Business Connexion CEO Benjamin Mophatlane exuded a reserved confidence as he weaved his way among investors, colleagues and reporters ahead of the group's results presentation held in Johannesburg in April. "We're cautiously optimistic about 2013," he declared to the audience.
The JSE-listed ICT conglomerate now employs 7 000 permanent staff across all of its operations. Founded in the mid-90s by iconic local IT personalities Benjamin and Isaac Mophatlane, the Business Connexion (BCX) of today is a product of various mergers over the years [see sidebar].
To maintain its position as one of SA's heavyweight ICT players, the group is focusing on integrating its recent acquisitions into the normal flow of business and extracting increasing value, then branching out into specific directions that promise rapid growth - expanding operations across the African continent, developing apps for corporates and end-users, and new energy-efficiency solutions.
BCX revenue climbed 8% to R2.9 billion for the first six months of the 2013 financial year, with operating profit at R145.1 million. Headline earnings per share dipped slightly from 22.3 cents in the previous period to 19.1 cents, although most of its divisions reported solid revenue growth. Its Canoa (managed printing services) division stood out, with revenue at R514.9 million, up from R344 million last year.
Mophatlane speaks positively about the inroads the group has made across the African continent, and even more positively about future opportunities. "We've been able to invest aggressively in Nigeria and Kenya," he says.
Revenue from BCX's international division rose 12.1% to R239 million in 2012. Driving this African expansion strategy is the company's international executive, Rodwell Zvarayi.
Local presence
"Nigeria's GDP grows at 7%; Angola's is similar to that. Many people feel Nigeria will at some stage overtake SA as Africa's biggest economy," says Zvarayi.
BCX made its Nigerian entrance four years ago. Following a subdued start, it established a data centre environment earlier this year to enable a number of services for clients and resellers.
"Having a strong local presence is key to achieving success," Zvarayi comments, as it's critical to provide the required level of customer support, build strong relationships, and meet service level agreements.
BCX is bolstering its local presence in Kenya in order to capture the expected surge in demand for IT services. "Kenya is quite advanced in terms of connectivity," he notes.
The 18 months the company has spent in Kenya has seen it sign deals with three major telcos, nail down some sizeable business in the public sector, and begin the development of another data centre.
And if Nigeria and Kenya are the flagship outposts of the group on the continent, a number of other regions are developing fast, notes Zvarayi. He points to a growing demand for cloud-based services among many of the company's larger clients across the continent.
In Tanzania, BCX operates the core switching platform that processes inter-bank transfers for all the banks in the country. Across Ghana, the DRC, Angola, Zimbabwe and Mozambique, it is retail, mining and natural resources, as well as the public sector that fill Zvarayi's portfolio.
BCX followed its SA-based clients into Namibia in order to provide the support services they need. Now with 120 staff on the ground, it also runs the licensing system for Namibian motorists.
Rapid growth
We've been able to invest aggressively in Nigeria and Kenya.
For South African ICT companies, any expansion has to start with expansion into the rest of the continent. Says research group TMT Finance: "At a speed that has confounded even the most optimistic, [Africa has] embraced aspects of information and communications technology at an envious pace... outstripping growth in the mobile market by a factor of two to one."
But Zvarayi's enthusiasm is tempered by an acknowledgement of the business risks.
His concerns relate to four areas: political and social stability, the availability of skills, the difficulties of setting up shop, and infrastructure challenges.
"Yes, things can change overnight," he says, although he points to increasing stability in many areas - for example in Kenya. "Then, from a skills perspective, some of the skills are very specialised, and you want to be building capacity in the countries that you go into," he adds.
Zvarayi, who has spent 16 years in ICT in Africa, spends most of his time between the various BCX presences that are emerging.
He's seen a lot in 16 years. Perhaps the most dramatic of the changes - from a technology perspective at least - is in mobile technology. He says glowingly: "It allows us to do things we never dreamed of all those years ago."
Another burgeoning area for the group is in the field of application development. For the first time, BCX is providing solutions directly to end-consumers, although not overtly branded as such.
Strategy Analytics' recent Mobile Apps Revenue Forecast predicts the app market - comprising mostly of paid downloads and in-app advertising - will explode to become a $35 billion industry worldwide by 2017.
Mophatlane notes that BCX has launched, or is about to launch, more than 10 apps - from custom solutions for specific enterprise clients, to general consumer apps. The 20% growth in this industry is a rate he expects will continue over the coming years.
'Table Magic' will allow users to find restaurants, make bookings, read reviews, and later rate their experiences. 'Do One Thing' looks to weld together a community of people making pledges to make the word a better place, in a number of small ways. 'Kids First Aid', aimed at parents of small children, packages a range of medical information and videos with a location finder of nearby hospitals.
Bigger picture
At a speed that has confounded even the most optimistic, [Africa has] embraced aspects of information and communications technology at an envious pace...
Mophatlane points to a few other key areas BCX is focusing on.
He remains bullish about the prospects for Canoa, a managed printing group with exclusive rights to Canon's copy, print and imaging services in SA. BCX acquired a controlling share in Canoa just over 18 months ago, and sent in former innovation executive Isaac Mophatlane to head this business.
As energy efficiency continues to dominate CIO conversations in almost every company, BCX is approaching this market by focusing on services for the industrial sector that derive really large results - such as monitoring solutions to optimise machinery.
As margins remain pressured in the more traditional areas of IT outsourcing and systems integration, the opportunities presented by the group's forays into Africa, into apps, and into new green energy services, are clear. Making a success of these new areas requires agility and some very quick thinking.
First published in the June 2013 issue of ITWeb Brainstorm magazine.
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