2016 is here and despite the “tough times”, I dare say many Nigerians, at least those I have spoken with, are facing it with optimism.
One of the most defining sectors will be ICT, for a number of reasons. One is the capacity of the sector to generate significant primary and multiplier jobs and innovation/ entrepreneurship opportunities. The second reason is ICTs pervasiveness and pivotal role in our socio economic lives, and third is the fact that it has double edged features that can edify and also destroy.
Given our huge population and reluctance to be left behind, especially where trends are concerned, it is not surprising that billions of dollars are expended annually on corporate ICT infrastructure, mobile devices, software, content streaming and much more including our spend on voice and data. ICT, if not properly harnessed can be a channel for significant capital migration, in many ways,notwithstanding the benefits. Infrastructure is largely imported and providers have to pay suppliers from revenues we generate. When we stream content, what portion is local, especially when we are informed that we spent some N50b + on streaming content in 2015. The local content portion remains relatively painfully shallow in the scheme of things, and we must do well to up the ante in terms of qualitative local content across the entire spectrum.
It is our belief that the following will be some of the top focal points in 2016.
1. MTN/NCC/FG – The issue of the fine imposed by NCC on MTN will dominate the waves for a while, especially as MTN has gone to court and expects that to “pause” the matter for now, which indeed it may well do. This however, may not prevent the NCC from applying penalties for non- payment, and seeking enforcement of same if it wins the court case. However, MTN make some interesting points which may be useful for judicial clarity, and may have relevance beyond the telecoms sector, especially in respect of regulatory powers exercised without a board, and equity of treatment ( though this last point may be academic if NCC simply goes ahead to impose the fines MTN say where not fairly meted out on competitors. Some view this legal action as a delay mechanism perhaps to enable MTN move financial assets beyond the reach of government in case push comes to shove. Some see it as it as a way of ‘routing’ the issue to less “inflexible”, quarters namely the legislature and the Judiciary. Some believe it will not get to proper hearing and will be settled. Already, there is a growing sentiment that the company is obstinate and reluctant to conform with preset rules. In any case, the outcome may prove seriously adverse for MTN if it loses in court, or has to reach a settlement outside it, even if at a discounted rate.
2.The Remitta issue is another significant one that actually touches upon the core essence of capitalism. Here we have a contract that has delivered revenues beyond expectations, as a result of Government implementing a policy that was significantly adhered to, leading to a furore. In our view, an indigenous company has invested over many years, and have been identified and selected as an enabler of Government’s drive to save money and improve financial management. No one has found the company technically wanting, and yet it appears to have been ‘bullied’ off its legitimate earnings that were guaranteed by a signature on dotted lines. Now that the matter has been dragged into the realms of the legislature, it is anybody’s guess how this may end up. It is however a disincentive to indigenous investment when the rules are changed midway, and contracts are simply swept to one side because of a huge headline income figure. What must be said though is that a number of senators kept harping on about the ab initio need for Remitta. I am not sure the answers provided – perhaps because of the technical aspects involved – provided the sort of clarity required. System specs and CBN will be wise to clearly establish the “imperativeness of Remitta” for retail end leg of the transaction chain, and the quantum of transactions undertaken under the ” no alternative method” model. It may be very problematic if discovered that the fee extends to transactions that do not require a party between CBN and the banks – where the monies are ostensibly swept from. Without utmost clarity, Remitta may well look like an inserted middleman when one was not needed. This matter will be a defining issue for the sanctity of PPP arrangements in ICT and beyond, contract “worth” and the inspiration for indigenous investments.
3. OEM support contracts especially in the database/ ERP/ CRM space will come under scrutiny as private sector companies and government organizations alike look to reduce their recurrent expenditure. One of the most critical areas that will come under scrutiny will be how OEMs communicate their support policies, and the penalties for suspending support, which in many cases appear to differ from the text of the contracts signed by customers. There will also be resistance to support contracts that commence even before shipment of products (especially software), and are ostensibly used to support the implementation DISTINCT from implementation costs, which tend to be high in themselves. Often, the implementation extends beyond the initial support year, and disputes arise when customers, who are yet to see the benefit of their investments in products and implementation yield any fruits, are asked to pay support for year two, failing which they go onto a penalty framework usually charged at 100- 150% of the annual support costs. The practice of multiplying the penalty by the number of ‘support absent’ years ( in which customer effectively had no support from OEM) may require a holistic National position as it is probably costing the country tens of millions of dollars, if not hundreds per annum, and is not likely to withstand rigorous legal scrutiny. It is also likely to draw the attention of CEOs and legal departments in the private sector where these sort of investments are often sizeable.
4. Cloud technologies will continue to attract interest from organisation who want to reduce expense and effort own ICT infrastructure management and acquisition. However, we believe that security concerns, connectivity concerns and legal implications of support absence/ subscription payment breaks may slow down the adoption of cloud technologies, unless clarity is established in respect of these and other pertinent elements. Local providers who have invested in connectivity and Tier 111 data centre resources, like MainOne and MTN are well positioned, and could be the leaders of the provider pool, especially if they are able to expand offerings to include the full stack of datacenter, platform as a service and software as a service.
5. Sector clarity will be critical to inflow of investments. the roles of publicly owned institutions will require clarity as they obsfucate a private sector driven ecosystem. Furthermore inter agency differences may deter investment. A brewing one is the NCC/NBC spectrum issue which threaten s to open up a long standing problem reasonably addressed by the ICT policy of 2012. Regulatory Convergence and clarity of roles will prove important. The policy ( and we declare our involvement in its formulation as consultants to the committee) provides for a spectral and quality regulator, a regulator for content and development roles to ensure roles are defined. NBC for example could regulate all the content across all mediums ( perhaps with an expansion of the definition of broadcast to include all visual content). NCC through the NFMC can hold spectrum and regulate technical quality whilst NITDA absorbs all the development activities to avoid duplication and fragmented regulation ( NITDA is currently a regulator too for IT). A converged world requires a converged approach to regulation and intervention.
6. Identity related initiatives will come to the fore once more in our view. We have outspent most nations in the world and yet cannot boast of one compressive National Database that captures All Nigerians. NIMC will attract increased focus as will electoral and financial related identity initiatives. In our view, apart from those mandated by law to establish and maintain sector databases, NIMC should be the focal point for capturing data attributes and maintaining the ‘mother database’ against which all identity claims can be cross referenced and validated. Apart from the agencies mandated by law, NIMC may well be positioned and promoted as the ultimate source of information databank each agency can plug into for extracting datasets needed, rather than embarking on their own initiatives.
7. Enterprise Business Intelligence / Analytics / Compliance solutions will gain more traction and attention as businesses and Governments seek to have more real time visibility, trend analysis, ‘predicative scenario building” capabilities, and automated compliance monitoring, to better drive and manage their organizations. Increasing regulatory activity will create a window for reasonably priced GRC (Governance, Risk, Compliance) solutions. We also believe Enterprise Analytics will increasingly leverage open source technologies to provide flexibility for enhancements. The increasing availability of open source solutions may break the traditional stranglehold of mainstream players on this ” narrow” segment and alter the perception of complexity and costs.
8. Customer collaboration and experience leadership will continue to be driven primarily by the large institutions who recognize the ROI inherent in high end Contact Centre/ CRM investments that enable them serve customers better and maximise the value of the relationship. However, we believe smaller providers will bring down costs for basic implementations where the requirement is to provide a single aggregated point of entry and control with basic routing, reporting and technical functionalities. There is also likely to be an upsurge in outsourcing as numerous clients will use this as a ” toe dip in the water” approach to understand the ramifications and benefits of Experience Management and leadership, leveraging technology platforms like Contact Centers / CRM/ workforce management solutions.
9. Content beyond the mainstream platforms will drive data adoption and operators will look in this direction to shore up revenues already impacted by falling voice income. With reducing smartphone costs, this will be a major battleground for the operators. The likely winners will be those who are able to ensure their relevant departments deliver partner services professionally and devoid of sharp practices, deliver useful qualitative content, support market communications in respect of their content portfolio and focus on developing a solid partner pool of innovation. We believe that those who start competing with their partners, rather than focussing on strengthening their data delivery platforms may find themselves at the regulators doorstep at some point.
10. Social and mobile marketing will not replace traditional channels in the short term but will allow companies of all sizes to engage in mass marketing. We will see increased focus on mobile advertising from operators and media organizations, and will also begin to see organised Social Media Marketing Entrepreneurship Networks and specializations come to the fore.
11. Electronic payments will be topical for many reasons. In 2014 Electronic payments hit N35 Trillion indicating widespread adoption. Electronic payments reduce the avenues for corruption, make transactions easier , and extend the potential financial inclusion to those excluded from mainstream banking services. Policy consistency is critical, as this has been an issue in the past ( many remember the onsite/ offsite ATM saga that caused many organizations huge losses after investing in ATM machines). The restrictions will cause angst as many innocent people are caught in the web of policies occasioned by dwindling FOREX availability and the need to close off ‘escape routes’ for stolen funds. One cannot quite call how this will play out, especially with falling oil prices. However, reduced addiction to foreign goods, moderation of excesses, local substitution as much as possible, and local manufacturing are emphasis areas for mitigating the situation. Electronic payments will continue to increase but restrictions and fraud concerns may impact growth rate.
12. Cybercrime has the potential to wreak havoc on entire financial systems, businesses and even individual activities. in the worst case scenarios National Security can be adversely impacted. Nigeria is becoming a leading convergence point for Cybercrime activity. The statistics vary but all agree we are at the top tier of the segment. The negative implications for national brand are almost unquantifiable. Efforts coordinated through the ONSA, implementation of the provisions of the Cybercrime ACT 2015, regulatory payment for compliance with international standards in the banking sector and other factors will force attention to ICT security and we believe 2016 will signpost a “roll back” on what has become a serious problem. As part of increased security productiveness, we expect a significant rise in disaster recovery/ storage solutions.
13. Video conferencing will, in our view, witness a spike as public and private sector organizations will seek to slash high operational costs, of which travelling and associated logistic costs, represents a significant percentage. With an increasing array of high end – low end solutions, we believe video conferencing presents one of the most compelling ICT return on investment cases. Video conferencing though will require adequate connectivity to guarantee quality. As connectivity infrastructure owners seek ways to offload and maximise returns on their capacity, video will be repositioned during 2016, as a cost justification for investment in MPLS networks in addition to the improved connectivity and other networking advantages they present.
14. The Digital Switchover which is expected to commence during 2016 with a 2017 deadline is a project of National magnitude which will begin to go into implementation during 2016. In response to a question from Emma okonji of Thisday about the implications of not owning a digital set top box, the NBC DG says “The implication is that they will be completely cut off from receiving digital broadcasting, if they failed to buy set top boxes by the time we switch off analogue broadcasting in Nigeria. What this means is that only those with set top boxes and those on pay television like StarTimes or GOTV or DSTV, can actually receive digital broadcasting signal, and the rest hundreds of millions people will be cut off from television viewing”. DSO and the services around it will yield increased accelerated expansion towards the end of 2016, unless financial constraints affect the project.
Within these focal areas lie nuggets of opportunities for organizations and individuals alike, from entrepreneurship potential to reduction on recurrent expenditures. From performance improvements to garnering of insights that translate to increased profits. Happy new year!!