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SA digital prospects shine

By Doug Woolley, GM, Dell EMC Southern Africa

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South Africa is awaiting the arrival of not one but three international data centres, each representing a major hyperscale provider. Suffice to say, SA and its neighbours will soon have access to the same digital power, flexibility and reduced costs that makes the likes of Google, Facebook and Netflix possible.

It’s not an isolated event but in response to the market’s appetites. Companies large and small are rethinking and rebuilding their data centres, moving to massive hosting sites, using public cloud services, and investing in more specialised private systems. Not long ago this was the message brought to a reluctant market, but by 2018 the adoption of modern technologies – collectively called Digital Transformation – is in full swing.

There are many challenges facing our country, but we are also seeing important gains. The fast growth of fibre, refreshing new attitudes around mobile data, and proactive moves by Government are all pushing digital’s momentum in the right direction. Digital is prompting both foreign investment and massive expansions by local companies.

According to an International Data Corp (IDC) report, the local IT industry is outperforming other parts of the economy and is a real job creator. Much of this is due to cloud adoption, which moots suspicions that digital technology will reduce employment. In contrast, it shapes a smarter business environment, which is more productive and innovative. This grows economies and creates work.

What does it mean for 2019? The IT sector is still a small part of SA’s GDP, but that view doesn’t take in the knock-on effect of technology. For example, you can now apply for an ID or passport online, a big step forward from the stifling queues that many had to take time off from work to attend. Local services are taking on international rivals in the taxi and entertainment sectors. There has been a steady bubbling of startups taking SA innovations to international markets. Smarter farms, smarter taxis, smarter cities, smarter mines – digital is rippling through our society.

That ripple will continue to grow and reverb in 2019 – of that, I have no doubt. Today we have many local use cases where businesses and services have changed how they serve their markets. This is silencing digital’s critics as well as giving clear pathways to transformation. Making the switch is not easy. It takes leadership and an appetite for change and its challenges. But the practical proof is out there for all to see and the ways to accomplish it are clearer than ever before.

Meaningful change requires a certain level of strife. We can use this idea to colour our expectations for 2019. We can’t deny that it will be a tough year as the repercussions of a struggling economy start making themselves felt. But that means for the enlightened and proactive there will be opportunities for change as well. The groundwork for that shift is, as I explained earlier, already in place.

2019 will be tough, but it will also see SA flex its digital muscles. These are ready for primetime in a society that increasingly appreciates the relationship between digital technology and our wellbeing. The arrival of Azure, AWS and other international data centres to the market show that foreign investors see that potential. In 2019 South African society will start seeing it as well.

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Half of SA mobile phone users avoid data activity

Research shows 87% of South Africans have cellphones, but 50% have data issues and a quarter struggle to find a place to charge them

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A Pew Research Center survey of 11 nations has found South Africans second most likely to avoid doing things on their cellphones because of fears of data charges. The 50% of users who report this fear is second only to Lebanon, where 66% avoid data use.

As ownership of mobile phones, especially smartphones, spreads rapidly across the globe, there are still notable numbers of people in emerging economies who do not own – or even use someone else’s – mobile phone, a Pew Research Center survey of 11 nations finds. However, in this department South Africa scores well, with only 13% not having phones – in line with a median of 6% of adults in the countries polled do not use mobile phones at all, and a median of 7% do not own phones but instead borrow them from others. 

These mobile divides between have and have-nots are most pronounced in Venezuela, where about a third of adults (32%) do not own or use mobile phones, India (30%) and the Philippines (27%).

At the same time, the new findings show that mobile divides also exist among those who own phones. A median of 46% in these countries say they frequently or occasionally have difficulties getting reliable phone connections, 37% say it can be a challenge to pay for their phones and 33% report finding places to charge their phones is a problem at least occasionally. In addition, a median of 42% report frequently or occasionally avoiding some activities on their phones because they use too much data. 

In some countries, mobile owners’ challenges are particularly striking. In Lebanon, for example, 77% of phone owners report having problems getting reliable mobile connections, and about two-thirds (66%) say they avoid doing things with their phones because those activities use too much data. In Jordan, nearly half (48%) report having trouble paying for their phone, while in Tunisia four-in-ten (40%) say it can be a challenge to find places to recharge their phones. 

“The spread of mobile phones brings a variety of benefits to users in emerging economies, and they can clearly spell out what appeals to them about the arrival of a phone in their lives,” says Laura Silver, senior researcher at Pew Research Center. “Still, our survey shows that these devices bring new challenges and headaches to users at the same time they open up new divisions in their societies. It turns out that digital divides take several forms in these countries.” 

Beyond those concerns, there are other issues that can disrupt life for some phone users and sharers. Around three-quarters or more of mobile phone owners in every country except India report concerns about identity theft, and around nine-in-ten or more in Mexico (95%), Colombia (94%), Tunisia (90%), South Africa (89%) and the Philippines (89%) say they are at least somewhat concerned about the issue. 

For mobile sharers, concerns about device security can also play a role in why people choose not to own their own devices. While cost is the primary reason mobile phone sharers give for why they do not personally have a phone (a median of 34% across eight countries reports this), the second most commonly cited reason is that a previous mobile phone was lost, broken or stolen. 

Additionally, a median of 29% of mobile owners in these 11 emerging economies report they have frequently or occasionally experienced problems finding information online in their preferred language. This problem ranges from 17% of mobile owners in Jordan to 37% in South Africa – the highest of all countries surveyed.

Other key findings from the survey include: 

Nonuse tends to be more common among adults with lower levels of income and education. In the Philippines, for instance, 10% of respondents with more education say they do not use a phone, compared with 38% of those with lower levels of education. This pattern exists in all 11 countries surveyed. Similarly, across most of the nations, older people are more likely than younger people to be non-users. 

Non-users are divided over whether they would like to own a mobile phone in the future. Venezuelan non-users stand out for their keen interest in acquiring a mobile phone; 86% of mobile phone non-users in Venezuela say they would like to get a phone in the future. Elsewhere, these numbers vary markedly, from around half or more desiring a mobile phone in South Africa (65%), Colombia (61%) and Tunisia (52%), to fewer than half in Mexico (41%), the Philippines (35%), India (31%) and Lebanon (9%). 

In some countries, issues of technological literacy are particularly pronounced. For example, around a quarter of Indians (26%) say the primary reason they share a phone is because it is too complicated to use, followed by Mexicans (11%) and Filipinos (10%). 

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MUST you buy into Black Friday? The pros and cons

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Black Friday, once only a North American marketing frenzy, has become a critical entry in the calendars of South African retail business owners.

Research published by Stats SA says that historically, the most important month of the year for retail trade is December, when many consumers are on holiday and go Christmas shopping. But December 2018 was a tough month for retail in South Africa with the volume of sales falling by 1,4% year-on-year.

The poor performance of retailers in December followed a fruitful November, when Black Friday boosted sales to 2,9% year-on-year.

Dov Girnun, CEO of Merchant Capital, an innovative fintech funder that provides working capital to retail SME’s across the country, says Black Friday presents a moment in time in the sales cycle, and business owners still need to consider whether the concept will make sense for their business’s growth.

“Small business growth is a delicate balance between doing what works and taking advantage of the right opportunities. Retail business owners should carefully weigh up the pros and cons before being swept away by the Black Friday wave,” says Girnun.

Girnun outlines the following pro’s and con’s that retailers should consider before jumping on the Black Friday bandwagon.

Shopper enthusiasm

Pro: Savvy customers look forward to a good bargain. They actually plan their year-end spending around this one retail event. They believe that they will enjoy savings and great deals which will often prompt larger spending and additional ‘treats’ for themselves.

Con: There was a time when festive season shopping mainly occurred in December. Black Friday has changed this. What was normally a very good festive season trade, can now mean rapidly reduced December turnover. Retailers need to work this new spending habit into their projections and stock flow.

Significant noise

Pro: If you can deliver agile marketing messaging and have a tactical social and email marketing campaign behind you, you may well be able to fight the clutter and up your sales in a meaningful way. 

Girnun says: “In our experience, small businesses use the funds we lend them for anything that will be additive to the growth of their business: to hire more employees; buy new equipment; refurbish their store; buy more stock – and even for marketing – they don’t necessarily have to be elaborate plans, but each funding step is crucial to the next.” 

Con: As a small business you are up against the big guys: large retailers with huge marketing campaigns behind them. Certain larger retailers will even offer loss-leaders to draw in customers.

Shed old stock for small business growth

Pro: Small business growth is often the difference between sitting with old stock or shedding your load. Black Friday is a great way to encourage take-up of old redundant inventory. Making way for the new.

Con: On this day, over any other, customers are price-sensitive. They expect a good deal otherwise will gladly shop elsewhere. Heavy discounts might be the only way to win that sale over your competitor. But this is often a discount that isn’t worth the sale.

Scaling up for traffic

Pro: Black Friday is a marketing vehicle to assist in scaling up your customer traffic. It is a unique opportunity to attract new customers and satisfy existing ones. Just make sure that your store has the capability to restock quickly and check customers out efficiently.

Con: Sub-par in-store or online service can have a negative knock-on effect on your brand. So make sure you employ more staff and security on the day and upgrade your online systems so that they can carry an abnormal load should it arise.

Realising retailers’ eleventh-hour cash needs and taking the rapid evolution of technology into account, funders like Merchant Capital have the capability of assessing and approving a loan in just 24 – 48 hours, offering retailers an opportunity to scale up if need be at lower risk.

What are your competitors doing?

Pro: If your competitors are in the space, this may mean it’s good for your vertical. Simply being there may be a good way to claim your stake in some way.

Con: If you aren’t in the game, you can almost guarantee it will be a bad sales day. But FOMO alone (Fear Of Missing Out), is a dangerous hill to climb. So think clearly and make decisions that are right for your business!

Girnun says: “The jury is out as to whether Black Friday makes sense for all small businesses. But what is very clear is that retailers need to think long and hard about capacity, strategy, bottom-line, and long-term impact before committing to partake in Black Friday.”

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