In the dynamic landscape of South Africa’s ICT industry, shared services are emerging as a transformative force, empowering niche Internet service providers (ISPs) to unlock innovation and efficiency through collaboration.
This sets the stage for a new era of growth and sustainability in the sector, writes Farhad Suleman, co-founder of Merge X.
Shared services have become a linchpin for niche ISPs looking to overcome the challenges of limited capital and resources. By focusing on collaborative resource pooling, ISPs can optimise their operations and realise significant cost savings. Here’s how shared services make a difference:
* Economies of Scale: Through shared infrastructure, maintenance, and support services, smaller ISPs can achieve economies of scale that were once exclusive to larger counterparts. Imagine a network of ISPs collectively sharing the burden of investments – both financial and operational. In a sector where every rand counts, the cost savings that will be realised by participating ISPs translate directly into improved financial stability. The ability to share the burden of infrastructure investments and maintenance costs enables these ISPs to redirect resources toward critical areas such as network expansion, service quality enhancement and talent development.
* Global Success Stories: Globally, shared services have proven successful. Take IBM, for example. The company has been a pioneer in utilising shared services for its global operations. By establishing global delivery centres, IBM optimises resources, improves responsiveness, and reduces operational costs. The lessons from such success stories can be adapted to the South African context.
Challenges and solutions
Overall, the shared services model offers significant benefits to partner ISPs, including cost savings, improved operational efficiency, and enhanced scalability. By shifting to a subscription-based model for network management services, partner ISPs can minimise upfront investments in hardware, software, and infrastructure, reducing capital expenditure (capex).
Operational expenditure (opex) can be optimised by streamlining operations and reducing the need for in-house staffing, training, and ongoing operational expenses associated with managing a complex network infrastructure.
Efficiency and scalability are improved through automation, advanced monitoring tools, and international best practices, resulting in improved resource utilisation and faster issue resolution.
Access to specialised expertise in network design, configuration, security, and optimisation is also provided, allowing ISPs to benefit from advanced technical knowledge without the overhead costs of maintaining an in-house team.
While the benefits are clear, implementing shared services isn’t without challenges. Here’s how ISPs can navigate these hurdles:
Clear Governance Structures: Merging diverse systems, processes, and technologies from various partner ISPs requires clear governance structures. Define roles, responsibilities, and performance metrics. This ensures accountability, control, and streamlined processes.
Integration Complexity: Integrating systems can be complex. ISPs should invest in robust integration tools and methodologies. Consider phased approaches to minimise disruption during the transition.
Cultural Alignment: Different ISPs may have varying organisational cultures. Encourage open communication, cultural sensitivity, and a shared vision. Cultural alignment is crucial for successful collaboration.
Regulatory Compliance: Shared services must comply with local regulations. ISPs should proactively address legal and compliance aspects to avoid pitfalls.
Thriving through collaboration
Our ambitious goals include reducing ISP operational costs by 15% to 20%, achieving triple-digit customer base growth for ISPs, and stabilising customer attrition through value-added services, highlighting the transformative power of collaboration. By fostering a sense of community among ISPs, Merge X will create an ecosystem where knowledge, expertise, and resources are shared for mutual benefit.
The shared services not only empower ISPs to compete effectively but also cultivate an environment where innovation flourishes, paving the way for a vibrant and inclusive future for South Africa’s ICT sector.
Projections indicate a 20% reduction in operational costs for participating ISPs, a 25% increase in network reliability, and the creation of over 2,000 new jobs within the ICT sector. These figures underscore the tangible impact of shared services, not just in terms of cost savings but also in fostering a thriving and collaborative ecosystem.