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How African SMEs are Taking On the Big Data Goliath and Winning

June 1, 2017 by SAP News 1

Digitisation is the future of business. But just how far along are small businesses on their digitisation journey? Facebook’s recently released Future of Business survey gives us an idea. The report showed that while 71% of South African small businesses are mainly concerned with attracting customers, only 19% believe developing new products to be a key concern.

So what gives? It’s not as if the business benefits of product innovation haven’t been discussed ad nauseum. Unfortunately, the numbers reflect a common issue that I often run into when talking to small business leaders – the perception that the business intelligence tools that have become essential to innovate are too costly for small business.

You can hardly blame them. Most articles around big data and analytics assume an enterprise audience – that you already have years of customer data on hand, a large amount of resources to invest in analytics capabilities and skills, and existing ERP systems. They’re also generally written from a US or European perspective, and don’t take into account the data collection and curation challenges that the average African business might face.

This has led to a misconception that only enterprises are capable of using data in a meaningful way, while everyone else is doomed to stumble through the data dark ages. Add to this the myth that small businesses don’t need data analytics as urgently as big enterprises, because their competitors are on the same playing field, and it’s no wonder that many South African SMEs aren’t investing in business intelligence.

Except there’s one big counterargument that blows these myths out of the water, and that’s the fact that many of the entities using data in the smartest and most innovative ways are start-ups. Turns out that big data is perfect for small business.

Starting small with big data 

First, let’s bust the cost and skills myth. Where once advanced business intelligence was a complex, resource-heavy affair, a number of platforms have sprung up that open analytics up to a wider audience. Businesses have a number of options available to them, from open-source software like Hadoop and Spark, to SME-specific solutions from large vendors like Microsoft Azure and SAP. These platforms are getting more user-friendly by the year, and a rich community of users means that tutorials, tools and other forms of help are accessible to everyone.

What’s more, many small and medium-sized businesses might be better equipped to use data in ways that large enterprises struggle to pull off. Practically, smaller businesses have fewer data siloes in place, and don’t have nearly as many cumbersome legacy systems to clean up. They can afford to start fresh, putting in place simpler data-driven platforms that integrate across their whole organisation.

Finally, smaller businesses can afford to take a much more focused approach to data, scaling up as they go. The smaller your core business focus, the easier it is to determine what your metrics of success are. Whatever your core offering, you’ll need to put in place analytics that speak to what the overall experience around that specific offering is. Once you have the foundational data capabilities to answer these, you can expand the scope of your questions and really start to explore the gaps.

The African edge

There’s an additional layer we need to consider when it comes to African business intelligence. With big enterprises largely having sewn up the more digitally mature (and thus data-rich) segments of the market, smaller businesses looking to grow must turn to largely untapped emerging markets that have light or non-existent data footprints.

This has had the effect of forcing innovation, as businesses seek out both different ways to source data about these customers, and new ways to implement this data to solve their unique problems. Necessity is the mother of invention, after all.

You need only look at the microfinance space to see these ‘alternate data’ models in action. Traditional risk assessment is inadequate for many microfinance platforms, as users often have no credit history. The answer is to use non-traditional data to assess credit risks. Kenyan farming app FarmDrive not only allows smallholders to keep a record of their revenues and expenses, it uses that information to assess whether users are eligible for loans. Similarly, Cape Town’s Jumo uses mobile data to conduct background checks.

Perhaps most exciting is the potential for start-ups and small businesses to scale up their data efforts, discovering new revenue streams and value adds for customers. Data-centricity is already at the heart of these kinds of platform-based businesses. This is rich soil from which new ideas can grow.

Take Safe Motos, a Rwandan ride-sharing app that lets people hail motorbike taxis. Its big selling point is that it uses telematics technology to track driver behaviour and kicks those with a low safety score off the platform. WumDrop, meanwhile, has launched an on-demand delivery courier that uses GPS to deliver packages anywhere, even without a formal address. On their own, both apps are a good use of data to meet unique customer needs. But there’s also plenty of scope to pull off an Uber Eats type of success, where small businesses enter into strategic partnerships to expand upon their current offerings and serve their customers in bold new ways.

So, how can SMEs bring this data-centricity into their own businesses? Ask yourself whether you have a robust data system in place around your core offering. If not, get one, whether it’s a basic CRM platform or open-source business intelligence platform. Start small, keep a tight focus, and you’ll start to see your analytical strength grow.

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