Finpro report south africa
Transcript of Finpro report south africa
Digital Africa StudySouth Africa
South African ICT capabilities are acceptable (especially for Africa) but not advancedSource: World economic forum – Global IT report 2014
Commentary:• South African ICT infrastructure is acceptable
but not advanced• SA Broadband is both limited and expensive• While SA business usage is moderate, both
individual and government usage is low• The Government of South Africa is not using
technology extensively to make social or economic impacts
Political and regulatory environment
Business and innovation environment
Infrastructure and digital content
Affordability
Skills
Individual usage
Business usage
Government usage
Economic impacts
Social impacts
12345
6
7
Finland
South Africa
Affordability FinlandSouth Africa
Mobile cellular tarrifs PPP $/min 0.07 0.51
Fixed broadband internet tariffs PPP $/month 28.94 37.25
Internet & telephony competition (index) 2.00 1.07
Internet & telephony competition (World rank / 148) 1 125
Public Services still with paper documents and SMS …But Telecom earnings are changing
6/9/2015 © Finpro 3
The ICT market size in South Africa is estimated at R 190 billion (€ 14.1 billion)
The telecommunications businesses are by far the largest share – due to customer subscriptions
The South African ICT market is dominantly driven by telecommunications expenditure – approximately 80% of the ICT budgets are used telecommunication.
Large telecommunication companies are moving from traditional communication to providing ICT services themselves.
Vodacom
MTN
Cell CNeotel
Other BytesEOH
BCXDD
Datacentrix
T Systems
Gijima
Telkom
Major Telecommunications Companies in South Africa
• Telkom is the major fixed line provider• Vodacom is the largest mobile service provider in B to B
and B to C• Vodacom is anticipated to acquire Neotel in the near future, giving
them ‘last-mile’ capabilities
• MTN is a larger mobile service provider than Vodacom, but their South African revenues are significantly smaller
• Cell C is a private company • Discussions about Cell C’s financial challenges and their future in
the market
South African Telecoms
Vodacom
TelkomMTN
Neotel Cell C
32 483
58 801
38 922
3 900 7 500
In South African Rands 100 R ~ 7,77 EUR or 1 Eur ~ 13,1 R (25.5.2015)
-
20 000
40 000
60 000
80 000
1 2 3 4 5 6 7
Revenue growth of the big three telecoms companies
Telkom Vodacom MTN2008 2009 2010 2011 2012 2013 2014
-
50 000
100 000
150 000
200 000
1 2 3 4 5 6 7
International Revenue - Vodacom and MTN
Vodacom MTN
IT Service provider market in South Africa
1 Eur ~ 13,1 Rands(25.5.2015)
6 512 300
8 761 000
2 279 512
6 124 556
7 220 000
1 519 000 2 000 000
Share of market – Revenues in Rands
Bytes
Business Connexion BCX
Dimension Data
Datacentrix
EOH
Gijima T-Systems
Seven largest represent about € 2,564 billion revenue.
Average revenue growth for the major IT suppliers is 12%.
Average gross profit is 6.55%(Excluding the loss-making company)
Also the usual international companies are represented in the market
Approximately over 2000 medium to small
niche ICT service providers
IT service providers: Entry points to telecom, financial and cybersecurity market in South Africa
• As the South African buying culture tends to be exclusive and trust is major issue among corporate buyers
• As buying is steered by rigorous and long lasting Request For Proposal (RFP) processes and guided by personal relationships
• As Broad Based Black Economic Empowerment B-BBEE levels are relevant issue in public sector
Existing networks by ICT service providers could be good entry point
• The ICT market is relatively decentralized and competitive with many potential options to start to co-operate with the seven major IT service players, who operate in the market with a significant grip on the clients in the focus markets like financial, telco and cybersecurity
• Partnering model with added value service and product providers is operating model for ICT service providers – although global partners prevail, local added value providers have remarkable advances and opportunities
What Telcos want to develop?
Summary: Telco market and investment areas
Telecom
• Biggest telcos are moving into IT service space
• All three major telco’s (MTN, Telkom, Vodacom) see huge opportunities in
Africa, South Africa considered as competitive and mature market
• New services are considered as source new revenue in digitalization and
IT service space
What Telcos want to develop?
Summary: Telco market and investment areas
Telecom
• Biggest telcos are moving into IT service space
• All three major telco’s (MTN, Telkom, Vodacom) see huge opportunities in
Africa, South Africa considered as competitive and mature market
• New services are considered as source new revenue in digitalization and
IT service space
”IT SERVICE
COMPETENCIES IN ALL
IT DOMAINS””EVERYTHING
RELATED TO
DATA
CLASSIFICATION”
”HELP CUSTOMERS TO
DEVELOP NEW
NETWORKS”
”VERTICAL EXPERTISE
NETWORK SECURITY ”
”HELPING OUR
CUSTOMERS TO
DEVELOP THEIR
DIGITALIZATION
ROADMAPS ””TO SECURE
CUSTOMER DATA
MANAGEMENT”
”IT SECURITY CAPABILITIES
IN DISASTER RECOVERY,
BUSINESS CONTINUITY
MANAGEMENT”
Opportunities
Two type of opportunity exist – servicing the Telecommunications Companies as a provider in corporate and ICT servicesThere are many small ISP (Internet Service Providers) and web-based companies, which use the networks and infrastructures provided by the big Telecoms companies. Finnish companies wishing to use telecommunications networks will find opportunitiesTelkom, MTN and Vodacom have all stated a strategy of expanding into IT domains. At the moment they provide networks, hosting, and ‘white label’ IT products. There is an opportunity to offer them partnerships in all IT services domainsThere is an opportunity to provide secure industry specific virtual networks (e.g. Medical)Many telecom companies have clear Africa strategy that makes it possible to expand into other areas in Africa for e.g. Finnish ICT companies.Network security has been named as one of the development areas among telcosfrom offering perspective.Companies are creating their digital strategies which opens up opportunities.Companies, which can create new business for Telcos and even offer new financing models for that business, have opportunities.
SWOT: South African ICT market - focus on telecommunications
South Africa has a mature financial market
0 5 10 15 20 25 30 35 40
AVAILABILITY OF FINANCIAL SERVICES
AFFORDABILITY OF FINANCIAL SERVICES
FINANCING THROUGH LOCAL EQUITY MARKET
SOUNDNESS OF BANKS
REGULATION OF SECURITIES EXCHANGES
10
3
21
5
2
39
21
3
6
1
Financial market development
Finland South Africa
• South Africa has an excellent banking system – but it’s not cheap for clients
Source: World Economic Forum, Global Competitiveness
Report 2014/15 Scale out of 144: 1=best, 144 = worst
South Africa has four major banks
• All together 13 local South African banks• South African banks are growing their networks to Africa
• E.g. Standard Bank operates in 19 African countries
South Africa has over forty insurance companies
19,49,6
6,2
20,98
59,1
56,2
Old Mutual
Momentum SantamOutsurance
Hollard
DiscoveryThese include four major banks
Revenue of major insurance companies in Billion Rands
Insurances and Healthy life style
6/9/2015 © Finpro 15
What financial organisations want
to develop?
Summary: Financial sector market and investmentareas
Financial
sector
• Mature and sophisticated market with lot of innovation
• All major financial institutions building Africa presence and investing
heavily in other parts of Africa and Middle East
• Financial institutions building their mobile and digitalization strategies as
part of internet and mobile banking
• Many institutions use old technologies, looking for leapfrog technologies
What financial organisations want
to develop?
Summary: Financial sector market and investmentareas
Financial
sector
• Mature and sophisticated market with lot of innovation
• All major financial institutions building Africa presence and investing
heavily in other parts of Africa and Middle East
• Financial institutions building their mobile and digitalization strategies as
part of internet and mobile banking
• Many institutions use old technologies, looking for leapfrog technologies
”DIGITAL BANKING
WITH THE FOCUS ON
MOBILITY””EVERYTHING
RELATED TO DATA
MANAGEMENT AND
NEW DATA SEARCH
FEATURES”
”HELP CUSTOMERS TO
DEVELOP ROADMAPS
FOR DIGITALIZATION””FRAUD
MANAGEMENT,
MALWARE AND
PHISPING
PROTECTION”
”IT SECURITY IN
GENERAL”
”BIG DATA FROM
CUSTOMER
INSIGHT”
”EXPANSION TO OTHER
PARTS OF AFRICA AND
FOOTPRINT CREATION ”
OpportunitiesThere is a saying in South Africa: “Banks buy everything in IT”. While this is an exaggeration, there is certainly opportunity for sophisticated ICT suppliers to find a market amongst mature IT buyersAll major banks and insurance companies are actively expanding into Africa and elsewhere. They are willing to partner with ICT suppliers who offer niche services/products for their marketsDigital banking with the twist of mobility is in great demand – huge investments will take place in that space in the near futureMany Financial companies have clear Africa strategy that makes it possible to expand into other areas in Africa for Finnish ICT companies.Companies are creating their digital strategies which opens up opportunities for Finnish companies. Everything related to customer data, data classification and customer experience development is in great demand IT security and cybersecurity in general is big investment area for all financial sector companies
SWOT: South African ICT market - focus on Financial Industry
Notice: Investments on digital/mobile banking are done now – window of opportunity is getting narrower all the time
Strengths
• Most sophisticated and mature ICT market in the African context
• Most Companies have reasonably mature security measures and software in place
• There are a number of organisations directed at promoting cybersecurity in South Africa. www.cybercrime.org.za is a cybercrime awareness portal, and the Information Systems Audit and Control Association (www.ISACA.org,.za) which trains and certifies IT security and audit specialists
• Companies are relatively well aware of the cybersecurity threaths and expect their ICT suppliers to address these risks
Threats• The Government is lagging in
Cybersecurity legislation. New cybersecurity legislation is being mooted for 2015/6, which may change the parameters of operation
SWOT: South African ICT market - focus on cybersecurity
OpportunitiesTwo types of legislation provide opportunities: King III which requires Company Boards to take responsibility for IT and with it IT security.
Any product or service which makes IT security clearly robust to Executives will be welcomed POPI (Protection of Private Information) requires companies to categories, document,
secure, and destroy personal data when its purpose has been served. Companies have so far dealt with this (if at all) in a crude way. Any sophisticated, automated, and secure data management service/ tool will be welcomed
Government Departments are laggards in terms of securing their ITDeveloping governance processes provide opportunities to consulting assignments.Security and fraud management are great concerns of almost all market players – with the right offering this should provide huge market opportunities for Finnish ICT companies concentrating on cybersecurity with clear focusTelecom operators moving from consumer markets to B2B market – they need to understand enterprise security related issues (disaster recovery, business continuity management etc.) –this provides opportunities for Finnish companiesFinding players who have general level competence in security but who require vertical experience.
SWOT: South African ICT market - focus on cybersecurity
Digital Health
6/9/2015 © Finpro 21
Digitalization and Security
6/9/2015 © Finpro 22
How to approach corporate customers in South Africa: Check List
1. Approaching customers without proper local partners and trust created through their existing relationships could be a daunting task – direct approaches are not likely to succeed. To approach customers directly, you need a major marketing / education / public relations program
2. Identify the real decision makers already in the early phase and address them – relationships are important
3. Decisions might be made somewhere else than in South Africa– be aware that you understand where the decisions are made
4. Show that you understand the local business culture by presenting your own operating model that fits into the customer’s operating model
5. A well defined value proposition is needed that shows that you also understand customers pain points and business challenges – local support of your service is critical
6. Value propositions need to include clear benefits from business perspective but quite often also in the personal level (decision maker level)
7. Closed RFP’s do exist in South Africa, even for those RFP’s you need local partners that are backing your offering – if you have good international references, these are your best bet
8. Be aware that financial sector is extremely conservative and slow in decision making, Telco’sknow their value as partners as they expect a lot in return for co-operation and security market is sensitive and requires even more than other markets from trust creation
Recommendations for Finnish ICT companies in South Africa
• The SA ICT market is sophisticated and matured ICT market – if you are looking for good infrastructure and “almost” European style business culture, South Africa is your location of choice
• The SA ICT market is highly competitive with almost all global players combined with strong local players – there are no quick wins and go-to-market activities require long term planning and commitment
• Because of the maturity of the market, growth is not as strong as in certain other geographical markets –if your resources are limited and you want to operate with “niche” offerings, you might find it easier to operate in some other African ICT markets
• As everywhere in Africa, you need local partners that are able to take you to the right networks and relationships – buying is highly personalised and it requires a lot of time to build right relationships
• South Africa is the gateway to other ICT markets in Africa as main telecom and IT service providers as well as their clients operate from South Africa – if you are planning growth in other African locations, South Africa is good base and option to build your business expansion
• South African ICT market operates same way as any other ICT market (despite local characteristics) – you need to have clear and focused offering message as well as well formulated value proposition to your potential partners and clients
Thank you.• Terry White: (+27 82 537 3887) [email protected]• Mika Jantunen: (+27 79 123 6078) [email protected]