Why CWG is re-strategising
BUSINESS
| Sept. 16, 2014, 6:12 a.m.
By Kokumo Goodie, Lagos, Nigeria
Leading tech giant, the Computer Warehouse Group (CWG Plc), said after working with the five-year blue print it designed to run the business, it is re-strategising to take the company in a different direction into a more robust subscription businesses model by evaluating the progress achieved, and the impact on its hitherto traditional business, underpinned by technology sales and support to major enterprises in Africa.
Group Chief Executive Officer of the firm, Austin Okere, said the marshal plan was crafted with cloud computing at the centre because of the realisation that it will define the future.
He said, “We crafted the plan code named CWG2.0 in 2010, realising back then the pervasiveness of cloud computing, and the major enablement for this in our region following the increase in broadband access from 0.65tb to a combined capacity of 9Tbits per second.
“We were very clear that while our tremendous growth over the years had been propelled by our traditional businesses in hardware and software sales and support, and VSAT bandwidth vending, these represented mature and declining margin businesses, the import of which have been evident in our recent Financial Statements.”
It said the uptake of the its new cloud products not only in Nigeria but also in Ghana, Cameroon and Uganda proves that its emerging business model of providing cloud services on a subscription basis is scalable, repeatable and transferable and relatively more sustainable and profitable.
Following its listing on the Nigerian Stock Exchange (NSE) last year, the tech firm has vigorously pursued her CWG2.0 initiative with the commissioning of a tier 3 Data Centre and the release of many products, which have been solely locally developed, or in collaboration with other innovative companies such as MTN Nigeria, Diamond Bank and Ericsson among others.
Commenting on the development, Group Chief Technology Officer (GCTO), James Agada, said: “CWG2.0 is all about the freedom to dream and the passion to execute. CWG2.0 defines the future direction of our company. In summary it is a social impact investment initiative directed towards empowering the African entrepreneur.’
CWG2.0 comprises products such as SMERP, an online resource planning solution that enhances proper business inventory management by business owners; Openshoppen, an e-commerce site that provides multiple shop owners the opportunity to open virtual shops online, complemented by an integrated secured payment gateway, thereby allowing online buyers to pay for products and services with their cards.
CWG2.0 also includesa Payment Terminal Service Provider (PTSP) smart grid solution, and various cloud services which promote the cashless policy initiative of the Central Bank of Nigeria (CBN).
The company’s SMERP product has received increasing interest, with different channel partnerships being developed for rapid deployment of the product. There is a lot of interest for this service from individual merchants, banks and other organizations that support SME business.
CWG is currently nurturing relationships with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the Bank of Industry (BoI), as well as other agencies charged with the support and growth of Small and Medium Enterprises (SMEs) to take advantage of its vast offering.
In addition, CWG has entered into strategic partnership with SES Astra, a satellite services provider to provide teleport and platform services for the pioneer satellite-based free to air and free to view digital television system that will launch commercially fourth quarter this year.
Head, Power Business, Gbadebo Adesina, said the audacious plan to privatise the power sector has unveiled a new revenue opportunity for us, as we have partnered with a company in India to provide a key solution to address the technical and non-technical loses in power distribution. “Our solution which provides an effective medium for energy audit and revenue assurance is currently undergoing proof of concept with two of the largest DISCOs in Nigeria, and we expect that this new line of business will be at implementation stage by third quarter of 2015.
“With the full launch of this solution, CWG shall generate an additional source of revenue, not unlike the volumes witnessed during the telecoms boom earlier in the decade,” he said.
CWG Financial Controller, Remi Adeloye, explained that the first half of the year revenue of N8.3billion is 16 per cent below last year’s N9.9billion, while gross profit N1.6billion is 23 per cent below that of last year’s N2.1billion. He said, “The lower H1 revenue is a reflection of the continued decline in margins on traditional IT infrastructure business due to commoditisation and competitive pressures, as well as viable alternatives in the Cloud Computing Frontier.
“The financial position of the group remains strong with adequate liquidity, leverage and efficiency ratios. H1 2014 Current ratio improved to 1.5 as against H1 2013 which was 1.4 signifying strong liquidity and adequacy of working capital to meet transactional needs. Also CWG’s leverage Debt to Equity ratio remains low at 9% as against 10% in 2013.”
The GCEO said the change in strategy is underpinned by the need to shift to subscription model. He said, “We consider the refocusing of our business into a subscription based model as a dual advantage play. In addition to being a more sustaining strategy, it maximises our social impact investing on the economy of Africa, and helps to create jobs by empowering entrepreneurs in the countries of our operation. The dip in our H1 numbers while expected, will be more than compensated for when the full import of CWG2.0 comes fully on stream by H2 2015.”
With the rebasing of Nigeria’s Gross Domestic Product (GDP) to $509.0billion (N80.3trillion), capturing the recent growth effects in sectors such as telecommunication and the movie industry (Nollywood), and with the fast growth of the ICT sector, contributing about 8.3 per cent of current GDP, Mr. Okere’s optimism is not far-fetched.
