According to the 2005 African Economic Outlook report by Africa Development Bank and Organization for Economic Co-operation and Development, African economies are characterized by “a missing link.” There is a wide gap between the big and smallest firms in the industrial sector that must be filled if African countries have to grow and meet the MDGs by 2015.
Small Medium Enterprises (SMEs) play a major a role in development as they generate jobs hence eliminating poverty that afflicts people; however, they are faced with challenges such as small local markets, inadequate region integration, poor infrastructure, failure to access credit and adopt information and communication technologies (ICT) among others.
With the increase in ICT, companies have adopted technologies to make their management more effective. However this is not the case with most SMEs in Kenya and Africa at large, yet SMEs contribute largely to our economies and would contribute even more if their operations were facilitated through adoption of various technologies.
SMEs tend to shy away from ICT as they feel that it is too expensive. This is a misconception as ICT is an investment that builds efficiency into processes and promotes accountability. The benefits that IT brings should be examined in the long term although one can enjoy the short term benefits. With this approach, proper planning is therefore required.
If not well planned for, IT can be very costly. Enterprises should not result in putting their money into IT without examining the Total Cost of Ownership (TCO) both direct costs such as hardware, staff, training and the indirect costs such as power consumption, license and consultants among others. “Without calculating TCO, SMEs are not likely to comprehensively calculate their return on investment. This means that an enterprise is not likely to have the value they are looking for in the technology,” says Dorcas Muthoni, Director Openworld Ltd.
To ensure that SMEs get proper benefits from IT, they should go through Strategic Technology Planning. This is an involving and reflective process in which an organization ensures that the technology it invests in furthers its mission. It saves organizations from being pressured by technology and instead benefit from technology as identified in their technology plan.
“For a long time, SMEs have been feeling left out as big vendors are focusing on larger enterprises and solution providers looking at SMEs as too small,” observes Muthoni. Despite this, companies are now coming up with products and solutions that provide solutions to all but with a special focus on SMEs. Openworld Ltd, for example, trains and offers consulting services in Strategic Technology Planning to help enterprises plan and apply IT cost-effectively.
They base their solutions on Open Source technologies for which organizations do not require to pay any form of licenses. Open Source technologies enable SMEs or any other enterprise for that matter to have state-of the art technology and significantly lower its IT costs. These products allow enterprises to live without fulltime IT support staff and therefore only ask for assistance on need basis. “By adopting this technology, SME’s can afford to carry out their activities without incurring too many expenses. Unfortunately, very few of them know such technologies exist,” says Muthoni.
Wireless Networks which are affordable, is yet another technology that SMEs can adopt. With this, SMEs do not have to incur extra expenses incase of relocation. “When your organization relocates, you relocate with it and you continue enjoying the services of your network,” adds Muthoni.
SMEs just like other enterprises deserve to benefit from the efficiency that technology brings to businesses. IT has a big role to play in SMEs as it is the growth of SMEs that leads to the birth of the big corporations that we all like to be associated with.
By Purity Njeru
Ms. Njeru is an African Executive staff writer
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