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Calculating the real cost of IT

The initial cost of a company laptop represents less than 30% of the total cost of owning and using it. The remaining 70% is often ignored by companies because these costs form part of the ‘background’ cost of IT. This is according to OutSystems South Africa director, Craig Terblanche.

“However, companies that make an effort to manage these costs, have shown substantial financial returns and productivity has also improved dramatically. These usually ignored IT costs include the level of usage of technology, the level of training and more importantly, how effort, time, software and functions are duplicated,” he added.
Largely due software adoption issues and a lack of training, staff normally uses less than 20% of the software functionality. This is a huge loss to the company considering that it usually pays large amounts for the software according to Terblanche.
“To manage usage costs, many companies send their employees on a half day training course. However, there is a new form of training called adoption mentoring – where mentors show employees how to use software to be more efficient in their jobs. They also show them functions that are available that they should be using,” Terblanche explained.
In the more modern software solutions, there are online checks and balances that track where an employee is in a process and advises them on what to do next, or on how to achieve the same task in a more efficient manner. Companies that want to get the best out of their IT spend, track and incentivise their people to use the systems to their full extent.
“Duplication often occurs when software is purchased for a specific function, but is already available in other applications or in other departments. Duplication and redundancy are linked. The average software package is built for the widest sample of users, it has functions that perhaps one in a hundred people would use. Companies pay for it all, irrespective of whether or not they use it,” said Terblanche.
Most software packages duplicate functions in other packages, an invoicing system will duplicate credit control system functions, will duplicate accounting functions and will duplicate reporting functions. However, some companies do a functional analysis and are able to rationalise their software functions.
All these usage and duplication efforts will still only get about 50% utilisation of one’s software. Research shows that current usage is between 5 to 20%, so the actual savings and productivity improvements of raising the bar to 50% are profound.
“Another cost lies in legacy systems, some refer to it as the ‘technological debt’. This is software that is outdated, undocumented, hard to change or upgrade, or has ‘lost fit’ with business needs. This cost is an insidious one, the costs are not direct or visible and the incentive to change is weak,” Terblanche explained.

About The Author

Following reverse listing, public can now acquire shareholding in Paratus Namibia


20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.