Fuelling SME growth in Kenya: the competitive advantage of the cloud

With the growth in mobile devices, decreasing bandwidth costs and more international vendors and local service providers offering a variety of new services, Africa is cloud computing’s next great frontier.

In 2013, 48% of SMEs in Kenya were using cloud, and new analysis from Frost & Sullivan reveals that the overall cloud computing market in South Africa and Kenya will reach revenues of US$288 million in 2018.

SME’s, which are estimated to contribute 45% to Kenya’s economy, are well positioned to benefit from the cloud because of its low cost, but many have been slow to implement this new technology. So why the reluctance to adopt cloud technology, and why is it essential to build confidence in this technology?

Flexibility, scalability and affordability

In simple terms, cloud computing involves storing, processing and accessing data and programs over the internet rather than on local computers or servers. Importantly, a Boston Consulting study found that SMEs adopting this kind of modern IT have seen 15% growth revenue than those not using it. These businesses also created twice as many jobs.

One of the reasons for this is that the cloud negates the need for large upfront investments in on-premise solutions. Instead, you only need to pay for what you need, when you need it. This means scalability and steady growth.

The cloud also gives businesses of any size access to a flexible, scalable and affordable choice of productivity apps, traditionally reserved for large multi-nationals. This enables entrepreneurs to collaborate and work remotely – levelling the playing field in terms of their operational efficiency and productivity. SMEs and their employees are realizing that their competitive advantage comes from what they do with technology in and out of the office. Mobility and the cloud are more than technologies – they represent the potential to change how we approach both work and leisure, in ways that can bring more control over where, when and how long we work and have fun.

Managing communications in the cloud

Ugandan entrepreneur Kaakpema Yelpaala has seen first-hand how adopting the cloud can help SMEs. He is the founder of access.mobile and hospital management application ClinicCommunicator, which allows hospitals and clinics across East Africa to manage patient communications through SMS and email. The solution was built on Microsoft’s cloud platform – Azure – by a team of Ugandan software engineers, with technical support from a Microsoft MySkills4Afrika volunteer.

“IT managers in hospitals now see the benefit of the cloud more and more, and are increasingly accepting environments like Azure are essential for their data hosting and management needs,” says Yelpaala. “One year ago many would have preferred to use their own servers and infrastructure. However, thanks to the cloud we have been able to make our product very affordable, which has lowered the barriers of entry from a cost perspective for hospitals to use our system.”

Yelpaala adds that the cloud has also allowed his team to scale their solution across many countries quickly, meaning more and more hospitals are able to manage their patient communications digitally.

Kenyan entrepreneur, Felix Musau, developed his entire business model around the cloud. Using Microsoft’s cloud platform, Azure, he is able to offer payment, loan and remittance solutions via mobile phones. His flagship solution, AgriLife, uses a cloud-based data collection and analysis system to gather vital information from farmers, enabling them to build a credit history via their mobile phones, as many are unbanked

The cloud connects them to payment and settlement mechanisms between agricultural financiers and markets. Ultimately all players in the agricultural sector from banks to micro-finance institutions and co-operatives have visibility over the farmers’ financial and physical supply chain. This gives the farmer easier access to affordable credit.

“The impact has been huge, with farmers able to access financing and other necessary services to grow their business,” says Felix Musau.

Dealing with connectivity, security and tech support

Despite these benefits, many businesses in the region have been slow to embrace technology.

In a region where consistent access to high-speed internet is an ongoing concern, many organisations fear losing access to data or services should they make the switch to cloud. However, while this is a valid concern, the World Bank reports that a growing number of developing countries are adopting national broadband plans to stimulate broadband market development. Officially launched on July 2013, the National Broadband Strategy for Kenya was Africa’s second national broadband strategy after South Africa. It is a long-term initiative that is expected to contribute to Kenya’s goal of becoming a true knowledge-based economy by the year 2030.

Security is also a valid concern. However, cloud servers offer enterprise-grade security with the latest security patches that a single business could never afford. But with many businesses subscribing to a cloud server, they are able to tap in to affordable world-class security and data protection mechanisms. There is also a hybrid option where some data remains on traditional servers, whilst other business functions are moved to the cloud. Most cloud solutions will automatically sync all data and information when online. SMEs should look for cloud servers that build security into their products from the design stage, secure third-party certifications and have a transparent approach to data privacy policy.

On the issue of security, Yelpaala comments, “All patients’ data and information in ClinicCommunicator is hosted on a trusted cloud platform with built-in security of the highest international standards. This means our hospitals have even more peace of mind than before.

Another critical issue in developing markets is availability of local tech support and skills. According to a World Wide Worx survey, the single most important incentive for SMEs is having a guarantee of 24/7 real-time support, with more than a third of respondents (36%) citing this. That is actually more than double the next most critical factors, which were recommendations from other users (16%), a localised provider (15%), and price (15%). Governments and the private sector need to work together to address the skills gap with regards to modern IT.

Adopting the cloud for a competitive advantage

There are many challenges for SMEs in today’s market, such as increased competition, rising customer expectations and limited capital. However, by using the cloud to access the same tools and services once reserved for enterprises, SMEs can deliver a higher quality of service without placing additional strain on existing resources. This will also help to build intra-Africa trade in value-added goods and services, and the knowledge economy.

Ultimately, the rapid adoption of cloud computing will be found in the growing confidence that IT decision-makers have in the environment – SMEs will be quick to follow.

The author Kunle Awosika, is the Microsoft Country Manager, Kenya.