Building the cloud ecosystem South Africa’s SMBs need
Date: January 2021
SMBs have a critical role to play in our economic future, but to compete in the digital economy, they need the right kind of help.
South Africa’s small and medium businesses (SMBs) have a supersized role to play in the economy. They employ between 50% and 60% of the country’s workforce and are the engine of job growth. And yet, compared to advanced economies such as the European Union, our SMBs do not contribute as much to the economy as they might – 39% of GDP as compared to Europe’s 57%.
Covid-19 hasn’t helped, as shown by the dramatic surge in jobless numbers in the last quarter of 2021. Now, 34.4% of South Africans (46.6% using the expanded definition of unemployment) are unemployed.
“Our SMBs have to equip themselves to compete in a marketplace that is increasingly digital and highly fluid. They need to digitalise, which means not only using technology smarter but also adapting their business models to take advantage of the new opportunities thrown up by this digital world,” says Anton Herbst, CEO, Tarsus Technology Group.
“SMBs, which typically lack the in-house IT and strategic resources of the enterprise, need a special kind of support to help them undertake the digital transformation journey successfully.”
Herbst says that digital transformation is a multifaceted exercise, and cannot be achieved quickly. It requires the development of new business models, a change in corporate culture and a new talent pool has to be created.
“SMBs – companies of all sizes, in fact – generally underestimate how much work needs to be done,” he adds. “Change management is pivotal because this is not about technology as such, but what it enables.”
Getting the cloud right
Cloud has become inseparable from the notion of digitalisation and digital transformation because it allows even smaller companies to access sophisticated services and capabilities without the need to tie up large capital sums in technology. This `as-a-service’ model is highly attractive but presents many challenges, both for IT service providers and end-users. For the latter, says Herbst, the temptation to move too quickly into the cloud can create a complex environment that is hard to manage – and may actually reduce agility and increase costs in the end.
Herbst stresses that this is not a binary discussion. Cloud isn’t the answer to every question, he argues. The issue should be what is appropriate for the particular company at a particular time. “In many instances, a blend of on-premise and cloud-based services is going to be the best option to allow the organisation to respond to change successfully,” he says. “There are multiple factors to consider, and the worst thing one can do is attempt a Big-Bang approach. There are steps to go through, and working with the right partners will help the SMB set the right course.”
New world: New models needed
This brave new world of digitalisation and fluid business models that adapt to changing market conditions requires a different type of approach from the IT service provider community. The old transactional model, in terms of which the end-user purchased products and services from vendors that, in turn, were supplied by distributors is no longer fit for purpose. Nowadays – and increasingly into the future – one needs to be thinking of an ecosystem that collaborates closely to understand what the client needs, and then provides the solution.
In this ecosystem, says Herbst, Tarsus On Demand sets out to play an enabling and connecting role, pulling together the solution providers that can deliver the solution. There are many facets to this enabling and connecting role, one of which is to help existing members of the channel to adapt to their new role as providers of services and not products. To make this transition successfully, they need to develop new business models based on totally different cash flow models. At the same time, they need to acquire new skills that are often scarce, particularly in the South African context.
“For our channel partners, the focus is shifting from sales to marketing, and we assist them to do that,” Herbst says. “We’re basically helping the ecosystem position itself to talk into – and supply – what the SMB market needs.”
Another key role is identifying startups that are developing software that the SMB market wants, and helping them to commercialise it and then take it to market. It’s an important focus area because the products these developers create for SMBs are what ultimately gives them the competitive edge.
Providing the platform
Another facet of Tarsus On Demand’s role is to provide the platform to orchestrate this expanding ecosystem. For SMB clients, coordinating multiple cloud service providers and their bills presents a significant challenge, consuming scarce management and accounting resources every month. Tarsus On Demand enables SMBs to leverage the rich resources of its partner ecosystem via the CloudBlue platform, which enables integrated vendor management, seamless interfacing with the Microsoft ecosystem, and one bill.
“This is a key differentiator because the market is so dynamic, with new functionalities being added all the time,” Herbst says. “Tarsus On Demand provides the stable, scalable platform that brings all that innovation together in a way that makes it useful for SMBs—and, by doing that, we are helping to prepare this vital segment of the economy to fulfil its undoubted potential.”