Is Government failing ICT Sector

 by Prof Barry Dwolatzky

SA Stand at CeBIT

SA Stand at CeBIT

In an article published on 24th March 2010, Tracy Burrows of iWeek asks the question: “Is the South African Government failing the IT sector?” The article reflects on the recent CeBIT trade fair in Hannover, Germany. She notes the contrast between South Africa’s “fairly low-key (presence)  -  a small stand hosting seven local companies under the umbrella of the Department of Trade and Industry”  and “the enormous stands provided by other countries … that outshone SA’s national stand”. The article also criticises SA government policy in relation to its lack of support for the local ICT sector. The gist of the article is that Government is indeed failing the local ICT sector. 

Is that, however, a fair assessment? Government is only one of the stakeholders in the Sector. What are other stakeholders doing in support of the Sector? 

The other key stakeholder is the local ICT sector itself. The Sector consists of all of those companies – large and small, private and listed – that provide ICT-related products, systems and services. As the use of ICTs has grown rapidly in recent years, a huge and successful industry has emerged in South Africa. Consider, for example, the growth of cellular networks. Before 1994 there was no cell phone industry in South Africa. Today, only 16 years later, almost every South African has a mobile phone. Vodacom has a market capitalisation of R83 billion and employs over 6,000 staff, while MTN is valued at R213 billion and has a staff, across Africa, of more than16,000. Cell C, the smallest of our three mobile networks, serves nearly 5 million subscribers. In 2009 the SA ICT sector, as a whole, generated income of about US$28 billion. Thousands of medium, small and micro companies have been established to supply and support local users of ICTs in SA, resulting in the creation of tens of thousands of new jobs. 

What is the role of these companies in supporting the ICT sector as a whole? As a first priority each company is obviously responsible to its shareholders and employees to remain successful, competitive and profitable. To achieve this they need to operate within a supportive environment. They therefore carry a responsibility, beyond their own specific interests, to promote and expand the broader South Africa ICT industry to ensure that this supportive environment exists. 

Ideally, the role of Government should be to create a policy, budgetary and legislative framework that promotes the supportive environment in which the ICT sector can operate and compete. In practice, however, Government is faced with a multitude of competing priorities. The South African Government is obliged by the history of our country and the demands of its electorate to focus attention and resources on service delivery, health, education, poverty alleviation, job creation, reduction in crime, and many other pressing issues. “Government” is also not one entity, but consists of a large number of inter-related, sometimes competing, organisational units and individuals all struggling to achieve their own specific outcomes. 

While anyone close to the local ICT industry will understand that a strong and successful Sector will assist Government in meeting many of its high-priority objectives, this is not obvious to most public officials and politicians. While industry insiders might believe, for example, that a well-implemented e-Government strategy will have a huge positive impact on service delivery, many in Government see it as another technological “nice-to-have” that may land up costing billions of Rands without delivering any real value. 

There is another key group of stakeholders that operates at the interface between Government and the ICT sector. These are “industry organisations”.  The SA ICT sector has no shortage of such organisations. To name but a few, we have: the Computer Society of SA (CSSA); the SA Electrotechnical Export Council (SAEEC); the ITA; the Joburg Centre for Software Engineering (JCSE); the SmartXchange; the Black IT Forum (BITF); Savant (within the Department of Trade and Industry); the Cape IT Initiative (CITI); the Innovation Hub; ISETT SETA; etc. 

While each such organisation will have its own focus, all have one thing in common. They aim to operate in a ‘pre-competitive’ space at a higher level than individual companies and individuals. These organisations form the vital link between the private sector and Government. It is through these industry organisations that individual companies are able to act and speak as an “industry”. These bodies must work to either directly or indirectly convince Government to create a supportive environment for the ICT sector in South Africa. 

An important prerequisite is that both Government and the ICT sector must acknowledge the importance of these industry organisations and actively use them as a communication channel. Let us consider two examples of how this has worked in the SA ICT sector. 

Example 1- CeBIT:  As Tracy Burrows pointed out in her iWeek article, CeBIT is one of the world’s biggest annual ICT trade shows. If South African ICT companies are looking to develop export markets for their products and services, or are seeking international partners, CeBIT is undoubtedly the place to be. Several industry organisations, including the SAEEC, Savant and the JCSE, acted as a channel to Government by persuading the Department of Trade and Industry (the dti) to include CeBIT on its list of “national pavilions”. As a result there was an official SA Pavilion at CeBIT from 2007 to 2009, and a stand sponsored by Savant in 2010.   

While the dti generously funds the construction and running of the pavilion and covers some of the costs incurred by companies exhibiting, it is up to individual companies to come forward and participate. While each year the SA pavilion at CeBIT has attracted enthusiastic participation from a handful of excellent companies, there have always been a very limited number of responses from the industry. 

The “low-key presence” at CeBIT 2010 referred to by Burrows does not, therefore, reflect a failure on the part of Government to support the ICT sector, but rather the Sector’s unwillingness to come forward to use the opportunity made available. 

Example 2 – Quality certification: For ICT companies involved in software development quality and predictability are important prerequisites. In a survey of the international software development market carried out in the early 2000’s the dti determined that the “Capability Maturity Model Integration” (CMMI) process improvement model is an important benchmark. Internationally companies wishing to compete in the software industry need to acquire a CMMI Maturity Rating. Over the past 5 years the dti has provided substantial funding to the JCSE at Wits University to develop local capacity to provide CMMI training and assessments. The aim is to make acquisition of a CMMI rating affordable to local companies. 

As with CeBIT there has been limited enthusiasm from the local ICT industry to participate in CMMI adoption via the channel (i.e the JCSE) created by Government. 

Conclusion

 While there might be some elements of truth in Tracy Burrows’ assertion that Government is failing the local ICT sector, I believe that it is more true to say that the ICT sector is failing itself.  There is a reluctance to work together for the good of the Sector as a whole. 

The solution lies in the role of industry organisations. These organisations need to be strengthened. Where there is overlap and duplication they need to be combined and aligned. Where they do not support the needs and priorities of the Sector they need to be focussed and directed. Industry must put its energy and resources behind these organisations to ensure that Government hears its collective voice and provides the supportive environment necessary for the long term success of the local ICT sector.

3 thoughts on “Is Government failing ICT Sector

  1. Prof Barry has highlighted some key issues that affect the success (or lack of it) of the South African ICT sector – well, perhaps more the IT than C, but we’ll come to that.
    I have to acknowledge up front that I work with Barry, so we share the ideals and goals for the development of the country’s potential. But, I am responding with my Computer Society hat on, since he has specifically referred to the role of industry organisations.
    It has long been a hobby horse of mine that South Africa’s approach to the so-called ICT sector is fragmented beyond belief. “So-called”, because I have another whole argument around the wisdom or foolishness of grouping multinational, monolithic, network service providers with individual “entrepreneurs” writing code or repairing devices and expecting them to behave as “an industry”. Even so, other (more successful) economies have benefitted from a holistic view of the role of ICTs by government, balanced by strong representation of industry and practitioners by industry associations.
    Our government has no such holistic view. In spite of efforts in the past to take a non-departmental approach through such bodies as the President’s National Commission and the President’s International Advisory Council, we still persist with dividing the consideration of the role of ICTs in our country’s performance between too many, sometimes conflicting, Ministries. How many of us understand the interests of Communications, Trade & Industry, Public Service & Administration, Public Enterprises, Science & Technology, Higher Education & Training and the rest, when it comes to shaping the development of ICT capacity in South Africa?
    On the practitioner and private sector front, we have even more “bodies”, each with a tiny “voice”, singing somewhat different songs and rarely combining their minimal resources to achieve a common goal. Perhaps the notable exception to this was the Working Group that came together to compile the ICT Charter, but even this has failed to produce a clarity of purpose in the final outcome. Given this lack of coordination within the industry, is it any wonder that government has no great vision of the potential that is being wasted?
    South Africa does great things when it comes to selling wine, minerals, cars, tourism. What will it take to elevate our ICT capacity to the same level? I have challenged the CSSA and the BITF to take the steps that will unify them in the short to medium term. I have challenged the “business bodies” to do the same. I challenge government to form a National ICT Council to demolish the barriers between the departments and across industry, so that we can follow the example of our network providers and brand “South Africa” on the global ICT stage.

  2. I happened to be at CeBIT with Prof. Barry as one of the exhibitors. One thing that I took home from my trip to Germany, in general, is how serious the German government is about the ICT sector. In fact, one entire exhibition hall was dedicated to e-Government initiatives.

    The initiatives were predominantly electronic content management and dissemination, devices for citizens to procure government services (unmanned kiosks), and government incentive schemes for ICT. In fact, many of these services were geared around removing barriers for citizens to participate in government. Many of the initiatives showcased were already “in production”; certainly during my trip I made use of a handful of these services, all of which were also internet enabled.

    In contrast, in the UK the Electronic Communications Bill (postponed until after the election) has been receiving flak from analysts predominantly because ministers were accused of not understanding the importance of the internet.

    Then there is South Africa. On the one hand, the government can do so much more to remove barriers for e-commerce and eliminate anti-competitive practices. For example, until very recently South Africans could not easily derive international revenue from products and services provided through the internet (no Paypal). On the other hand, the government is being, I believe, utterly ripped off by unscrupulous ICT suppliers. As the ICT industry, it is our responsibility to educate the government in these matters, just as it is our responsibility to educate all our clients.

    In both of these instances, industry organisations can play a role. The question is which model should be adopted; voluntary membership or legislated compliance?

  3. I think it would be valuable to initiate a “National ICT Council” to integrate the various industry roles and interests. An overarching body could coordinate the common interests while smaller working groups of the council or ‘sub-councils’ could focus on the separate areas of focus e.g software development companies, system integrators, business process outsourcers etc. And there are models we could adopt without re-inventing the wheel; India, Ireland and others. I have been particularly impressed with how Enterprise Ireland supports Ireland’s software industry through developing new markets and introducing Irish companies to potential customers.

    I would also urge that we also include the ICT customers (e.g Banks, Insurers, Retailers etc) in some of these discussions as there is a lot of software development happening ‘in-house’ in these companies. An example would be to interact with the recently formed “CIO Council of South Africa” to link with CIO’s.

    Regards,
    Mantsika

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