Tribalist

Microsoft SA and Entreprenuership

Posted by Daniel Makhura on 21 August 2017 4:45 AM SAST

More info about the above.

Microsoft South Africa was recognised as the Top Empowered Multinational company in South Africa at the 11th Oliver Empowerment Awards on 3 May 2012.

As a multi-national, Microsoft’s mission and values speak strongly to making ourselves relevant in local markets. In aligning closely to government’s priorities, we are committed to supporting the human foundation of the knowledge-based economy through training, support and investment at every stage in the innovation continuum, as well as to support the country’s transformation imperatives.

South Africa places emphasis on bringing democratic and economic freedom to all its people by establishing legislative policies that encourage the introduction of Broad-Based Black Economic Empowerment (BBBEE). BBBEE is a policy to redress some of the inequalities of the past by giving preferential support and opportunities to disadvantaged individuals. Microsoft South Africa is currently verified as level 2 BBBEE compliant, which makes us the most empowered ICT multinational in South Africa. Companies are evaluated against their level of compliance to the relevant Black Economic Empowerment (BEE) legislation. The lower the level, the higher the compliance.

Microsoft South Africa's BBBEE strategy is faced with the challenge that as a subsidiary of a global company, we are not able to sell equity in our local subsidiary. To overcome that, Microsoft South Africa has been trying to find an innovative solution that speaks to addressing the country’s challenges, while still supporting our greater BBBEE strategy and raising our BBBEE rating.

On an industry level, the broader challenge is that South Africa is currently a net importer of software. We aim to create a local software industry that can take their innovations to a global marketplace. What we’re trying to spark is a business model that creates software and solutions for emerging economies and finding an application that could, for example, help the Angolan oil industry do better business. The development of Independent Software Vendors (ISVs) is also aligned to government priorities such as job creation, intellectual property development, research and development, and skills enhancement. It will help South Africa develop a sustainable software market by developing software for emerging economies.

In 2011, with the guidance and approval of the Department of Trade and Industry, we developed a unique implementation approach to the BBBEE strategy. Microsoft kicked off the Equity Equivalence programme, which will see the company spend R500-million over the next seven years in growing several sustainable, independent and majority black-owned software companies. The size of the investment makes this the largest deal of its kind by an ICT company in South Africa.

One of the cornerstones of the programme is that it creates a new model for entrepreneurship, and sets a new benchmark for developing talent in the South African technology industry. The core objective is to grow these majority black-owned companies into global organisations through a period of seven years, through financial, technical, operational and sales investment. Through the success of this programme, the market will come to associate BBBEE with real entrepreneurship, job creation, business/enterprise development and skills enhancement. This investment directly addresses key challenges such as job creation, enterprise development and building a local software economy while developing scarce technology skills.

To be eligible to apply for the programme, companies had to be in operation for a minimum of three years, have a maximum of 30 employees and turnover of less than R10 million a year. The successful companies needed to demonstrate their track record in creating IP/software for specific market needs. They also had to specify what investment is required to grow their IP/software solution into a global product by submitting a business plan. The first phase of the programme in 2011 attracted 689 companies to register for the programme, of which 215 were valid BBBEE submissions. 455 of the total registered companies were majority black-owned, while 454 were majority black-managed.

The first four companies were chosen to be part of our development programme through a process that included representatives from Venture Capitalists, business chambers and entrepreneurs. The selected companies are:

• Chillisoft, from Pietermaritzburg, which creates public health software solutions that assist in alleviating service delivery bottlenecks;

• Maxxor, from Cape Town, which creates consumer applications for mobile phones;

• Johannesburg-based security solutions specialists BUI; and

• Home Grown Business Integrations, from Durban, which creates cloud-based software that boosts government service delivery to rural people.

In November 2011, a further two companies were added to the programme:

• iSolv Technologies, which creates high-end security solutions for government and enterprises; and

• Mmapro IT Solutions, which creates law enforcement software for traffic authorities

With this programme, Microsoft is taking a high-risk, high-reward approach to create a new model for developing entrepreneurship.

We are satisfied that our choices not only meet the letter of BEE, but also the spirit thereof. While development is key, we are balancing this with the commercial opportunities for all involved. The companies that grow out of this investment, and the software that they develop, will help Microsoft and its partners reach new markets. The investment should galvanise the local software economy and leave a legacy for other entrepreneurs.