Business Report asks SAP Africa MD Brett Parker some key questions ahead of the WEF Africa 2016 summit in Kigali...
Q: Africa’s future success is dependent on its economies’ successfully diversifying beyond their current heavy dependence on commodities: How do you rate its progress in this regard?
A: The average growth of sub-Saharan Africa’s economies has slowed down to 3 percent. The good news is that the World Bank predicts that the average growth rate will return to 4.5 percent in 2017, hinging on the economic recovery of the continent’s biggest economies Nigeria, South Africa and Angola. However, the World Bank also warns that its predictions for growth are still vulnerable because of the global economic environment, in particular commodity prices and China’s industrial slowdown.
Given the fact that Africa will probably remain natural resources-driven for the next two decades at least, the continent is also looking at new business models and exploring new efficiencies:
* Investment in infrastructure, transportation and logistics has been responsible for more than half of Africa’s improved economic performance and is a cornerstone of socio-economic development.
* We have seen a significant shift in the insurance industry, as many companies in this sector expand their services across the continent. New service offerings, speed to market and operational agility are more important than ever.
* Faced with decreasing revenues, companies in the energy and natural resources sector are looking to invest in technology that will enable cost reductions across organisations, for example, asset management and supply chain. With information technology/operational technology (IT/OT) driving convergence and connecting assets, these companies are challenging technology providers to deliver high value Internet of Things innovations in rapid cycles. Utilities service providers are less exposed to volatility but are driven by the need for consistent power supply in support of national grids.
Clean drinking water remains a priority across most African countries, including the most developed. Government and international financial institutions (IFI) are continuing to invest in utilities. This also marks a key space in which business applications provider SAP can demonstrate innovation with solutions, such as smart metering and smart power grids, to help bridge Africa’s energy gap.
* In terms of the public sector, SAP is supporting African governments to promote good governance, greater transparency and inter-agency operations; in the war against corruption; and improving a citizen-centric approach.
* As far as financial services go, African banks are investing in IT solutions to get to world class standard, including system readiness for the adoption of the latest capital adequacy requirements.
I firmly believe investments and innovation in the above sectors and industries will drive further technological adoption and growth and diversification from the current dependency on commodities.
Q: When it comes to start-ups, Africa has a couple of unicorns of its own. How healthy do you think Africa’s tech scene is and is it ready to take on global competition?
A: Investment in Africa continues to make headlines with the continent’s success and growth dependent on effective support underpinned by private investment and responsible business practices. This applies to the information and communication technologies sector as much as it does to any other business sector. It hinges on partnership by government with the private sector to support the development and sustainable management of Africa’s digital potential, promoting employment and education from the cornerstones of this trend.
Five years into the age of the customer, investments in mobile, cloud, big data, predictive analytics and social technologies are unquestionably booming. But unlike previous technology cycles, technology investments will continue to grow rather than diminish throughout the refinement period. This year’s top ten technology trends show that a shift is under way from cyclical, invention-led spending on point solutions to investments targeting customer-driven, end-to-end value. We are seeing early signs of cloud adoption, particularly within commercial banks and the mining industries and the fact that mobile continues to thrive.
An indicator is certainly the strong uptake of our flagship in-memory product, S/4HANA (S stands for Simple, 4 for 4th generation and HANA stands for in-memory and real-time) adoption in South Africa, supported by initiatives like our African chapter of the SAP HANA Startup Forum that recognises Africa’s fantastic entrepreneurial spirit and seeks to create new businesses and also our drive to recruit developers on the SAP HANA Cloud Platform across Africa.
Q: Bill McDermott, SAP’s global chief executive, spoke in Davos with Joe Biden about how big data could be deployed in the fight against cancer. In what other areas do you see big data showing the most promise in helping solve major global challenges?
A: Research is definitely an area where big data processing is key. Take the Square Kilometre Array (SKA) astronomy project in the Kalahari desert, which promises to massively advance space science, not just for Africa. This is probably the world’s biggest example of a big data initiative.
The SKA’s goal is to map the early universe using radio telescopes and the first phase of the project is capped at $740 million (R11 billion at yesterday’s rate). The necessary computing architecture will be among the most advanced on the planet. SKA will eventually produce more data than the rest of the world’s astronomy projects combined. The project in South Africa will produce 2 terabytes per second of total raw data; that is roughly enough data to fill 340 000 laptops with content a day.
Big data means different things to different customers. SAP’s focus is on injecting intelligence into big data from varied and rich data sources so that it can lead to informed action. We focus on the “why” of big data, as opposed to the “what”. We look at what jobs our customers are trying to get done for their customers and what role (big) data can play in solving this challenge. As the market leader in enterprise application software, we are helping customers across the globe use (their big) data in ways not possible previously. For example, we have imported transaction level data from customers into SAP HANA and shown trends, key performance indicators and even predictive insights into data that was previously just too large for these customers to even attempt.
Q: What do you see as the single biggest challenge affecting SAP’s ability to grow its Africa business?
A: While we have to acknowledge that there are many challenges in Africa, SAP is nevertheless very upbeat and sees the huge potential of the continent. Skills development with sustainable job creation in mind is, however, a significant issue.
Africa has the fastest growing digital consumer market on the planet and is quick to generate or embrace new technology and digital trends. But companies are struggling to fill positions with employees who possess the right digital skills. The African Economic Outlook reported that in the youth labour markets of 36 African countries, there is a 54 percent mismatch between the skills of job seekers and employer requirements.
Africa also has the fastest growing working population – estimated to double to 1 billion in the next 25 years. This poses challenges in two ways: a) Will the growing economy create enough jobs; and b) How can the economy grow when access to higher education and digital skills is limited
. SAP is committed to driving business in Africa with the ultimate objective of improving people’s lives through the deployment of innovative industry-specific technology solutions. A key component of this plan is the investment in a full cycle of technology skills support, providing university graduates with training and immediate job opportunities, as well as casting a wider net to include primary and secondary students. SAP’s Skills for Africa scholarship programme, for example, kicked off in 2013 and will train 10 000 technology consultants in Africa by 2020.
Last year, we also launched Africa Code Week, a one-week programme designed to introduce children to programming. The largest digital literacy initiative ever organised on the African continent, this programme in 2015 introduced 90 000 young people in 17 countries across the continent to coding. This year, the target is even more ambitious: 150 000 young people across 30 African countries. Without doubt, this can only be achieved through the close collaboration of a network of more than 100 partners, including non-profits, governments and corporations.
Q: Why will SAP be participating in WEF and what do you hope to achieve at the World Economic Forum on Africa?
A: As a global partner to the WEF, we see great value in participating. Our objectives are threefold:
* Expand and enhance relationships with Africa’s best and brightest: opinion-elite, cross-industry chief executives and media.
* Drive further awareness of SAP’s commitment to Africa, highlighting our skills and job creation initiatives. Africa Code Week and our SAP Skills for Africa initiatives stand out in this regard.
* As SAP sits in the driving seat of key technology trends that have the potential to reimagine business and create unforeseen opportunities in Africa, engaging with stakeholders at a forum like this is invaluable.
* Brett Parker is the managing director of SAP Africa and will be participating at the World Economic Forum on Africa 2016 in Kigali, Rwanda, from May 11 to 13.