Banding together for competitive advantage
South African software development companies should cluster to form a body that addresses their common problems and positions them for global competitive advantage.
18 March 2009
This is according to Prof. Barry Dwolatzky Director of the Joburg Centre for Software Engineering (JCSE), an industry organisation that develops research and training initiatives that strengthen the South African software development industry.
Dwolatzky says the majority of local software development companies are small niche players, which is a disadvantage for them when they bid for big contracts, both locally and internationally.
"Small players are perceived to be risky by companies looking to procure services, as vendors question whether they have the capacity to deliver on large contracts," he says.
Local developers also have to deal with the skills shortage, a problem that is not unique to their industry, but bedevils the ICT industry and the country as a whole.
"If you speak to any developer or company involved with software development, they'll tell you that SA has good skills, but we just don't have enough of them," says Dwolatzky.
The third challenge, which can also be seen as an opportunity, is that of globalisation.
"During the apartheid years, developers were guaranteed government business and did not have to compete with international players. Now all the multinationals compete for every large contract that comes up, and South African developers have to be on par with the world's best," he notes.
The downside is that local players have to up their game or lose business opportunities to their international competitors. However, playing in the international arena does enable local players to bid for international contracts that weren't previously available to them, expanding their business horizons and potentially pumping money into the South African economy.
"It's not enough for SA to encourage the start-up of software development companies. These companies need mechanisms through which they can share common problems, and where they can do joint marketing through a common brand."
Promoting the industry:
Dwolatzky proposes that SA form a body much like The Flower Council of Holland, which promotes the sale of floricultural products from the Netherlands on behalf of growers and traders, who cooperate closely in the process.
Activities by the council include market research, maintaining trade contacts, and developing and executing marketing plans. The council, which is made up of a group of competing companies which cooperate for their mutual benefit, also deals with best practice issues.
"If you look at SA, the wine industry and motor industries have organisations that address their common challenges. But when you look at the software industry in SA, we have a geographical concentration of software development companies, and the companies are of varied sizes, but we do not have a solid clustering point," he says.
Some headway
Dwolatzky concedes that the ICT sector as a whole has put in place infrastructures that address some common industry issues, including those faced by software developers.
Examples are the Information Systems, Electronics Telecommunications Technologies (ISETT) Sector Education Training Authority (SETA), whose mission is to generate, facilitate and accelerate skills development for workers at all levels of the sector.
The Meraka Institute aims to facilitate national economic and social development through human capital development and needs-based research and innovation in the ICT sector, and the Innovation Hub, Smart Xchange and the Bandwidth Barn, which provide clustering points for the budding ICT companies.
SA also has software development communities that are based on widely used international products as well as associations like the Computer Society, various trade federations and the Black IT Forum, which addresses black economic empowerment issues of the sector.
The JCSE fits into the picture by providing graduate training, which is not a major focus of the ISETT SETA, and upgrading the software development capacity of people, who already work in the industry through training, says Dwolatzky.
However, more needs to be done and the JCSE is trying to find ways to bring together small and large companies to understand common needs and put plans in place to deal with them, he says.
"We need ways to tackle the skills process, put systems in place to maintain world-class standards, and deal with the challenges of being small," Dwolatzky says.