Initiative could create more jobs in South Africa and improve business infrastructures in the region

IBM has announced that it will increase its investment in Sub-Saharan Africa and build an African Innovation Centre to house the continent’s first High Performance On-Demand Solutions Lab (HiPODS).

The Solutions Lab will focus on industry specific solutions, initially in the public, banking and telecommunications sector. The firm has said it will deliver hardware, software and IT services to drive automation, virtualisation and standards into African-based businesses' infrastructures, as well as delivering open standards tailored to Africa’s industry and business needs.

Mathula Mphande, IBM Africa communications executive, said the centre will advance African software development capabilities.

“The lab will enable business partners, independent software vendors (ISVs), and system integrators (SIs), to reduce their risk of failure and accelerate the time it takes to market their solutions,” he said. “This will enable businesses to develop more sophisticated software and increase the competition in the market, thereby increasing innovation."

Mphande said another objective for the new lab was to build a “Community of Practice in South Africa”. The community will include IBM’s clients, universities, government, ISVs and SIs, he added.

Another objective of the programme is to increase the number of jobs in South Africa. “IBM expects to hire up to 100 students from sub-Saharan universities to meet the growing demand in services, global delivery and software development,” said Mphande.

The move builds on previous IBM investments in Africa, such as the creation of the Integrated Delivery Centre in 2005.

"The IBM announcement follows on from the HP acquisition of the Atos Origin Middle East business and from recent discussions with senior executives in the enterprise software market about their current operations,” said Ovum analyst David Mitchell.

“The trend is clear— there is definitely a heightened interest in the African IT market, with considerable revenues already being generated," he added. The market opportunity is real, not a twinkle in the eye. IBM is one of the global companies that will continue to invest and exploit the opportunity."

There a number of factors that are increasing IT demand, including telecoms de-regulation in parts of Africa, the increasing maturity of financial services markets and the growing use of ICT by the public sector, said Mitchell. “Initiatives like the Nicholas Negroponte inspired $100- OLPC scheme, while expected to create putative IT demand through increased IT literacy, have yet to make any real impact – though they will in the long term,” he added.

Mitchell said vendors looking at investing in Africa should take care to not make the same mistakes they did when entering the European market. “Africa is by no means a homogenous market. There are huge variations in demand between countries, different business cultures and different market structures," he added. "The go-to-market strategy of vendors attacking this market will need to be subtle and recognise the market tapestry, but without creating sales structures for all products and services in all countries.”

Mitchell said the “growth of indigenous African market giants” is one area of the market that is still to be developed.

“We hope that the influx of capital into the market will also see local African players emerging to challenge the existing market hegemonies. The overall Indian economy has grown and benefited from its IT surge, with local companies and international players alike sharing in the feast. We hope that the equivalent growth in African IT is marked by an equal amount of locally inspired companies, not just being fuelled by subsidiaries from success stories in other parts of the world,” Mitchell added.