Data costs stifle start-ups

MINIMISING the cost of running a small and medium enterprise (SME) and boosting its growth,Picture: Supplied

MINIMISING the cost of running a small and medium enterprise (SME) and boosting its growth, makes it crucial to reduce the cost of data in SA, says Jeremy Lang, regional general manager at Business Partners.

Lang insists that internet connectivity has become an indispensable business tool for entrepreneurs and business owners. “However, the high cost of data is severely impacting the profitability and productivity of many SMEs.”

He says the cost of data in SA has been the source of much debate, with a new survey by research consultancy BDRC Continental on the competitiveness of broadband data costs, ranking SA at 97th place on a list of 196 countries.

“In terms of competitive pricing, SA ranks below a number of other emerging economies, including Guatemala (72), Morocco (59), and Tunisia (15). Furthermore, mobile data in SA is the most expensive out of the continent’s six leading economies.”

Data connectivity and digitisation are vital in levelling the playing field for SMEs, allowing them to compete with more established companies in their industry, Lang said.

“Depending on the nature of the business, online digital technology has a role in increasing turnover, reducing operating costs, increasing turnaround times, increasing capacity, increasing scalability and keeping the company relevant among its competitors.”

Data connectivity and digitisation offer improved accessibility to SMEs according to Lang. “It is increasingly becoming a trend for potential customers to find online reviews before engaging with a business. At the same time, more people are leaving their comments on peer-to-peer review sites.

“It is therefore vital for businesses to have an online and social media presence in order to know what is being said about them and to respond to customer comments and reviews. It also allows the entrepreneur to identify how the business is positioned in terms of quality, pricing and service relative to competitors,” he said.

SMEs are capable of marketing to much larger audiences through an online platform, Lang said. “It is definitely not like the old days when the business with the biggest marketing budget also had the largest audience. Social media especially has become an invaluable and affordable mass marketing tool for SMEs.” Mobile connectivity is another important aspect, he said.

“An increasing number of entrepreneurs need to be mobile for their businesses and being able to access one’s company data from anywhere is extremely important.

“The growing popularity of mobile payment software and technology is also making it easier for SMEs to offer their customers card and online payment facilities, which increases the size of sales and orders that they can process at a time.”

Yet, SMEs cannot exploit these benefits to their full extent if SA’s data comes at a high cost, Lang said. “Just as an example, the average cost of 1 Gigabyte of mobile data in South Africa is between R99 and R150.

Taking into account that a business is likely to rely on massive amounts of data being exchanged within the span of a month, the cost adds up incredibly quickly.

Kenya, which is the second most expensive economy for mobile data, is a little over half that price.” Lang says that both the government and the private sector therefore need to work towards bringing the cost of data technology down to much more equitable levels.