South Africa grows, but where’s the FDI

The SA economy is growing at between 4.5 to 5.5 percent, depending on which quarter was last measured, according to Business Report. My question is, if we have such growth where is the fixed direct investment (FDI) that overseas companies should be putting in here?

For me, it specifically relates to software vendors. Back in the mid- to late-1990s, US and European software firms of all sizes were coming to SA to open offices, and in those days we didn’t have the growth we are seeing now.

For South American or Asian countries having such growth for an extended period (as we have had), I’m sure the vendors would be piling in. My slightly cynical perspective is that because this is Africa, investment is seen as a risk by foreigners, no matter how the economy is performing.

It surprises me that the European companies in particular are not here in more numbers, because they are more familiar with Africa. I started to give up on US companies several years ago when I realised that Americans have very little idea of what goes on in the world apart from a fairly selective number of countries.

My 10th anniversary of ERP

I realised today that I have been revolving around, and been involved in, the ERP industry for just over 10 years. It was in early 1997 that I attended an SAP partner congress in Germany, I think it was in Munich.

I was the new Alliance Partner manager for Digital Equipment Corp in South Africa, having been re-directed from my previous role as a data warehouse (DW) consultant. I had some background with databases, but the ERP ‘thing’ was very different – the focus on business functions and processes was a new experience. And the software was far more complex than the DW applications I had worked on.

For Digital my objective was to position the company’s 64-bit NT and Unix platforms with the ERP vendors and their prospects; our biggest competitors were Compaq (NT) and HP/Sun (Unix). In retrospect, Digital were too early with their 64-bit systems.

The ERP market in those days was far more varied than it is now. I have a mousepad with Digital’s ten main ERP partners – SSA, Baan, SAP, Peoplesoft, Marcam, JD Edwards, Oracle, Great Plains, QAD, Platinum. Only three of those names still exist in the same form – Oracle, SAP, QAD.

The position of ERP in the technology adoption life cycle has moved since 1997. Back then we were talking about how to position Digital in the ‘tornado’ part of the market; now ERP is very much in the mature phase. In those days projects were big budget items, sales cycles were short, growth was in double-digits, and if you were involved in selling or implementing, the bonuses were good and the international meetings were great. I miss those meetings the most – that was when I used to get a chance to catch up with friends around the world and have a fun time; now its just work like everyone else.

Something I get – Mxit

Thanks to those who gave me feedback about Second Life and Twitter.

Dennis said he didn’t get Second Life, but referred me to one of his posts about Twitter.

Since then I have tried out Twitter and tried to get some friends on board, but it hasn’t been productive yet. A problem for a South African on Twitter is that the text messages (SMS messages in SA-speak) come from a UK number, and replying to an international SMS is an unnecessary expense.

What has been much more interesting to me, though, is to have got Mxit (pronounced Mix it) running on my cell phone. It has a huge market amongst young people in SA as a social network, and my kids helped me load it on my phone. Through Mxit I can also connect up to MSN Messenger and so can send messages via my phone when I’m away from the office.

Mxit runs as a web application on the phone, using a fast connection like GPRS. The two main advantages are that SMS messages is not limited to the 170-odd characters of a standard SMS, but can be as much as 2000 characters, and because it runs as a web app, the cost per message is less than 5c per message (compared to 40c+ for a standard SMS). Essentially it works like a chat or messenger app on a cellphone; contacts are identified either by their cellphone number or MSN nickname.

Of course, it has had its problems – predatory adults pretending to be kids, pornographic images spread through schools – but from the way I see my kids using it, it has far more pluses for them than minuses.

Sources of innovation #1

The CIO Weblog summarises a McKinsey report on the software industry that says, among other things, that customers expect software innovation is more likely to come from smaller vendors. That’s encouraging for our company with the software development plans we have.

The company I work for has many ERP manufacturing clients, and a number of them deal with long term projects. While the term ‘engineer-to-order’ could describe their busic business process, it doesn’t indicate the long-term nature and issues around their business. We use the term ‘project manufacturing’ because each engineering order is unique and must be managed as a different project. Each project can extend over several years.

When your business is making something that takes several years, a number of the traditional management and financial practices have to be adapted. Revenue doesn’t necessarily come in every month, but is related to a delivery milestone. Inputs to the manufacturing process may be ordered up front but only delivered a year or more later, which means escalation costs have to be planned for. Because the work takes so long, you need a means to measure progress so that you know that you are on track all the time.

Our application has been developed with a customer to address those and many other issues. From a technical perspective, we have built the software to be as independent of the back-end financial system as possible; the aim being to slot in with any ERP application. Using Microsoft’s .Net Framework, we are able to do that as many ERP applications are .Net compliant.

I wanted to write this blog to substantiate that innovative software could come from smaller companies. It’s thanks to technical and architectural developments in recent years that companies like ours can now do those things. I will go into more detail about our product in another blog.

Trying to make contact with difficult prospects

I have been trying to make contact with a prospect on our opportunity list for weeks but he is always out or unavailable. Then I read Jonathan Farrington’s blog about voicemail. Let’s see if his suggestions work as well as he claims.

You are proudly South African when …

A friend sent me a list of South African-isms, so for non-SA readers, here’s a taste of life here.

1. You call a bathing suit a “swimming costume” or Cozzie
2. You call a traffic light a “robot”
3. Employees dance in front of a building to show how unhappy they are
4. You get cold easily. Anything below 16°C is Arctic weather
5. You can sing your national anthem in four different languages, but have no idea what it means in any of them

6. You know someone who knows someone who has met Nelson Mandela

7. You go to “braais” ( barbecues) where you drink beer, eat boerewors (sausage) and swim, often simultaneously
8. You hire a security guard whenever you park your car
9. You regard any steak under 300g as a snack
10. You can count the national soccer team’s scores with no fingers
11. You enjoy reading about the sad state Zimbabwe’s in because it makes you feel better about conditions in your own country
12. More people vote in a local reality TV show than in a local election
13. People have the most wonderful names: Christmas, Goodwill, Pretty, Blessing, Brilliant, Gift, Precious, Innocence, Obvious etc.
14. “Just now” can mean anything from a minute to a month
15. You continue to wait after a traffic light has turned to green to make way for minibus taxis traveling in the other direction

16. Traveling at 120 km/h you’re the slowest vehicle on the highway
17. Prisoners go on strike
18. You wonder if fools like Jacob Zuma might actually do a better job than Thabo Mbeki.

Only from Africa

Thanks to Thomas Otter for linking to this thrilling video of a fight involving buffaloes, lions and crocodiles.

The URL is:

http://www.youtube.com/watch?v=LU8DDYz68kM

[http://www.youtube.com/watch?v=LU8DDYz68kM]

2 things I don’t ‘get’

Would someone out there in the blogosphere please educate me about Twitter and Second Life.

Do you have to be in the US or Europe to ‘get’ them, ie, to understand and see their benefits? How would they help me here in South Africa? Or is it a generational thing – I have only recently ‘got’ YouTube.

RSS Reader – Google Reader

Thanks again to Dennis, I have started using Google Reader to handle my RSS feeds.

I used to use the RSS feed in Windows Live (www.live.com) but if there were any Internet bottlenecks the browser would drop feeds. I tried using the Feeds functionality in Internet Explorer 7 but its tied to my laptop, so I couldn’t read the feeds on our home PC. With Google Reader, I can browse feeds anywhere – its even available on your cellphone.

High tech marketing in a rut

Seth Godin made a comment in which he related the first sound of a Steely Dan tune to creating a brand. Well, I have news for him, my kids wouldn’t recognise that ‘sound’ brand, or many of the other brands he probably takes for granted. It’s those assumptions of people in the ‘north’, forgetting that brands are age, societal and geographically influenced, except for a few global ones.

In my experience, the high tech marketing blogs come from a developed economy perspective. Take these blogs:

• Eric Kintz’s Marketing Excellence blog recently covered the issue of how HP marketing is developing a better customer experience. When he says “we will continue our transformation towards customer centricity by combining deeper customer intelligence and experience execution”, what’s the bet that will be done firstly in the US.
• The B2B Lead Generation blog talks about linking sales and marketing more closely, but assumes that marketers and sales people are in the same place, which of course they are in the US. In SA, the high tech B2B marketers are given little initiative, and so couldn’t have the same dialogue with the local sales team.
• Josh Greenbaum and the Enterprise System Spectator discuss what marketing to the mid-market should be. Perhaps in the US you could segment companies as those that see IT as either a utility or as strategic because of the level of education and skills in that economy. But in a developing economy, the availability of educated and skilled people is not a given, and I don’t believe that simple kind of segmentation would work.

I was in high tech marketing during the 1990s when, as Eric Kintz says in another blog, marketing was ”the growth engine of a company”. Marketing was considered important, not just in the big economies, but also in the smaller ones like SA. But the role of marketing started to change around 2000 and its “ability to produce results began to decline and marketing became quickly perceived as nothing more than creative spending. CEOs turned to other functions such as supply chain, IT or sales to drive profitable growth”. Then high tech marketing only survived in its true form in the big economies, whilst in places like SA it became an admin function, implementing whatever someone in Europe told you to do. 

What that did, in my opinion, was to negate the societal and geographical aspects of marketing that are unique to countries and need to be managed in-country.

Eric believes that marketing “can re-conquer its role of growth architect, provided that it can prove its direct contribution to business results.” As marketing’s re-growth occurs, I hope that the importance of a marketing intelligence and initiative in each country becomes recognised again.

Then instead of being forced to play Steely Dan (because someone in the US has identified it as a brand), we can adapt our local programs and play Mandoza or Freshly Ground.