Tech Update on Africa by Bryan Mulliner

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October 15, 2015
Tech Updates from Around the World
Bryan Mulliner

Africa: Conventional wisdom sees Africa as a uniform continent, characterized by a history of instability both politically and economically. Yet, a closer look shows that the 54 states on the continent are in fact quite diverse.

Doing business in Africa comes with challenges, but the experience of Protea Hotels in building a successful hospitality business on the continent proves that the challenges do not have to be overwhelming. The skills learned through the process make established businesses attractive to foreign investors who now view Africa as the next location for new markets. This is true of the leading global hospitality group, Marriott International, which acquired Protea Hotels in 2014, and which has ambitious plans for expansion in Africa.

It’s important to note the different economic opportunities the continent offers, marked roughly by a west-east divide. Cities located on the western half – Lagos, Luanda and Johannesburg –  are key to business activity relating to commodities like oil and minerals, while the eastern section is known for tourism – the Egyptian Pyramids, Ethiopian temples, East African wildlife, Victoria Falls and Cape Town.

Secondly, the continent has produced notable innovations in technology and manufacturing. Amazon’s EC2, for instance, viewed by many globally as core-to-cloud computing, originated in Cape Town. Other important innovations include developing a process to extract oil from coal, the invention of the automated pool cleaner, and pioneering the first heart transplant.

In regards to technology, there are few local hospitality technology vendors of substance. Those that exist operate with limited infrastructure and low capital funding, and there is only a limited presence of global key technology vendors, with those operating in Africa consequently being dominant players. This lack of competition may lead to lower support and service levels. Within the context of Africa seeking to acquire first world technology with limited funding, the quest to negotiate the best deal puts hotels at risk of becoming the tech dumping ground for discontinued ranges. Despite this, Protea Hotels constantly applies international standards, an area in which the alignment with Marriott International pays off. As a result, the company’s approach to technology keeps it comfortably in line with global requirements.

A positive impact of the continent‘s lag in technology investment compared with elsewhere is that, in states with more stable economies, a leapfrog effect is being seen. Whereas new technologies must replace legacy systems in more advanced countries, and consequently are expensive to acquire, new systems and applications are brought in as the first versions in the African scenario, and certain hotel establishments are immediately leaders in hospitality technology.  

Challenges still exist regarding fees for ongoing licenses and purchasing hardware and once-off software because prices are usually quoted in U.S. dollars or euros, and exchange rates can play havoc with budgeting and the sustainability of support expenses. Protea Hotels applies a strategic approach to negotiate with vendors to split costs, so that for services delivered locally, payment in local currency is accepted, while other costs are paid in U.S. dollars or Euros.

From a human resource perspective, limited specialized IT skills exist, although there is knowledge around core products such as Microsoft, SQL and Oracle. Employing expatriates is costly and securing work permits can be difficult, but the expatriate knowledge allows for a skills transfer to locals. Through providing training and online learning experiences developed both by Protea Hotels and Marriott International, a significant contribution to developing the skills base is possible, creating a pipeline of staff with internationally recognized abilities.

One of the biggest opportunities is improving the connectivity landscape. Metropolitan areas generally have fiber and multiple carrier routes that join Africa to the rest of the world, allowing for competition that drives down data costs. Active bodies are lobbying the telecom sector to drive connectivity as an economic enabler, with the hospitality industry key to this through international brand standards for connectivity and guest Internet.

Security and compliance are significant focus areas. The hospitality sector focuses on ensuring the privacy and safety of guest data; improving this in Africa will continue to attract attention and investment. Steps taken to ensure the safety and security of information in line with international standards are the implementation of PCI-DSS (the payment card industry data security standards) and POPI (the South African protection of personal information and privacy legislation), and brands operating on the continent continue to prioritize security and compliance activities at all levels of the organization.

Infrastructure investment in Africa is difficult because of weak currencies. However, by adopting cloud computing, competitive advantage is possible – at an affordable price. With the availability of local connectivity and world-class data centers capable of servicing the entire continent, a continued focus on cloud and SaaS (software-as-a-service) strategies will dominate the technology agenda for operators, owners and vendors alike.
 
 
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