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How small and medium businesses buy high-tech

Small and medium enterprises are seen as a gold mine for technology vendors, but there is a secret to how they buy high-tech, writes ARTHUR GOLDSTUCK.

There are more than 650 000 small and medium enterprises (SMEs) in South Africa, making the sector a major target market for vendors of almost any type of product aimed at other businesses. High-tech products, solutions and services rank high among these, with SMEs seen as a gold mine for those who can crack the code of how to sell to them.

The problem is that there isn’t really a code, but one very simple secret: SMEs will only buy high-tech solutions when they’ve become a “no-brainer”.

That attitude goes hand in hand with what is to some an unpalatable reality about SMEs: they are notoriously slow at adopting new technologies.

However, that does not mean there is no hope in selling to them. 

SME Survey 2018, a research project conducted by World Wide Worx in partnership with Intuit QuickBooks, showed there is one clear exception: the Internet of Things (IoT). Interviews with 1400 SMEs revealed that 83% of decision-makers expect to be using IoT in their business within five years.

The reason for this enthusiasm? Many of them have been using IoT all along, in particular with fleet- and vehicle-tracking systems, and asset management. The SIM cards hidden in vehicles to allow them to be tracked are in fact part of IoT. They act as sensors that report vehicle positions to base stations, and that information can be aggregated and supplied to live mapping services. In fact, it is just that technology that makes Google Maps so effective for navigation.

However, when it comes to more futuristic technologies, SME enthusiasm vanishes. The next highest-ranked high-tech options were artificial intelligence and Big Data, but they are expected to be adopted by only 29% and 27% of SMEs respectively.  Just 21% of SMEs expect to use 3D printing, while crowdsourcing drops to 16% of respondents. 

Right at the bottom of the list came Bitcoin, the technology underlying Bitcoin, at 9%, and Virtual Reality, at a mere 8%.

The reason is simple: Blockchain is so new, its value proposition remains a mystery to SMEs. Not only that, but it is strongly linked in the public mind with Bitcoin. The massive fluctuations in the value of the cryptocurrency makes it too volatile and risky for the cautious SME decision-maker.

While virtual reality doesn’t suffer the same bad press, it is still regarded as a toy, and falls far short of the no-brainer status SMEs require of technology.

Even the technologies that fare a little better, like artificial intelligence, are still far off the mark for SMEs. Because they require large amounts of data, which are typically generated by large customer bases, they tend to make sense only to large organisations. Further, it requires a new way of thinking, and adoption requires a mindset change, something that is not even on the radar for most SMEs.

The annual SME Survey has shown again and again over the years that decision-makers are generally only willing to embrace a new technology if there is a clear business case.  So, for example, when the massive technology shift from dial-up to ADSL happened between 2003 and 2009, it was not because SMEs were attracted by higher speeds. Rather, it was a combination of speed, cost-effectiveness, efficiency and the ability to connect multiple users to the same connection, at a lower price. In short, it was a no-brainer.

Now, we are witnessing the beginning of the decline of ADSL, for the very same reason. High-tech history is repeating itself as ADSL is replaced by fibre to the home or office. 

ADSL usage peaked at 73% of SMEs in 2009 and remained at this high until 2015, when fibre arrived. SME Survey 2018 indicates that ADSL usage has now dropped to 59% among SMEs, while fibre has increased to 25% – meaning adoption of fibre is taking place even more rapidly than ADSL did 15 years ago.

This is partly due to 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 a need for technology replacement. In other words, it’s a no-brainer.

When SMEs see such a clear value proposition, they are ready to embrace it rapidly. On the other hand, when it has to be explained or demystified – as originally occurred with the concept of cloud computing – they tend to stay clear of it for far longer. However, the fibre value proposition is so obvious, that SMEs are clear about how it will improve their business, and so adoption is taking off.

A key benefit SMEs obtain from switching to fibre is that it enables SMEs to operate online without the performance and quality constraints they faced before. This means that their communications are significantly improved for  solutions like video-conferencing and social media. It also gives them more confidence in transacting online, thanks to the quality and speed of the connectivity.

Those selling gadgets and other high-tech will probably take courage from one particularly startling finding in SME Survey 2018: that 70% of SMEs are ready to embrace new technologies.

However, it is clear that, while the willingness is there, they will only embrace something new if it makes sense for their business. In other words, just because SMEs say they are ready to embrace new technology, it doesn’t mean that they will buy just any new technology.

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube

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What US game of phones means for Huawei

The Trump administration shocked the world with its ban on US companies supplying Huawei. ARTHUR GOLDSTUCK digs deeper.

The Trump administration shocked the world with its ban on US companies supplying Huawei. ARTHUR GOLDSTUCK digs deeper.

In the same week that the wildly popular Game of Thrones series reached its climax with major characters meeting their startling destinies, US president Donald Trump took the game of phones to a new level in a move that was as startling.

By declaring a trade ban on Huawei, he in effect blocked any US technology from being supplied to the world’s fastest growing smartphone manufacturer. The immediate consequence: Google revoked Huawei’s access to the Android operating system, the Google Play Store, and Google apps like Maps, Gmail and YouTube for all future phone models.

However, Google announced on Twitter, through its Android account, that it would not pull the plug on current devices. It said:

This means that the current market-leading phone, the Huawei P30 Pro, won’t be affected by the ban. Huawei said it had stockpiled chips from US suppliers with this possibility in mind, so it should at least be able to meet demand for the current model.

Huawei is also known to have worked on its own operating system for some years now, with a view to it eventually replacing Android and reducing the company’s reliance on Google. However, the severity of the ban, and its catch-all nature, shook the market. A smartphone without any Google products is a phone that will see little demand outside China, which itself has banned most Google apps and services.

Notably, the first impact of the shock wave was on American companies that supply Huawei. Chipmakers Intel and Snapdragon were hit, and a wide range of other corporations, from Microsoft to Corning, could also be affected. Apple could be next, as the Chinese government may well block the assembly of its products in China. Currently, all iPhones are put together at factories in China. Should it retaliate in this way, Apple will have to develop a new supply chain, both delaying its next versions and increasing its cost due to its loss of a cheap source of labour.

That is not to say that Huawei won’t be a big loser in this trade war. It’s a massive blow. Until now, Huawei could carry on blithely in the face of a sales ban in the USA, knowing it is dominant in the rest of the world in both 5G equipment and in handset sales.

However, its smartphone leadership is founded on a particularly good implementation of Google’s Android ecosystem. Losing that means it has to go back to the drawing board in developing and evolving its own operating system and even apps environment. It can do it, but it will lose years of development to Apple and Samsung.

The bottom line, then, is that everyone loses in this trade war. If the Huawei ban is no rescinded, Donald Trump will have dealt a crippling blow to the entire smartphone industry. This could, in turn, presage a slump in technology shares on the stock markets of the world.

It may, then, appear baffling that the US administration would take such drastic steps. The ostensible reason is that Huawei is subject to a Chinese law that requires local companies to cooperate with authorities. This is interpreted as meaning that Huawei would install secret backdoors in handsets to give the Chinese government access to them, and secret spy technology in 5G networks to allow the government to eavesdrop on all communications.

This is clearly an absurd accusation, as any evidence to this effect would instantly destroy Huawei as a credible provider of technology to the world. No such evidence has been presented, and most arguments to this effect have been on the level of conspiracy theory rather than presentation of facts.

It also speaks volumes that the US has not banned trade with China’s Lenovo, which acquired the IBM hardware business a few years ago, and the Motorola handset division more recently. Motorola is still perceived to be an American brand, while Huawei is perceived not just as the challenger brand it had been for some years, but in fact as an invader brand.

Can foreign policy be based on mere perception? In the case of the Trump administration, that tends to be the rule rather than the exception. And the perception is further clouded by the halo effect that surrounds Apple products in the USA. The iPhone makes up well over a third of all American smartphone sales. Typical iPhone users tend to be rather enthusiastic about their loyalty to the brand, to the extent that they are usually disparaging of any other brands.

Grudging respect for Samsung, which has been going head-to-head with Apple for much of this decade, does not extend to Huawei, which emerged seemingly from nowhere to become the world’s third biggest smartphone brand. Its current sales trajectory has it overtaking Apple very soon, and reaching the number one position by the end of the year. Until, that is, Donald Trump brought its momentum to a halt.

Again, why not ban Motorola and Lenovo in the same breath? The answer may well lie in the pathology of the Apple fanboy. American-born Motorola and Lenovo handsets pose no threat to Apple’s dominance of the US market, whereas the interloper, Huawei, is a fundamental threat. It is, therefore, the enemy, merely by virtue of its existence as serious competition when it is seen as having no right to compete with the likes of Apple. Trump is known to be an enthusiastic iPhone user, using two of the devices simultaneously, and would almost certainly buy into this mindset. That, in turn, makes it a natural kneejerk reaction simply to ban American companies from doing business with Huawei.

Whether this is merely idle speculation is beside the point. The ban also represents self-inflicted harm, which extends the pathology argument to an entire administration.

It will be a blow to both countries, symbolic of how a trade ban can hurt the country imposing the ban. It also casts a dark shadow over world trade, and is a shameful example of how trade wars wreck so much in their paths. 

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee

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Time for smart energy

South Africa is experiencing an energy crisis that requires the public and private sectors, along with households to work together. Fundamental to this is embracing innovative technology that provides more efficient ways of managing the country’s energy.

Riaan Graham, sales director for Ruckus Networks, sub-Saharan Africa, said: “With the number of connected devices expected to top more than 75 billion worldwide by 2025, the Internet of Things (IoT) can be considered an important tool in reaching this goal. Already, connected devices can be used to deliver smart energy that sees a more optimal use of resources.”

This approach relies on a smart grid of connected sensors pointing to areas where energy is wasted. In turn, the supply to these points can be allocated to higher priority areas resulting in a better use of resources.

Aiding this drive towards connected devices is government pushing towards the establishment of smart cities. These cities require a technological infrastructure built around various sensors connected to the internet to not only generate data, but control things as diverse as traffic lights, street lamps, and other electrical devices.

Graham said: “These smart cities enable lighting to be automatically switched off when not needed. Sensors on the connected devices will detect when people are on the street and turn it off or on accordingly. What might seem like a novelty, can make a massive difference in reducing energy waste.”

According to Kate Stubbs, director of business development and marketing at Interwaste, IoT is just part of how technology can be used to create a more efficient environment.

“South Africa produces an average 108 million tonnes of waste annually,” said Stubbs. “Of this, only 10 percent is recycled. There is significant potential to use this waste and convert it to energy. This is more than just the traditional way of viewing recycling. Instead, it is using technology to extract value out of waste through initiatives like refuse and waste-derived fuel.”

The first South African Refuse Derived Fuel (RDF) plant was launched in 2016 and not only aims to reduce landfill, but also the country’s carbon footprint. As the name suggests, the plant converts general, industrial, and municipal waste into an alternative fuel that is used in the cement industry.

Stubbs said: “Spin-off benefits of this plant includes the creation of additional employment opportunities and a reduction of South Africa’s greenhouse gas emissions. Waste management entails so much more than what many people think. But the key remains a combination of technology innovation and a willingness to use the resources generated by this.”

Graham agrees about the need to readily accept the innovation technology brings as the country is teetering on a significant energy disaster.

He said: “New technologies are critical in helping the countries and their cities of the future promote sustainable energy use. For example, Nairobi has introduced smart street lamps that use LED lighting saving money and resources on energy costs. These lamp poles also have Wi-Fi embedded in them that sees air quality probe sensors submitted vital data for city planners on where there are pollution hotspots.”

Stubbs feels these are good examples of how energy management approaches in the connected world need to be non-linear.

“The traditional ways of adopting technology, recycling, and managing energy must be seen as relics of the past,” she said. “Instead, we must all work together and readily embrace modern solutions or risk our country entering a new dark ages.”

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