Two key drivers that have always existed within Business Connexion have been innovation and intellectual property. Historically these two elements existed throughout the group but during this financial year it was decided to house the group’s intellectual property and innovation under one roof – the Innovation division. The creation of the Innovation division has ensured that the organisation’s proprietary technologies, specialist skills and intellectual property can be more easily leveraged to provide unique Business Connexion offerings to assist customers with their ICT needs.
Business lines range from payroll and time management services to workforce management systems, encryption technology and a number of public sector-focused solutions. The division’s offerings are supported by the group’s strength in the Services and Technology divisions and, at the same time, allow these divisions to be true systems integrators meeting the group’s customer needs.
The Innovation division comprises Nanoteq, LARA, Q Data Dynamique, Q Link and Persal. Nanoteq is focused on the development and supply of custom cryptographic products, solutions and services. e-Venus, sold via the LARA business unit, is a fully integrated enterprise resource management solution specifically developed for local government.
Q Data Dynamique is one of Africa’s largest providers of complete human resource management systems. The solutions encompass the managing of the employee from attraction to retirement and covers recruitment, training, industrial relations, access control, time management, payroll, human resources, performance management and many more. In the past year the business unit has strengthened its relationship with its international partners and integrated its financial system offering – Smartstream – to leverage additional customer interaction. The past year has seen the organisation strengthening its African footprint with implementations in Zambia, Lesotho and Tanzania.
Q Link is a service offering allowing third party companies and employers to overcome having to deal with the complexity of multiple interfaces and laborious manual processes to manage collections and payments.
The Q Link strategy for the next twelve to eighteen months will be in the market sphere where Business Connexion can provide value added services to both the customer and the consumer at large. The drive is to fast track the implementation of current opportunities within the bank collections space, both the debit order and Non Authenticated Early Debit Order channels. The unique garnishee order solution is also finding traction in the market with at least one large corporate committing to start implementation early in the new year.
Persal is an integrated system for the administration of human resources transactions and salary payments for the South African government which is in operation at the majority of government departments at both national and provincial level. Persal also includes the Vulindlela team which is responsible for the design and management of the data warehouse for the transversal systems of the South African government.
As can be noted from the above the Innovation division has a large footprint in public sector based solution offerings. The past financial year has seen municipal, local and provincial government applying significant budget cuts which, in turn, have resulted in the division’s revenues and earnings underperforming. The very nature of the solution offerings, and the existing customer base, allow the division to remain confident that the budget cuts suffered in the past financial year will not result in future losses in revenue. The drop in revenue has resulted in the decrease in margin contribution of 1% because of a strategic decision not to reduce the size of the workforce, which is a major cost driver in this division.
Despite the disappointing results of the division for 2010, the strategy is clearly defined and the division well positioned to take full advantage of revenue opportunities as government departments free up allocated budgets and the International division opens new opportunities as they expand the group’s African footprint.
One of the unique features of the Innovation division is the fact that the intellectual property is all of African design. Therefore, it is far more adaptable to the African market when compared to the group’s competitors who tend to be resellers of internationally developed solutions. Business Connexion has the technical skills to deliver extremely high levels of service and support without having to attach a dollar based price, making the group’s offerings that much more attractive to chief information officers across Africa as they face the challenge of budget cuts following the global economic crisis.
Prospects for 2011 are linked to Nanoteq and Q Data Dynamique continuing their integration into the Innovation division allowing for greater synergy between business units. The existing customer base will be used across divisions, and business units, to recognise new revenue opportunities.
Revenues are further expected to increase with the newly launched Kitso product offering from Persal. Kitso gives central and provincial government the ability to extract and manipulate information from various systems to assist in identifying possible fraud, trend analysis, exception reports and general reports to identify problem areas within departments.
The group anticipates a modest recovery in the economy which will complement revenues in the coming year. Revenue recovery in LARA, however, is likely to be affected by local government elections due to take place in 2011 as the elections will impact on the e-Venus provincial standardisation project which is a key driver for LARA. Currently, all indications are that the division will successfully retain all key contracts which are due for renewal in the coming financial year.
While the division expects to grow organically, acquisitive growth is also expected to enable the division to increase its contribution to group revenues through enhanced services offerings and new revenue streams.
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