SMEs and Cloud : A South African Perspective

It is often said that SMEs' are the lifeblood of most economies around the globe. In most cases, they contribute a huge chunk to country’s overall GDP and they are arguably the biggest employer compared to other segments of the market. 

Based on the statement above, it is therefore worth investigating and understanding the key drivers for the success of SMEs' and how SMEs' can exploit technology to their advantage and achieve their profit objectives.

SA's Official SME definition: In SA, a ‘small business’ is officially defined in Section 1 of the National Small Business Act of 1996 as amended by the National Small Business Amendment Acts of 2003 and 2004 (NSB Act) as:

" … a separate and distinct business entity, including co-operative enterprises andnongovernmental organisations, managed by one owner or more which, including itsbranches or subsidiaries, if any, is predominantly carried on in any sector or sub

sector of the economy mentioned in Column I of the Schedule14 "

Despite SMEs' significant importance and their contribution towards economic growth, SMEs across the whole world and in SA in particular, are still facing with numerous challenges that inhibits entrepreneurial growth.

A survey done by the National Small Business Chamber in 2012 revealed 4 major challenges that are faced by SA SMEs.

1. Access to finance.
2. Building relationship with big business and being listed in their procurement databases.
3. Understanding and unlocking the value of technology
4. Poor or Lack of business skills

The third point above confirms, SMEs' do acknowledge that technology can play a huge role enhancing their business performance however the challenge seem to be understanding what kind of technology to deploy in order to extract maximum benefits. 

One of the small business owner mentioned in a focus group done by a SA telecommunications company in July 2014:

" IT scares me, because I don't understand it. I have got an IT firm to do that stuff for me and anytime I ask them a question, they talk to me in mumbo jumbo " - Small Business Owner

One can associate the above statement with stress and difficulty. 

Having said all the above, statistics from different research houses in SA clearly show a growing trend in the use of technology especially cloud computing technology by SMEs'. 
A survey by Ovum 2013 results below show a positive cloud adoption rate in SA

If this indeed is the case, few questions come to mind that needs attention:

• What exactly is cloud computing?
• What are the driving forces behind this positive trend?
• What are the perceived costs and benefit for SME’s?

Keep watching this space as we attempt to answer the questions above...