The highs and lows of South Africa’s World Economic Forum’s global competitiveness rankings (from Business Report, 10 Sept 2010)
|High ranking||Low rankings|
|Strength of auditing and reporting standards||1||Business impact of HIV||138|
|Regulation of securities exchange||1||Quality of maths and science education||137|
|Efficacy of corporate boards||2||Business costs of crime and violence||137|
|Protection of minority shareholder’s interests||6||Hiring and firing practices||135|
|Financial market development||9||Quality of primary education||125|
S.Africa’s overall ranking was 54th out of 139 countries
Back in the pre-Y2K era, when I first encountered ERP, one of the selling points that the ERP vendors used to tout was their ‘industry best practice’ solutions. This meant that they had determined that for a particular industry (say buggy whip production) that best way to do things was to follow a set of processes that their software encapsulated.
I don’t know how many companies were convinced but that message, but its fallacy was brought home to me recently when we visited a company in the heavy manufacturing industry. Not that best practices are wrong per se, but its likely that they were developed in first-world environments, and transferring them to developing-world situations is not straightforward.
During our walk around the factory, we were told at more than one location that the factory managers had tried implementing procedures that were considered first-world best practices but had failed on every attempt. In some cases the reason was lack of advanced support infra-structure on the shop floor, but in other cases it was due to the level of education and training of the workers, cultural attitudes, and language issues.
So when we implement at the factory, we have to be aware of the local ’way of life’ and not try and impose practices just because some ‘northerners’ think they should work. Once again, it shows to me the importance of enterprise software vendors recognising local conditions when they sell their solutions. I’m afraid that too many international (US?) vendors have little idea about how things work outside the environment they are familiar with, and then cannot understand why some countries struggle with implementations.
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.
IT organisation and companies are stressing due to a lack of technical staff. It reminds me of the late 1980s when, working at a bank, they started to break IT staff salaries away from the standard bank salaries because it was getting harder to hire and keep staff. Bruce Richardson referring to SAP consultant shortages says its like 1994. For me 1994 was my change from a buyer/customer environment to a supplier/vendor. The early 1990s was when the IT vendors started coming after technical people at customer sites – in my case it was experience in data warehousing and executive information systems that got me hired away. It was the start of the long party for IT that lasted until 2002/3. I wonder how the current situation is going to play out?
1994 was also the first democratic election in SA; with the famous pictures of queues stretching for miles as we waited to vote. We celebrate the election date on 27 April, we also celebrate Workers Day on 1 May, so this year we have just had an effective 5 day extended long weekend.
I am leaving the ERP arena.
We merged our company with a larger ERP VAR, and while they took our technical staff, they didn’t want the sales/marketing/admin side – which means I was left looking for another job.
Like the consolidation of the ERP vendors, it seems that the same is happening in South Africa with the VARs. In the small-medium business space, new customers are choosing software based on price and perception of the supporting VAR. The SMB market for ERP is definitely in Geoffrey Moore’s late majority/laggard end of the adoption curve. So I am beginning to believe that the age of ERP is coming to an end. ERP VARs will survive on the basis of occasional new business, but additional work for existing customers will become more important, and other business areas will need to be developed
I am moving to a software company that started as a Syspro VAR over 10 years ago, but it has also developed a sophisticated project management solution for large manufacturing organisations; that’s where I will be working. More on that once I get into it.
I have now had personal and second-hand experience that Telkom (SA’s currently sole fixed line telco) hampers and frustrates new business in SA.
During November I have been very busy get things organised for our new company, including applying for phone lines. First, it took Telkom 12 days to find a phone number for us. Then they said that our phone line would go in a week later than I was first told – which actually means for the first week in our new offices we have no phone. The final kicker was when I asked about our ADSL line, the answer ‘Oh, that will take 8 weeks.’
I was flabbergasted! No Internet connection for 2 months – if we were lucky. So I cancelled our ADSL application and went to a wireless Internet provider, iBurst. It costs a bit more per month but we will be set up in 5 days.
I heard that another business that is also moving into the same office block has also been frustrated by Telkom’s appalling customer service.
By the way, when I was in the Telkom office fuming, the branch manager was sitting not 5 feet away, and when I voiced my displeasure his comment was ‘I know, our ADSL service is terrible.’
The crazy thing about this is that Telkom is heavily promoting its ADSL service!
I thought I would document this as newspaper articles occasionally appear discussing whether SA is competitive or not for new businesses.
We got our business name registered in a week, the company registration done in a month, and the tax and other issues should be sorted out in another week or so. That’s about 8 weeks in total for the SA government to allow us to set up business. I think that’s pretty good.
But then it came to the bank. I approached the bank with which I have been dealing for 20 years as a client, who know the value of my house and know I have paid off that loan, with whom I also have a substantial money market account, thinking they would be accommodating. They still haven’t fully approved the overdraft we wanted, and it has taken lots of cajolling from me to get us some credit facilities so we could pay the salary bill.
So for anyone coming to this country to open a business, the SA government is really helpful but the banks are a pain in the back-side.