ERP demand rises in sub-Saharan Africa

The growth of the small and medium-size enterprise sector and an effort on the part of local companies to replicate global business and marketing trends have led to increased uptake of Enterprise Resource Planning systems in sub-Saharan Africa.

With improved and affordable connectivity throughout the region, sub-Saharan Africa has attracted global brands that have set up offices or partnered with local companies, bringing a wider variety of business solutions to regional businesses.

The demand for ERP solutions has been driven largely by the continued exposure of local companies to global business practices as well the economic growth that has been recorded consistently in most of the region over the last few years, said Mike Macharia, CEO of Seven Seas Technology, an SAP partner in East and West Africa.

The telecom, banking and airline industries, driven by strict regulatory requirements, have been early adopters. While the trend toward ERP adoption may be driven by companies with extensive branch networks and a large financial base, vendors such as Microsoft, SAP and IBM have developed modules to suit smaller companies.

“In the recent past, ERP would be seen to be something for really large companies but more recently some providers have much scaled down versions with even six to 10 user licenses. Thus, even a local spare part shop with four to five branches can use an ERP, this is where the recent growth is,” said Francis Hook, IDC East Africa Manager.

Apart from absorbing the cost, smaller companies face the challenge of choosing systems that have more functionality than they need, a problem analysts say affects many companies, especially those that have not measured the scope of their projects correctly.

“Research has shown that users most organizations worldwide use a fraction of what the deployed solution can offer. According to a report by the Standish Group research, out of all ERP deployments worldwide, only about 23 percent to 28 percent are successful,” noted Wambui Mbesa, a Microsoft Dynamics partner accounts manager.

Though sub-Saharan Africa has experienced a higher rate of EPP deployments recently, there still exists challenges such as lack of smooth integration with existing systems; lack of reseller offices; and a shortage of trained personnel. Often, trained personnel tend to move to other areas such as Europe and Asia, where the pay is better.

There has been an increase in the number of trained personnel who can manage, implement and consult on ERP, but the number is still low, forcing providers to seek international expertise.

For public and private organizations that invested in systems earlier, smooth integration of new ERP software is key, given the prior heavy investment. Sectors like government and healthcare tend to use very industry-specific applications, making it harder to integrate new software.

“Some end users have some stand-alone legacy systems for which they have invested considerably and cannot immediately justify replacing and to migrate to an ERP system can take time or be plagued by problems migrating data and users of the data,” added Hook.   

With the extensive use of its products in the region, Microsoft has benefitted from its ability to integrate its ERP offerings with Office, Outlook and Sharepoint, giving users services they are familiar with.

“The ERP look and feel is exactly the same as other existing services to ensure a short learning curve and familiarity — users have the same experience whether using Microsoft Outlook or Microsoft Dynamics ERP,” said Mbesa.

While most ERP companies have resellers in the region, some of the resellers are not backed by teams of experienced solutions architects, which at times leads to poor project scope, leading companies to invest in systems that they can not fully utilize.

“The biggest drawback to deepening the access of SAP solutions has been lack of dedicated reseller offices backed by a team of experienced solution architects; it’s not just enough to have a sales office as the solutions are highly specialized and require superior technical designs and evaluations to ensure that the end product is suitable,” said Macharia, who is also the founder of Seven Seas Technology.

Seven Seas Technology recently partnered with Twenty Third Century Systems, a Zimbabwean firm with extensive SAP implementation experience. Macharia expects the partnership to increase SAP market share in Sub Saharan Africa and to contribute in training local expertise.

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