African SMEs Projected To Outgrow Established Companies

A technology expert has predicted some small and medium enterprises to grow to mega corporations in the next five years following the rampant pace of digital transformation.

Tracy Bolton, SAP Director: General Business and Partner Operations for Africa, said their quicker adoption of technology, such as the cloud, compared to bigger organisations, had put SMEs in good stead to outgrow some current dominant businesses.

“If you look at the change of companies and rapid adoption of technology, and look into who is growing into these big billion-dollar companies, it’s the SMEs of today that are going to be those companies in five years,” said Bolton in an interview.

“If you look at Uber, five years ago they were nowhere, and now they are making a billion dollars. If you look at Africa, 90 percent of companies are SMEs. They are leapfrogging from a technology point of view.”

She pointed out how SMEs were adopting such innovations as the cloud more rapidly than established firms.

“They (SMEs) have no legacy problems, they don’t have this big infrastructure, they are starting small and can go really big very quickly,” said Bolton.

“Never mind they have same advantage as big companies by using the cloud, which does not require the building of big infrastructure and doesn’t require to have the skills on site. Also, the cloud is more effective from a cash flow point of view,” said Bolton.

“However,” she added, “These are just the standard benefits, “SMEs can have exactly the same technological advantage that a big customer has, at a quarter of the price. It enables them to make that big leapfrog and be agile and maybe do things a big company couldn’t do and service their customers more effectively.”

Bolton said the SME market was moving much quicker than bigger customers because they did not have legacy issues to deal with.

“It’s easier for them to make a technology decision and move quickly to the cloud space. Secondly, they see the advantages, they can adapt as the environment is changing.”

Bolton said as such, SMEs were central to the company’s strategy for Africa.

“They are absolutely important,” she said.

“Some 80 percent of SAP customers are in the SME space. Ninety percent of our net-new name customers are in the SME space, which is the general business space. From the top, from (CEO) Bill McDermott, all the way down SAP has said SMEs are the future.”

Bolton said SAP was working with its partners to expand to the SME space in the continent.

The company is running some enablement programmes and workshops for partners that work in the SMEs.

The company is offering such solutions as SAP Business ByDesign and BusinessObjects Business Intelligence to enhance the growth of SMEs.

Bolton however cited challenges SMEs encountered in accessing foreign currency, flight of skills, expensive bandwidth and political instability as the main hindrances to SMEs growth.