there are also ways to help mitigate risk and reduce capital outlay when the economy is weak. Resellers need to be assisting their customers to continue operating in difficult conditions by offering better advice and products that reduce their expenses or even increase their income. A product such as Rectron Finance does this by freeing up cash so that there are funds available for crucial expenses like rent, salaries, marketing and other important overheads, while ensuring the customer’s business still has access to top end technology.

It’s clear that this is a model that’s working for many businesses, with the uptake of this service on the rise. Since the beginning of 2016 we have seen a trend towards deals being processed through rentals and asset finance rather than normal cash purchases. It’s an opportunity to opt for a manageable monthly expenditure over three to four years, as opposed to a significant once-off outflow of funds at the time of purchase.

What is important for resellers encouraging customers to adopt this model is to start the conversation early. This way, approval is sped up and the customer understands that a big capital outlay isn’t required. There’s also a need to educate on the difference between a rental and an asset finance deal, depending on the customer’s needs.

Beyond these options, several ICT product solutions are also aimed at helping resellers and their customers manage their businesses in the current economic climate. For example, Microsoft’s Office 365 offering gives customers the flexibility on yearly subscriptions, which reduces cash flow. The Samsung LFD range assisted by Intel’s technology also allows resellers to build up different income streams like content management and monthly subscription services, which increases their profitability. From Rectron’s perspective, our online ordering system and our AskRectron app assist customers to reduce their time spent on admin, freeing up time to focus on their business.

ICT plays an important role in national development

These solutions link to the idea that connectivity and the use of technology to access information has an important role to play. It is the key to drive down the country’s unemployment levels through job and entrepreneur creation, as well as by stimulating skills development. In addition, our industry is vital in assisting the government in fulfilling its National Development Plan.

With that in mind, ICT is no longer a luxury but a necessity. That means that despite the challenges facing the ICT industry in light of the state of the economy, it’s never been more important to find new ways to keep technology accessible. There’s little doubt that we are in for a rough ride, but by thinking carefully about how we do business, we are in prime position to weather the storm and make it to the other side.

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Mobile is the new branch

Standard Bank has launched an account for mobile devices that gives back 500MB of data a month

Standard Bank has introducd a R4.95p/m bank account called MyMo that customers can open on their mobile devices, loaded with data and airtime offerings and other benefits such as virtual and Gold physical card.

MyMo account holders will also enjoy the convenience of a cheque account through a Visa and Mastercard gold card. Once the account is open, users can choose to either receive R50 in airtime or 500MB of data a month, if their card is swiped more than four times a month. A further megabyte of data is loaded on the account for every R20 spent.

“MyMo is an account for everyone, whether you just landed your first job or have been around the block. With no documentation required it only takes a few minutes to open the account,” says Funeka Montjane, Chief Executive for Personal and Business Banking, South Africa, at Standard Bank Group. “For just R4.95 a month customer will be able to enjoy free swipes and ATM withdrawals at only R6.50 for amounts under R 1 000.

“Mobile is the new branch. This account is about bringing the mobile branch into customers hands, it is about convenience and security while banking.”

She says mobile offers low cost transactional banking which integrates people and businesses into the new connected economy, making mobile the new branch ecosystem that will drive and connect Africa’s growth. Physical connections to the economy are rapidly changing to digital where banks have to move from being financial institutions to service organisations.

“In the past people congregated in communities and eventually cities to maximise the advantages of connectivity. Today a simple hand-held device has the potential to open infinite doors, transforming individuals’ access to opportunities, regardless of where they are, and like never before in history. 

“Historically, a bank account represented access to economic citizenship. Today, having a simple device enabling digital access to a modern banking platform is a passport to global connectivity and vast human development potential.”

The bank says it is using technology, and mobile phones in particular, to deliver low-cost transactional channels accessible to all our customers. The evolution in mobile can be seen in transaction options like cash back at the retail checkout till rather than the ATM, free digital banking rather than using a branch, and the ability to transact using digital wallets, even without a bank account.

“Developing comprehensive connected ecosystems requires a mind-set change from Africa’s banks,” says Montjane. “Banks will evolve away from traditional financial service organisations, into service ecosystems enabling broad universal access to almost everything like enhanced purchasing experiences of vehicles and homes, online procurement of goods and services and lifestyle elements like rewards and travel. 

“These connectivity drivers will also act to future-proof evolving connectivity ecosystem by allowing us to offer untold future services while deriving income from as yet unrealised revenue streams,.   

From a customer perspective, the kind of ecosystems of knowledge, access and, ultimately, connectivity that banks will come to provide will radically transform the share of life that almost all individuals will be able to access.”

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Two-thirds of SA staff hide social media from bosses

With 90% of people in employment going online several times a day, it can be hard for most workers to keep their private and work-life separate during the working day (and beyond). The recently published Global Privacy Report from Kaspersky Lab reveals that 64% of South African consumers choose to hide social media activity from their boss. This secretive stance at work also extends to their colleagues, with 60% of South Africans also preferring not to reveal online activities to their co-workers.

Globally, the average employee spends an astonishing 13 years and two months at work during their lifetime. Interestingly though, not all this time is directly related to solving work tasks or earning a promotion: almost two thirds (64%) of consumers admit visiting non-work-related websites every day from their desk.

Not surprisingly, 35% of South African employees are against their employer knowing which websites they visit. However, more interestingly, 60% of South African are even against their colleagues knowing about their online activities. This probably means that colleagues constitute an even greater threat to future perspectives of an office slouch or maybe the relationships with colleagues are more informal and therefore, more valuable.

On the contrary, social media activity appears to be a less private domain for many and therefore, more suitable for sharing with colleagues but not the boss. This is probably because workers fear harming the public image of a company or interest in decreased staff productivity motivates companies to monitor employees’ social networks and make career changing decisions based on that. Such policies have led to 64% of South Africans saying that they don’t want to reveal their social media activities to their boss and 53% even don’t want to disclose this information to their colleagues.

A further 29% are against showing the content of their messages and emails to their employer. In addition, 3% even said that their career was irrevocably damaged as a consequence of their personal information being leaked. Thus, people are worried about how to build a favourable internal reputation and how not to destroy existing workplace relationships.

“As going online is an integral part of our life nowadays, lines continue to blur between our digital existence at work and at home. And that’s neither good nor bad. That’s how we live in the digital age. Just keep remembering that as an employee you need to be increasingly cautious of what exactly you post on social media feeds or what websites you prefer using at work. One misconceived action on the internet could have an irrevocable long-term impact on even the most ambitious worker’s ability to climb the career ladder of their choice in the future,” comments Marina Titova, Head of Consumer Product Marketing at Kaspersky Lab.

To ensure workers don’t fall prey of the internet threats at a work, there are some core guidelines to adhere to in the digital age:

  • Don’t post anything that could be considered defamatory, obscene, proprietary or libellous. If in doubt, don’t post.
  • Be aware that system administrators may at least, in theory, be informed about your web browsing patterns.
  • Don’t harass, threaten, discriminate or disparage against any colleague, partner, competitor or customer. Neither on social networks or in messages, emails, nor by any other means.
  • Don’t post photographs of other employees, customers, vendors, suppliers or company products without prior written permission.
  • Start using Kaspersky Password Manager to ensure your social media and other personal accounts are not at risk of unauthorised access by someone else in an office. Install a reliable security solution such as Kaspersky Security Cloud to protect your personal devices.

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