The level of ICT application in Somaliland SMEs?

What is The level of ICT application in Somaliland SMEs? | 1

Acknowledgement

There are a number of individuals that I would like to acknowledge whose support has

made this work presented in this thesis possible.

Firstly I would like to express my gratitude to my supervisor PROFESSOR ALI JAMA

HASSAN for his support and guidance during the course of my candidature, without his

support and guidance this work would not be done, thank you so much, I appreciated your

support and guidance.

I would like to sincerely thank Professor Mustafe Ismail Elabe who has made considerable

contributions to my candidature. Especial thanks to Professor Muse Adam for the time he

spent to proof read my thesis.

To all my colleagues at University of Hargeisa, thank you for providing such a friendly and

enjoyable atmosphere to work in.

To my wonderful family: Dad (Ibrahim Sh. Abdirahman), Mum (Halimo Muhumed Jama),

Brothers and sisters, my deepest thanks for your years of love, support and encouragement

in my academic endeavors. To my Father Ibrahim Sh. Abdirahman, this thesis is dedicated

in loving memory of you.


ABSTRACT

Information and Communication Technology (ICT) plays a major role in all aspects of national

life: in politics, in economic life, as well as in social and cultural development. It is rapidly

transforming our lives, the way we do business, access information and services communicate

with each other and entertain ourselves. With respect to that the purpose of this research was to

investigate the extent to which small and medium size businesses in Somaliland are using the

Information Communication Technology in strategies they adopt for growth, therefore the

research question of this thesis is what is the level of Information Communication Technology

application in Somaliland Small and Medium-sized Enterprises (SMEs)?

The methodology we used to conduct this research was qualitative approach; as the research was

not large; having only 15 respondents in the sample, the use of the qualitative method best suits

this type of research. For analysis purposes, questions in the questionnaire was be grouped in to

the following logical groupings:

Current state of ICT within the SMEs, workforce knowledge, current information processing,

constraining ICT barriers of Somaliland SMEs, current state of the SMEs and the ICT awareness

within the SMEs

Data was collected using interviews based on questionnaires (See Appendix A). These

questionnaires were distributed to 25 SMEs with the Marodi Jex region, we have received 15

respondents.

There was no special reason for selecting the Marodi jex region but targeted businesses have

branches in other regions of the country, this data can be used or assumed that it represents the

whole country. The owners of each SME were chosen as suitable candidates for the

interview/questionnaire due to the fact that they have a good understanding of issues surrounding

their businesses.

The finding from the SME‟s replies to the questionnaire shows us that they have basic ICT

technologies implemented at their businesses, such as telephone, fax, and some have internet

access.

The findings reflect that the education levels of the staff of the interviewed businesses range

from Secondary to degrees, but most of them have not any ICT related skills.


When it comes to the current state of ICT in the Somaliland SMEs, the interviews show that in

the SMEs involved in the study, some basic technologies such as telephones, fax machines,

standalone, and networked computers are already implemented for some sections of the business.

This means that the basic technologies are in place but internet connectivity and ICT skills still

need to be increased.

The information processing side the findings of this study is that many SMEs do not keep

electronic records of their customer or their transactions, which means that they do not have

databases. Some of the interviewed SMEs keep only manual records of their clients' details and

transactions. Manual records are difficult to analyze, especially when there are a lot of records.

A number of barriers make it difficult for Somaliland SMEs to adopt ICT, such as a lack of

knowledge about the strategic use of ICT, a lack of necessary IT skills, perceived high setup

cost, the constantly changing ICT environment.

The ICT problems in Somaliland are both socio-economic and technological, ranging from

connectivity problems to ICT-skills needs. Somaliland SMEs should take advantage of various

emerging technologies.

In summary, the recommendations for Somaliland SMEs to overcome barriers and improve

implementation of ICT in their businesses are as follows:

Somaliland SMEs should invest in educating their staff and management about ICT and its

benefits.

They should invest in recruiting or outsourcing knowledgeable ICT specialists.

They should build a culture that is favorable to technology and innovative.

ICT decisions should be informed and based on ICT knowledge.

Based on the literature review and the results of the questionnaire, the following general steps are

suggested to increase the level of ICT application in Somaliland SMEs:

1. Setup ICT strategy based on the business goal and objectives.

2. Make sure that ICT strategy is aligned with the business strategy.

3. Identify the role that ICT will be playing within the SME.

The findings of this research support the literature.


Declaration

I hereby declare that this submission is my own work and to the best of my knowledge it

contains no materials previously published or written by another person, or substantial

proportions of material which has been accepted for the award of any other degree or

diploma at University of Hargeisa or any other educational institutional, except where due

acknowledgement is made in the thesis.

Any contribution made to the research by others, with whom I have worked at UoH or

elsewhere, is explicitly acknowledged in the thesis.

I also declare that the intellectual content of this thesis is the product of my own work,

except to the extent that assistance from others in the project’s design and conception or in

style, presentation and linguistic expression is acknowledged.

Abdirashed Ibrahim Abdirahman

Signature………………………………………

Date: …………………………………………….


Acronyms

ICT Information Communication Technology

SME Small and medium sized enterprises

ERP Enterprise resource planning

CRM Customer relationship management

SCM Supply change management

RPM Rapid prototyping and manufacturing

EAI Enterprise application integration

BI Business intelligence

DSL Digital Subscriber line

CIO Chief Information Officer

SQL Structured query language

GDP Gross Domestic Product

PC Personal Computer


I dedicate this thesis to my Father Ibrahim Sh. Abdirahman H.

Hussein Warsame God bless him


Table of Contents

Acknowledgement ............................................................................................................................................................................ 1

ABSTRACT ......................................................................................................................................................................................... 2

Declaration ....................................................................................................................................................................................... 4

Acronyms .......................................................................................................................................................................................... 5

CHAPTER 1: Introduction ............................................................................................................................................................... 10

1.2 THE STRUCTURE OF THE THESIS ....................................................................................................................................... 12

1.3 OBJECTIVES & RESEARCH QUESTION ........................................................................................................................................ 13

1.4 PROBLEM STATEMENT .............................................................................................................................................................. 13

CHAPTER TWO: Literature Review ................................................................................................................................................. 14

2.2 What are SME’s? ....................................................................................................................................................................... 14

2.3 Why SMEs are important? ........................................................................................................................................................ 15

2.4 Information Communication Technology ................................................................................................................................. 17

2.5 How Has the Knowledge-Based Economy Impacted SMEs? ..................................................................................................... 19

2.6 How Do SMEs Use ICT? ............................................................................................................................................................. 21

2.7 What Types of Advanced ICT Products are SMEs Starting to Use? ........................................................................................... 22

2.8 What benefits do ICTs bring to SMEs? ...................................................................................................................................... 25

2.9 ICT SECTOR PERFORMANCE IN SOMALILAND ........................................................................................................................... 26

CHAPTER THREE: Research Methodology ..................................................................................................................................... 27

3.1 Research Methodology ............................................................................................................................................................. 27

3.2 Data Collection .......................................................................................................................................................................... 27

CHAPTER FOUR DATA COLLECTION AND ANALYSIS ...................................................................................................................... 28

4.4 Data analyses ............................................................................................................................................................................ 29

4.5 Findings/Results ........................................................................................................................................................................ 29

4.6 Somaliland SMEs Work Force knowledge status ...................................................................................................................... 30

4.7 Current state of ICT within Somaliland SMEs ............................................................................................................................ 31

4.8 CURRENT PROCESSING OF INFORMATION ............................................................................................................................... 35

4.10 Awareness of ICT in Somaliland SMEs .................................................................................................................................... 37

CHAPTER 5 DISCUSSION AND RECOMMENDATIONS .................................................................................................................... 38

RECOMMENDATIONS ..................................................................................................................................................................... 41

LIMITATIONS OF THE STUDY ........................................................................................................................................................... 44

CHAPTER 6 – CONCLUSIONS .......................................................................................................................................................... 45

List of References and Bibliography ................................................................................................................................................ 47

Append i x A : The l eve l o f ICT app l i ca t ion i n Soma l i l and SMEs su rvey ques t i onna i re .............. 47

Endnotes ......................................................................................................................................................................................... 51


LIST OF TABLES

TABLE 1 - THE RANGE OF SME DEFINITIONS IN THE ASIA-PACIFIC REGION……………………. .PAGE 15

TABLE 2: ICT SECTOR PERFORMANCE IN SOMALILAND………………………………………………. PAGE 26

TABLE 3: WORK FORCE KNOWLEDGE ………………………………………………..………....PAGE 30

TABLE 4. EMPLOYEES THAT ARE CONNECTED TO THE INTERNET …………………………..............PAGE 31

TABLE 5 HOW MANY COMPUTERS ARE NETWORKED WITHIN THE SME?......................................... PAGE 32

TABLE 6. DO ANY OF YOUR COMPUTERS AT WORK HAS ACCESS TO THE INTERNET?...................PAGE 32

TABLE 7. WHAT TYPE OF EXTERNAL CONNECTION TO THE INTERN0ET DOES YOUR COMPANY HAVE?

…………………………………………………………………………………………………………………….PAGE 33

TABLE 8. DOES THE COMPANY HAVE OR PLAN TO HAVE A WEBSITE? ……………………………..PAGE 33

TABLE 9. WHAT ICT OPERATING SYSTEMS DOES YOUR COMPANY USE? ………………………… PAGE 34

TABLE 10 WHICH OF THE FOLLOWING TELECOMMUNICATIONS SERVICES DOES YOUR COMPANY USES?

……………………………………………………………………………………………………………………PAGE 34

TABLE 11 WHAT ICT APPLICATIONS DOES YOUR COMPANY USE? ………………………….………PAGE 35

TABLE 12. THE SME APPLICATION OF ICT CONSTRAINS …………………………………………...…PAGE 35


LIST OF FIGURES

FIGURE 1.0 WORK FORCE KNOWLEDGE …………………………………………………………….PAGE 30

FIGURE 1.1 NUMBER OF EMPLOYEES THAT ARE CONNECTED TO THE INTERNET? ……….PAGE 31

FIGURE 1.2 HOW MANY COMPUTERS ARE NETWORKED WITHIN THE SME? ………………….PAGE 32

FIGURE 1.3 DO ANY OF YOUR COMPUTERS AT WORK HAS ACCESS TO THE INTERNET?........PAGE 32

FIG 1.4 DOES THE COMPANY HAVE OR PLAN TO HAVE A WEBSITE?............................................PAGE 33

FIG 1.5 WHICH OF THE FOLLOWING TELECOMMUNICATIONS SERVICES DOES YOUR COMPANY

USES?....................................................................................................................... ........................................PAGE 35

FIGURE 1.6 ICT UTILITIES/APPLICATIONS ……………………..........................................................PAGE 36

FIGURE 1.7 THE SME APPLICATION OF ICT CONSTRAINS………………………………………..PAGE 37


CHAPTER 1: Introduction

In this Chapter, some background information about Information communication Technology

will be discussed. Then the objectives of the research will be discussed along with the problem

statement, resulting in an overall purpose of research, specific research question, then the

structure of this thesis paper.

1.1 Introduction


life: in politics, in economic life, as well as in social and cultural development. It is rapidly

transforming our lives, the way we do business, access information and services communicate

with each other and entertain ourselves. It fuels the global economy. It also relates to human

rights, helping, at best, to support freedom of expression and right to information according to

the Article 19 of the Universal Declaration of Human Rights. (UDHR -1948).

Information communication Technology (ICT) gives a range of useful communication devices

that enable nations from different countries connecting with each others without any

communication barriers. The term information and communication technologies (ICT) can be

used to embrace a multitude of stand-alone media, including telephone, television, video,

teletext, voice information system and fax, as well as those requiring the use of personal

computer fitted with Internet (Arren, 2002). Among ICT, computer and internet are playing the

main roles in order to increase the effectiveness of ICT.

In addition, ICT is able to upgrade and expand the speed of transmission information from

different countries around the globe market. In recent times, Somaliland companies are fast

realizing that technology has transformed from being a growth enabler to being a growth driver.

Information communication Technology (ICT) is helping companies to offer new and innovative

products, drive operational excellence, lower costs and manage compliance and risk management

functions.


In this environment, successful companies are likely to be those that achieve the right balance

between speed in the pursuit of the right strategy and the need for focus on operational

execution.

The level of ICT-usage in Somaliland is generally very low but the country has in the recent past

shown growth in the telecommunications sector.

In this research we will discover the level of ICT application in Somaliland SMEs.


1.2 THE STRUCTURE OF THE THESIS

This research paper is structured as follow:

Chapter 1 is the introduction.

In this Chapter, some background information about Information communication Technology

will be discussed.

Then the objectives of the research will be discussed. This will be followed by the problem

statement, resulting in an overall purpose of research, specific research question, followed by the

structure of this thesis paper.

Chapter 2 : Literature Review

This chapter reviews the earlier studies related to the application of ICT in SMEs, and literature

pertaining to the role of the business success,

Chapter 3 Research Methodology

The research design and the data collection process will be presented in this chapter.

Chapter 4 Data collection & Analysis

The findings of the survey, questionnaire and interviews will be discussed. Then the analysis and

recommendations will be drawn in this chapter.

Chapter 5 Discussion and recommendations

The analyzed results of the questionnaire will be discussed within this Chapter, there will be a

recommendation for each result.

Chapter 6 Conclusions

Within this chapter we will try to get an answer our research question which was what is the level

of Information Communication Technology application in Somaliland Small and Medium-sized

Enterprises (SMEs)?


1.3 OBJECTIVES & RESEARCH QUESTION

The purpose of this research is to investigate the level of information communication technology

application in Somaliland Small and medium sized enterprises. Most of the businesses have now

accepted Information communication Technology (ICT) as an important tool to increase its

business in the domestic as well as global market place.

In future information communication technology (ICT) will grow more rapidly in the Somaliland

SMEs sectors. In order to increase the effectiveness of ICT, companies can use Internet to

present almost unlimited information about their products and services in cyberspace.

Through judgment sampling SMEs from service sector was selected as the research area for this

study. This study investigates the rate of usage of ICT by the SMEs.

To arrive at the above purpose the following research question is developed:

What is the level of Information Communication Technology application in Somaliland Small and

Medium-sized Enterprises (SMEs)?

1.4 PROBLEM STATEMENT

Within the knowledge-based economy, SMEs are facing both opportunities and challenges due

to the information and communication technologies development.

This paper aims to present an empirical study of the usage of ICT among small and medium

scale enterprises (SMEs) in the Somaliland.

What is the level of Information Communication Technology application in Somaliland Small and

Medium-sized Enterprises (SMEs)? Will be my research question.


CHAPTER TWO: Literature Review

This chapter reviews the earlier studies related to the application of ICT in SMEs, and literature

pertaining to the role of the business success, and then the status of ICT in Somaliland

Perspective will be discussed.

2.1 Definition of literature review

A literature review is a body of text that aims to review the critical points of current knowledge

on a particular topic [Wikipedia by Cooper 1998].

Most often associated with science-oriented literature, such as a thesis, the literature review

usually precedes a research proposal, methodology and results section. Its ultimate goal is to

bring the reader up to date with current literature on a topic and forms the basis for another goal,

such as future research that may be needed in the area.

A good literature review is characterized by: a logical flow of ideas; current and relevant

references with consistent, appropriate referencing style; proper use of terminology; and an

unbiased and comprehensive view of the previous research on the topic. The literature review

seeks to describe, summarize, evaluate, clarify and/or integrate the content of primary reports

[Cooper, 1988].

2.2 What are SME’s?

SMEs are usually enterprises that employ no more than 250 employees.

The technical definition varies from country to country in the world but is usually based on

employment, assets, or a combination of the two. Some countries have different definitions for

SMEs in the manufacturing and services sector and may exempt firms from specialized

industries or firms that have shareholdings by parent companies. The following figure illustrates

the range of SME definition in the Asia-Pacific region.

http://en.wikipedia.org/wiki/Knowledge

http://en.wikipedia.org/wiki/Thesis

http://en.wikipedia.org/wiki/Methodology

http://en.wikipedia.org/wiki/Terminology


Table 1: Illustrates the range of SME definitions in the Asia-Pacific region.

Source:White Paper on Small and Medium Enterprises in Taiwan, 2006.

http://www.moeasmea.gov.tw/eng/2006whitepaper/2006white.asp

In Somaliland prospective SMEs definition is different from the definitions of Asia-pacific

region, SMEs are usually enterprises that employ no less than 5 employees, and have an asset of

$30,000 USD, and other wholesaler and retail companies in the country. (Source: Somaliland

Chamber of commerce – 2008)

2.3 Why SMEs are important?

SMEs are important because on average, they comprise over 95 percent of the Somaliland

economy.

The contributions of SMEs to employment and the countries‟ gross domestic product (GDP) are

by no means trivial.

As of July 2006, close to 140 million SMEs in 130 countries employed 65 percent of the total

labor force. (World Bank. International Financial Corporation Report: Micro, Small and Medium Enterprises 2006.)

Moreover, SMEs are the driver of economic growth and innovation. The total number of SMEs

in the economy depends on the rate of SME creation and rate of SME destruction. Profitable


market opportunities increase the rate of SME creation. This increases the total number of SMEs

in the country, which increases job creation and income per capita. As people become wealthier,

they will increase their consumption, which in turn will open up new market opportunities that

will entice the creation of more SMEs.

Contrary to multinational corporations, the growth of SMEs directly benefits the country because

most SMEs are domestic firms. This reinforcing dynamic generates economic growth.

The reinforcing loop of innovation also drives economic growth. As the number of SMEs

increases, their knowledge of their product and industry increases.

Their knowledge allows them to innovate on the product or process, which helps them form a

competitive advantage to generate more profits. Again, market opportunity as captured by the

profitability of SMEs will encourage more people to establish their own SMEs to capture the

opportunity.

In addition, the development of SMEs can also help to achieve other development goals. SMEs

can either provide goods and services in areas critical to development, such as health and

education, or provide a source of income to disadvantaged people. For example, efforts to

develop women entrepreneurs help increase gender equality by providing women with a source

of income.


2.4 Information Communication Technology


life: in politics, in economic life, as well as in social and cultural development.

It is rapidly transforming our lives, the way we do business, access information and services

communicate with each other and entertain ourselves.

It fuels the global economy. It also relates to human rights, helping, at best, to support freedom

of expression and right to information according to the Article 19 of the Universal Declaration of

Human Rights.

Every major historical transformation needs an enabler. Today, advances in technology have left

us in no doubt that Information and Communications Technology is the leading enabler for

global competitiveness and driving innovation in business development.

Footprints of ICT can be seen in the massive growth witnessed in the recent years across sectors

including Education, Healthcare, Financial Services, Business development etc.

In recent times, Somaliland companies are fast realizing that technology has transformed from

being a growth enabler to being a growth driver.

ICT is helping companies to offer new and innovative products, drive operational excellence,

lower costs and manage compliance and risk management functions.

In this environment, successful companies are likely to be those that achieve the right balance

between speed in the pursuit of the right strategy and the need for focus on operational

execution.


Somaliland SME‟s was growing very fast from 1999 up to now; this was considered by the

development of the ICT in Somaliland.

Before discussing the issues, it is necessary to define, what is meant by the ICT. There are many

definitions. OECD‟s definition comes handy, as it makes a useful distinction between the

manufacturing and service dimensions of the ICT.

The important factor in this broad definition is that, as it breaks the traditional dichotomy

between manufacturing and services, activities producing and distributing ICT products can be

found everywhere in the economy. (OECD 2002).

The definition, thus, paves way for understanding the multi-dimensionality of the ICT and its

applicapability in helping development of business.

Since these sectors rarely create direct development for the business, we will review mainly the

service role of the ICT.

ICT applications offer numerous advantages for its user from home to business area. Currently,

various businessmen are curious to find out the benefit that they can gain through appropriate

ICT implementation. With the investment of ICT, organizations are able to widespread its

business to globalization and the potential to contribute to more rapid growth in the future

(OECD, 2002). It is often argued that increased ICT proficiency in small and medium sized

companies (SMEs) will help the SMEs to survive in the marketplace and contributes to wider

economic divergence among developing countries (Anell, et al., 2004).

Contributions about positive impacts of ICT on SME performance indicators such as the ability

to attract new customers, to participate in overseas markets, to generate innovation, to save

resources, to get flexibility, to improve decision making, to increase productivity, to gain

competitive positions, to redesign business procedures, to manage supply chain relationships etc.

are increasing in literature (Palvia et al., 1994, Lacovou et al., 1995, Sohal, 1999, Mustaffa et al.,

2004, Liao et al., 2004). If government takes into account by improving the local infrastructure

of communication technology, it can give the local business greatest opportunity in competing

internationally. As a result, it is important to find out the willingness of organization in adopting


ICT facilities especially in our country which contribute large portion of Somaliland‟s economic

growth.

2.5 How Has the Knowledge-Based Economy Impacted SMEs?

For countries in the vanguard of the world economy, the balance between knowledge and resources has

shifted so far towards the former that knowledge has become perhaps the most important factor

determining the standard of living – more than land, than tools, than labour. Today‟s most technologically

advanced economies are truly knowledge-based. (World Development Report, 1999)

Countries in the world are moving from an industrial economy to a knowledge economy in

which economic growth is dependent on a country‟s ability to create, accumulate and

disseminate knowledge. Computers and the Internet catalyzed the growth of the knowledge

economy by enabling people to codify knowledge into a digital form easily transmitted to

anywhere around the world.

People who have access to this new wave of ICT – broadly defined as technology that can be

used for transmitting and/or processing information – are part of an information society

connected to a virtual network that constantly creates and disseminates new information. ICT has

sped up the pace of globalization and increased the complexity of business practices because

firms not only need to be familiar with their local context but also with global developments.

Thus, to compete in the knowledge economy, countries need a strong ICT-literate skills base that

can innovate and adapt quickly to change. More value is placed on the knowledge worker than

ever before. Knowledge, change and globalization are the driving forces of the new economy.

The knowledge economy has impacted SMEs both positively and negatively. On the positive

side, because the knowledge economy relies heavily on ICT, it has led to the rapid growth of ICT

sectors.

Many countries such as India, the Republic of Korea and Taiwan have created enabling

environments to ensure that SMEs are well positioned to capture these emerging business

opportunities. India, for example, offered relief from import duties for IT hardware, tax


deductions for income earned from software exports, and tax holidays, and developed

infrastructure in Software Technology Parks. For India‟s thriving ICT sector has in turn

propelled the country‟s economic growth. SMEs outside the ICT sector have also benefited by

adopting ICT in their own operations, enabling them to communicate quickly, increase

productivity, develop new business opportunities, and connect to global networks.

Conversely, the reliance on ICT in the knowledge economy means that those SMEs who have

not yet adopted ICT will have trouble surviving. For example, 60 percent of Intel‟s material

orders are now done electronically. With e-procurement becoming mainstream in developed

countries, SMEs that do not have that capability will not be chosen as business partners.

Additionally, SMEs that have not adapted to the faster pace and increasing complexity of the

way businesses are conducted will lose out to the increasing competition brought about by

globalization.

B2B Marketplace Opens New Buying and Selling Opportunities –

Alibaba.com

Alibaba.com is the largest online marketplace for both international and domestic business-to-business (B2B) exchanges in

China. In August 2005, Yahoo! paid USD 1 billion for 40 percent of Alibaba‟s ownership stake. Alibaba International caters to

SMEs interested in international trade. It has one million registered SMEs from over 200 countries and territories with more than

300,000 visitors per day. It was ranked by Alexa, which conducts independent web traffic ratings of websites around the world,

as the world‟s most popular site in the categories of Import-Export and International Business and Trade. Alibaba also has a B2B

portal for domestic businesses (http://www.china.Alibaba.com).With over 6 million registered users that are verified by a third-

party credit agency, it is the largest online SME community in China. Members pay an annual subscription fee that entitles them

to post offers on the website.SMEs do not need sophisticated ICT tools to join the community; only Internet access, email, and

basic use of web browsers are required. SMEs have a strong incentive to have the basic ICT capacity to join the network because

it offers them a wealth of buying and selling opportunities.

Alibaba overcame the online payment security problem by creating AliPay (http://www.Alipay.com), a proprietary fraud

prevention system that allows any individual or business with an email address and credit card to make transactions online.

AliPay partners with leading banks in China including China Merchants Bank, China Construction Bank, Agricultural Bank of

China, and the Industrial and Commercial Bank of China. (Alibaba Site)


2.6 How Do SMEs Use ICT?

SME usage of ICT ranges from basic technology such as radio and fixed lines to more advanced

technology such as email, e-commerce, and information processing systems (see Figure 1).

Using advanced ICT to improve business processes falls into the category of e-business.

However, not all SMEs need to use ICT to the same degree of complexity. The first ICT tool that

most SMEs adopt is having basic communications with a fixed line or mobile phone, whichever

is more economical or most convenient for their business. This allows the SME to communicate

with its suppliers and customers without having to pay a personal visit. After acquiring basic

communication capabilities, the next ICT upgrade is usually a PC with basic software. Even

without Internet connectivity, SMEs can use PCs for basic word processing, accounting, and

other business practices. With the Internet, SMEs are able to use more advanced communications

capabilities such as email, file sharing, creating websites, and e-commerce.

This may be sufficient for most SMEs, especially those in service industries such as tourism.

SMEs in manufacturing may adopt more complex IT tools such as ERP software or inventory

management software. SMEs may adopt the tools progressively or jump immediately to

advanced ICT capabilities.


Figure 1 Progression of ICT Adoption

Mobile phone use transforms business

The use of mobile phones has helped many entrepreneurs reduce costs and improve business

processes. In many developing countries, farmers now use mobile phones to find best prices for

their produce. In a recent study by Harvard University, Professor Robert Jenson found that the

use of mobile phones reduced waste by 4.7–6 percent and reduced price dispersion by 63–86

percent in the sardines market in Kerala.8 Some South Africans and Kenyans have actually tied

mobile phones around the necks of elephants to track them in the jungles. According to Professor

Wouter van Hoven of the University of Pretoria‟s Center for Wildlife Management, using mobile

phones can reduce the cost of tracking wildlife by 60 percent.

Cell Phone Use Changes Life in Africa‟. Associated Press. 16 October 2005.

2.7 What Types of Advanced ICT Products are SMEs Starting to Use?

Like any firm, an SME decides which type of ICT products to adopt based on the concrete

benefits they can bring to its core business, the ICT capacity of its employees, and the financial

resources available. Most people are familiar with basic ICT such as fixed phone lines, mobile

phones, fax, computers, and basic document processing software – like Microsoft Office.

Advanced communication technology, however, is more complex.


Advanced communication technology relies primarily on the Internet and the intranet, which

allow people within the firm to share files with each other over the same network. Having

Internet connectivity enables firms to do faster research, set up websites, conduct e-commerce,

and set up video conferences. One of the most revolutionizing developments in advanced

communication technology is Voice over Internet Protocol (VoIP).VoIP includes all types of

voice communication transmitted through the Internet, whether it is between computer and

computer or in hybrid form between computer and regular phone. It competes directly with

traditional fixed line and mobile phone operators. Users only pay for their dial-up, broadband,

wireless Internet connection. iSuppli, a market-research firm, estimates the number of VoIP

residential users worldwide will reach 197 million by 2010. (The Economist, 17 September 2005, pp. 69–71)

Skype Revolutionizes Communication Technology

Skype (http://www.skype.com) is one of the most popularly used VoIP programmes. It allows users to talk for free

over the Internet after downloading a simple free programme onto their computers. Skype also offers additional

services for a low price.

To connect with parties who use ordinary phones, Skype offers at a lower price „Skype In‟, which allows people to

call a Skype user with a regular phone, and ‘Skype Out‟, which allows a Skype user to call a regular phone (starting

from USD 0.02 per minute). Skype‟s growth has been astounding. In less than three years, it has attracted over 54

million worldwide subscribers, of which about 30 percent – primarily SMEs – use Skype for business purposes.11

eBay acquired Skype for USD 2.6 billion in cash and shares in September 2005.

Most complex of all is advanced IT. It is often very expensive, sophisticated and takes more time

to implement by a firm. SMEs can sign up for one or all available services. In order to reduce

costs, some firms opt to outsource this component or use an application service provider (ASP)

that provides functional software capabilities over the Internet.


The following are lists of the major types of products of advanced information technology:

1. Enterprise resource planning (ERP)

ERP offers a single repository for information on all business functions – human resources,

manufacturing, inventory, marketing, sales, accounting, and tax. It allows all levels of a

business to obtain real-time management information for there are of responsibility

2. Customer relationship management (CRM)

CRM software integrates people and technology to maximize external relationships.

Functionality includes: sales contact management, activity history, order entry, customer

service and support, field service, lead generation, data mining, etc.

3. Supply change management (SCM)

SCM software helps streamline the procurement of raw materials and delivering of finished

products. It helps to decrease error rates, delays, and to increase efficiency. E-Procurement is

often a part of SCM.

4. Enterprise Application Integration (EAI)

EAI integrates different types of ERP and other software systems through a common

problem in order to synchronize the processing, storing, and transmitting of information.

5. Rapid Prototyping and manufacturing (RPM)

Over the next 20 years, RPM will have a profound effect upon the global manufacturing

technology. RPM can reduce the new product design phase from 90 days to just three days.

It is still an infant industry based upon newly invented technologies, but it is apparent that

RPM will dramatically reduce the cost and time required to convert a new product design to a

practical manufacturing process.

6. Knowledge management (KM)

KM systems help a firm to better organize and share the knowledge of its employees. They

help the firm take better advantage of its human resources.


2.8 What benefits do ICTs bring to SMEs?

The information revolution has transformed the way modern businesses are conducted. ICTs

have enabled people to exchange large amounts of information quickly and cheaply. Those who

can best receive, process, and innovate now become the winners.

We are in the era of the knowledge economy where those who have access to ICTs are closely

connected to a virtual network regardless of geographic location, race, and gender.

Given this context, ICTs can benefit SMEs in three main ways:

1. Increase productivity in the production process;

2. Increase efficiency of internal business operations;

3. Connect SMEs more easily and cheaply to external contacts, whether locally or globally.

This all falls under the term, e-business

Concrete examples of how ICTs can benefit SMEs include the following:

Improve inventory management systems

Decrease wastage in production processes

Improve communication between different departments within the firm

Improve accounting and budgeting practices

Reduce communication costs and geographic barriers with global suppliers and clients

Expand client base through e-marketing (e.g. websites, portals and mailing lists)

Link to local and global supply chains and outsourcing opportunities

Share and learn new business practices

Facilitate capacity building of owners and employees through e-learning platforms

Simplify government services such as business registration and filing taxes

Introduce new methods of payment through e-commerce


2.9 ICT SECTOR PERFORMANCE IN SOMALILAND

There have been few reports on the status of Information and Communication Technologies

(ICT) in Somaliland. The following table shows us the ICT sector performance in Somaliland.

Table 2: ICT Sector Performance in Somaliland

Indicator

Telephone fixed mainlines: 105,000

Tele-density (per 100 people) 1.5

Mobile phones: 36,000

Tele-density (per 100 people) 0.5

Personal Computers (per 1,000 people) 0.5

Internet users (per 1,000 people) 1.4

UNDP: Somaliland ICT needs Assessment - 2007


CHAPTER THREE: Research Methodology

The objectives of this chapter are to explain and discuss the methodology to propose the suitable

types that match his study best. The chapter begins with explanation of research purpose and

approach that have been selected to achieve the goal of this study.

3.1 Research Methodology

Research is a methodical exploration to find answers to a question of interest. It is the study of a

question by the rigorous and systematic collection of data and its analysis (Cormack, 2000).

A survey instrument was formulated to obtain feedback from SMEs in Somaliland, assessing

their application, awareness, receptivity and adoption of ICT in their business. In order to focus

on SMEs, lists were sought from the Somaliland Chamber of Commerce. As such, the surveys

sent out were personally addressed to the owner and or manager of each of SMEs. Due to the

exploratory nature of this study, a cross sectional approach was undertaken to measure firms‟

responses regarding the level of Information Communication Technology Application in their

business.

3.2 Data Collection

The sampling method used is non probability sampling because of the lack of list or sample

frame of Somaliland small businesses.

Data were gathered based on mail and personal administered questionnaire. A packet of survey

instruments, enclosing a return envelop are sent to randomly selected from SMEs, Import &

Exporters, logistics, professional management, IT related service and advertising sector. The

respondents for this study are targeted to be the owner or manager of the organizations because

they always had the chance to deal with ICT in their working position.

To maximize the return rate, three subsequent reminders will send over telephone.


CHAPTER FOUR DATA COLLECTION AND ANALYSIS

4.1 INTRODUCTION

Data was collected using interviews based on questionnaires (See Appendix A). These

questionnaires were distributed to 25 SMEs with the Marodi Jex region, we have received 15

respondents. The nature of the interviewed SMEs was from service sector.

There was no special reason for selecting the Marodi jex region, except that it was easier to

access SMEs in this area. The owners of each SME were chosen as suitable candidates for the

interview/questionnaire due to the fact that they have a good understanding of issues surrounding

their businesses. There were a number of challenges when it comes to the data collection. For

example, the owners were always busy and so not easily accessible and some of the questions

where answered with “yes” or “no” without going into detail. Generally this would result in a

follow up phone call to clarify the answers. Since the sample is very small the finding can not be

generalized in a statistical manner. However, since this is a qualitative study, the results may still

be used in a valid way to suggest problematic areas and possible solutions.

4.2 Subjects

There were no specific criteria used in selecting the 20 SMEs that participated in the

interview/questionnaire.

The selection was done randomly and based on acceptance. All of the subjects are from in the

Marodi Jex region as it was easier for the author to access them. The targeted subjects were the

business owners, because they are the ones that take decisions in their SME or because they

could direct us to the relevant people. Getting the decision maker is very important for gaining a

better understanding of the issues facing the SME.

4.3 Data gathering

The questions were selected carefully: they were designed to gain an understanding of

information Communication Technology knowledge and usage within the specific SME and to

discover, if ICT is used, how it is implemented. Appendix A shows all the questions that were

asked to the owner/managers of the SMEs. The questions are open ended with objective that they


will be answered with as much detail as needed. Three of the questionnaires were conducted face

to face with the different participants. The other twelve chose to answer the questions by

themselves, due to time constraints, but a follow-up telephonic interview was done to clarify

where needed.

4.4 Data analyses

Since this research primarily uses a qualitative approach, the open-ended questions will be

analyzed interpretively. , the use of the qualitative method best suites this type of research. For

analysis purposes, questions in the questionnaire can be grouped in to the following logical

groupings:

Work Force knowledge: Questions 1, 2, 8 and 14 aim to understand the workforce employed by

the SME and at the same time confirms that the business is an SME with reference to the

literature review.

Current state of ICT within the SMEs: questions 3 to 11, 13 and 15 aims to establish the

current status of ICT usage within the SMEs, and to establish if basic technologies, such as a

telephone, computer and internet are available.

Current processing of information: questions 12 aim to determine how the SMEs are doing

their current processing of transaction and which ICT utilities are they using.

ICT Barriers: Question 16 aims to establish the barrier that prevent SMEs from adopting or

implementing ICT in their organizations.

Awareness of ICT: we will discuss about the levels of awareness of ICT and the knowledge

economy by the SME owner (as an important part of the SME) – This question was conducted

by interview not within the questionnaire.

4.5 Findings/Results

The findings are grouped according to the logical grouping of the questions discussed above. It is

important to once again highlight that this research makes use of qualitative approach in trying to

answer the research question. The replies are based on the experiences of the SME's

Owners/Managers as they run their businesses.


4.6 Somaliland SMEs Work Force knowledge status

All the respondents interviewed have a workforce within the required range as discussed in the

definition of SME (see Page 8). The number of employees ranges from 1 to 40. This reflects that

the chosen respondents were the right ones. Within the questionnaire filling we were asking the

respondents their educational level; the employees of all the fifteen respondents have a minimum

qualification of Secondary level and five of the employees were university level.

70% of respondents are computer users1, 20% of them have IT Technicians

2 while 5% of the

respondents have computer programmers3, this could imply that an SME requires some level of

literacy, but the problem is that 5% out of the fifteen respondents indicated that their employees

are not computer literate. Only three of the respondents have IT experts as their business is

technology-based. The others do not have any ICT specialists working for them but some of

them have Technicians as the below table shows. (see the below table and figure)

Table 3: Work force Knowledge

Work Force No. of respondents No. of Res. In %

Users 14 70%

Technicians 4 20%

Programmers 1 5%

Illiterate staff 1 5%


Table 4. How many employees are connected to the internet?

Use of Internet # of Employees No. of Res. In %

Employee that use internet 74 30%

Employees that do not use internet 172 70%

As you can see the above table, it indicates that the use of internet within the SMEs are very low,

SME‟s employee 30% of them are using or browsing the internet, while 70% of them are not

using the internet, this indicates that there is still a digital divide within the SME workforce.

4.7 Current state of ICT within Somaliland SMEs

The majority (eleven out of fifteen) of the respondents agree that their business uses some form

of ICT. This seems almost impossible in light of the above discussion on the high levels of

computer illiteracy, but the use of user friendly tools such as telephone, email, and fax machines

facilitate the use of ICT in this circumstance. Six, out of the fifteen, view technology as

important in their business. The kind of technology in use is mostly telephones and standalone

computers for internet purposes. 53% of the respondents have a network environment, while

47% do not have. They use their networked environment to provide services such as Internet and

sharing of work with clients and partners.


Table 5 How many computers are networked within the SME?

Alternatives No. of respondents No. of Res. In %

Yes 8 53%

No 7 47%

Table 6. Do any of your computers at work has access to the internet?


Yes 11 73%

No 4 27%


Most of the companies use the internet for the purpose of Email, Information search, while some of the

SMEs monitor the markets using the internet.

Table 7. What type of external connection to the internet does your company have?


Wireless 3 20%

DSL 6 40%

Dialup 2 13%

Don't Have Internet connection 4 27%

20% of the SMEs are using Wireless, 40% are using DSL connection, 13% are using Dialup

connection while 27% of SMEs do not use the internet.

Table 8. Does the company have or plan to have a website?


Have a Website 5 36%

Don’t have a website 9 64%


As you can see in the above table, 36% of the respondents have a website presence in the

internet while 64% don‟t have or planned to have a website, because the respondents clearly

indicated that the technology is complex while some of them told that the website is not useful

for doing business, some other respondents are saying we are not ready to a have a website at the

moment.

The SMEs that have a website presence in the internet mostly publish their contact details and

services catalogue so there customer see online.

Table 9 What ICT Operating systems does your company use


Windows XP 13 87%

Windows Vista 2 13%

As it can be seen in Table 1.7, most of the companies adopt Windows XP for their computer

system. There were 13 out of 15 companies using Windows XP which carried 87% percent and 2

companies were using Windows Vista for their operating system on respondents‟ work

computer. The main reason most organization choosing Windows XP as their operating system

might be the user-friendly of this system.

Table 10 Which of the following telecommunications services does your company uses?


Telephone 15 100%

Fax machine 12 80%

Email 11 73%

Internet 11 73%

Audio Conferencing 0 0%

Video Conferencing 0 0%

V-SAT 0 0%


Figure 1. 5

100% of the SMEs are using telephones, 80% of them are using Fax machine, while 73% are

using Internet and email. None of the SMEs are using audio/video conferencing and VSAT

because of the cost.

4.8 CURRENT PROCESSING OF INFORMATION

The 6% of the interviewed SMEs use very basic ICT. They do not even keep an electronic

database of their clients.

33% of the respondents are using Microsoft Office application to process their business

transactions while 33% of the respondents are using Peachtree Accounting, 20% percent are

using Tally program, there is also 7% of the SMEs that are using special packages developed for

their SMEs

Table 11 What ICT applications does your company use?


General Office Software 5 33%

Peachtree Accounting package 5 33%

Tally Accounting Package 3 20%

No Electronic Database at all 1 7%

Special Packages 1 7%


4.9 Somaliland SME ICT usage Barriers

The respondents listed different barriers that constraining the use, adopting or implementing ICT,

rating from socio-economic issues to technology related issues: Cost of equipment is to high,

availability of technical support, internet service providers, staff understanding of value of use,

and lack of management support. The listed barriers are very much in line with the literature.

Most of the barriers could possibly be overcome by learning more about ICT and by SMEs

employing knowledgeable ICT staff.

40% of the SMEs mentioned that Staff understanding of value of use and lack of management

support is constraining the use of ICT in their SMEs, while 27% told that there is lack of

technical staff, 27% of the respondents told that there is no barrier at all since they are

technology based SMEs. The remaining 7% told that the technical staff is available but there is

lack of management support.


Table 12. The SME application of ICT constrains

Use of ICT constrains No. of Res. In %

Staff & Lack of Management support 40%

Lack of Technical Staff 27%

No barrier at all 27%

Lack of Management support 7%

4.10 Awareness of ICT in Somaliland SMEs

Almost all the respondents have some sense of understanding of IT and what the benefit might

be, but not enough. They do not know ICT and how it differs from IT. They find ICT

complicated and do not want to try to understand it. They do not have dedicated ICT staff to

carry out the ICT-related responsibilities. The majority of the respondents generally use friends

and family who know a bit about ICT to help or give advice. The awareness level is very low.


CHAPTER 5 DISCUSSION AND RECOMMENDATIONS

5.1 INTRODUCTION

The findings from the SME's replies to the questionnaire reflect the need for further investigation

on how SMEs can achieve understanding of the knowledge economy and the effect of ICT on it.

The majority of the participants agree that to a large extent they rely on technology to run their

businesses. They have basic ICT technologies implemented at their businesses, such as

telephone, fax, and some have internet access.

When examining the answers it appears that the implementation of ICT has not been done from a

strategic point of view, but is based more on specific needs that the SME has or might have. The

fact that all the respondents indicated that they do not know anything about the knowledge

economy and also that they have highlighted lack of knowledge as a problem, confirms that these

SMEs implement ICT because of market forces rather than from a strategic point of view. Perry's

(2007) article entitled "SMEs get CIO-on-call"4 touches on the fact that ICT decisions for most

SMEs are not based on business strategy but on short-term requirements. Unlike big businesses,

SMEs do not have a CIO or someone playing this role to make ICT decision from a strategic

point of view.

The SMEs should thus employ an ICT specialist to look after the ICT needs of the business, or

get a consultant to advise the SME owner on ICT-related matters at a strategic level. This should

improve awareness and knowledge of ICT, thus improving decision making related to ICT in the

SME.

5.2 SME WORKFORCE KNOWLEDGE

The findings reflect that the education levels of the staff of the interviewed businesses range

from Secondary to degrees, but most of them have not any ICT related skills. Knowledgeable

and skilled ICT employees are very important in the knowledge economy for successful adoption

and implementation of ICT, as highlighted by Matula and Brakel in their article (2007:232), who

state that "Well-trained human resources for developing relevant ICT applications, supporting

and maintaining systems" are essential resources.


As mentioned before, there is a need to have someone championing ICT in the business and

driving the adoption/implementation process. Generally this person needs to be someone with

the right authority and influences; in the case of SMEs the owner can play this role. This role

makes sure that any technology that is adopted and used by the business is in line with the

business goal and strategies.

The findings validate the significant role that ICT knowledge and skills play. All the interviewed

SMEs agree that they do not know much about ICT, but they recognize the impact that ICT is

making on the economy. They highlighted a lack of ICT skills as a critical obstacle to their

business using ICT as a competitive tool.

5.3 CURRENT STATE OF ICT WITHIN THE SMEs

The interviews show that in the SMEs involved in the study, some basic technologies

such as telephones, fax machines, standalone, and networked computers are already

implemented for some sections of the business. This means that the basic technologies

are in place but internet connectivity and ICT skills still need to be increased. Some of

the SMEs recognize that technology is an important part of their clients' lives, which

means that it becomes important for their businesses too. All the interviewed SMEs say

that their businesses are impacted by ICT in some Way.

All the interviewed SMEs admit that they did not have a plan in place when they

introduced the current technologies into their businesses. Hence they have only basic

technologies.


5.4 CURRENT PROCESSING OF INFORMATION

Most of the benefits of ICT come from the data captured from the customer, such as personal

details and transaction details. The reason why the new economy is called the "Knowledge

economy" is due to the heavy reliance on information and data that is turned into

knowledge/intelligence. This knowledge is then used by the business to help its decision-making

process.

By keeping records of transactions a business can learn and discover new information about the

customers, such as their buying patterns or their tastes.

Business Intelligence5 can be used to develop the competitiveness of the business. This is one of

the motivations why there is a drive for SMEs to adopt ICT. BI tools are very expensive but

using the same concept of "CIO-on-call services" as discussed by Perry (2007), sharing BI can

make it affordable for SMEs.

The findings of this study is that many SMEs do not keep electronic records of their customer or

their transactions, which means that they do not have databases. Some of the interviewed SMEs

keep only manual records of their clients' details and transactions. Manual records are difficult to

analyze, especially when there are a lot of records.


RECOMMENDATIONS

Behind the findings, we have drawn the following recommendation for the ICT workforce, the

current ICT status, the ICT barriers and the ICT Utilities that the SMEs are currently using.

To solve the problem of the SME workface, the first thing that needs to happen is that SMEs

must establish ICT as a functional area, just like the functional areas of finance or human

resources. By doing so, they will be recognizing ICT as an important function that deserves

to be taken seriously.

Once that is done they need to identify fitting roles for this function and establish their

specifications, to know what abilities, skills and experience they are looking for when they

want to fill the roles. When looking for staff to fill the positions they should make sure that

they get people with the right qualifications and experience to do the job.

If the problem is that an SME cannot afford someone with the required skills, then it could

hire a consultant who can give advice and training. The objectives will be to get a consulting

company that understands both ICT and business aspect. The recent article on Itweb by

perry, entitled "SMEs get CIO-on-call", discusses this option. Perry also confirms the need

for ICT strategic-level thinking within the SMEs. He highlights random decision making

with regards to ICT as a problem that needs to be addressed in order to give SMEs

competitive capability.

On the other hand, there are lots of technologies that SMEs can exploit: having a computer

is not good enough; connecting it to the internet can bring an SME closer to its clients and

suppliers. This can reduce turnaround times and provide a delivery platform for goods and

services. Today almost everyone has a cell phone, which can work as a platform for

marketing or selling products.

The recommendation would be that SMEs should start considering the adoption of various

new technologies, making sure that such technologies are aligned with their business

objectives. SMEs need to explore emerging the Emerging technologies. All this needs to be

done at a strategic level, meaning that SMEs should employ the right people to assist in these


studies and the implementation thereof, as discussed above in the workforce knowledge

section.

In terms of ICT utilities SMEs should keep records of their customers' details and capture all

their transactions using ICT applications. They need to invest in databases, starting off with a

simple access database and only moving on to more advanced databases as they mature, as

databases like Oracle or SQL my be too expensive and too big them in the beginning.

Storing data is very important but will not result in any benefit or competitive advantage

unless the SME takes that data, starts analyzing it and studying patterns in it, and uses it to

draw up business strategies. So apart from the database, the SMEs need to invest in or

outsource analytical tools and skills in order to explore the information for potential benefits.

This again reflects the need for knowledge and skills related to ICT.

SMEs thus need to build their ICT systems in an enterprising manner for effective customer

relationship management (CRM)6. To gain a 360 degree view of their customers.

To reduce the ICT barriers that the SMEs are facing we need to classify all the obstacles

or stumbling blocks into impact areas, such as strategic, technological, or organizational

and behavioral, as recommended by Ritchie and Brindley (2005). Once that is done, a

plan of action should be drawn up of how to overcome the obstacles. For example, some

of the barriers can be dealt with more quickly as they do not require more money, while

others can be planned for when funds become available. The advantage of grouping the

obstacles is that you might find that the organizational and behavioral barriers can be

solved with relative ease, while solving technology-related barriers might take time.

Lack of money can be overcome by exploring operations support system solutions, by

sharing resources with other businesses or buying software as a service.

Education about ICT will solve issues such as lack of knowledge, feeling intimidated by

technology, and security, which fall in the organizational and behavioral grouping

barriers. Regarding security issues, there is a possibility of fraud in any system, not only


an ICT system, but awareness of how to protect your self in the ICT environment will

reduce the risks. Consulting experts is a good place to start if you do not know where to

find the correct information.

In summary, the recommendations for Somaliland SMEs to overcome barriers and improve

implementation of ICT in their businesses are as follows:

Somaliland SMEs should invest in educating their staff and management about ICT and its

benefits.

They should invest in recruiting or outsourcing knowledgeable ICT specialists.

They should build a culture that is favorable to technology and innovative.

ICT decisions should be informed and based on ICT knowledge.

Based on the literature review and the results of the questionnaire, the following general steps are

suggested to increase the level of ICT application in Somaliland SMEs:

1. Setup ICT strategy based on the business goal and objectives.

2. Make sure that ICT strategy is aligned with the business strategy.

3. Identify the role that ICT will be playing within the SME.

Choose the adoption strategy that is right for you business, considering the nature of your

business from the "small firm perspective"


LIMITATIONS OF THE STUDY

The data presented and analyzed in this research paper represents only in HARGEISA the

capital, but not in the whole regions and towns the country.

The reason why this research paper doesn‟t cover the whole regions of the country is some

constraints existing during the research process, the following were the major obstacles

encountered:

Time constraint, during the research writing period and the academic study is going on with the

research, there fore it is not possible to get enough time to stretch the research on the whole

country and travel to the other regions.

The second constrains was financial constraints traveling to other regions and collecting data is

costly, it need to get enough financial resource to do that.

Any way this data can be used or assumed that it represents the whole country because targeted

businesses have branches in other regions of the country.


CHAPTER 6 – CONCLUSIONS

The research tries to answer the question:

“What is the level of Information Communication Technology application in Somaliland Small and

Medium-sized Enterprises (SMEs)?”

ICT is an enormous subject which covers, amongst others, normal telephones, cell phones,

mobile technologies, point-of-sale systems, enterprise resource planning (ERP)7 solutions, CRM

solutions, the internet, PCs and networks. ICT is an enabler for global networking and can be

used in different ways, such as:

1. General-user where it is mainly used for administrative purposes.

2. Production-integrating where it is used to support business processes and the

production of goods and services.

3. Market-oriented where it is used for marketing purposes and increasing the company

presence on the web.

Somaliland SMEs play an important role in the national economy: they contribute to the GDP

and reduction of unemployment in Somaliland. Many governments around the world are pushing

for SMEs to adopt ICT in order for them to survive. The Somaliland government is no exception,

it should encourage and push in order our SMEs adopt ICT.

The adoption of ICT should take into consideration that SMEs are different and thus have

different needs for ICT. It is important for an SME to adopt ICT solutions that are specific to its

needs. A number of barriers make it difficult for Somaliland SMEs to adopt ICT, such as a lack

of knowledge about the strategic use of ICT, a lack of necessary IT skills, perceived high setup

cost, the constantly changing ICT environment.

The ICT problems in Somaliland are both socio-economic and technological, ranging from

connectivity problems to ICT-skills needs. Somaliland SMEs should take advantage of various

emerging technologies.


The study found that the basic ICT technologies such as telephone, Fax Email and internet are

already available in most of Somaliland's SMEs. Most of the respondents agree that ICT is

important and that it has an impact on their business in one way or the other. The biggest barrier

of the ICT usage in the Somaliland SMEs is a lack of knowledge and expertise on all ICT

aspects. This leads to poor decision-making regarding ICT, a lack of trust in the value and

security of ICT, failure to take advantage of the benefits that even the simple technologies could

give the business, and failure to utilize no-cost/low-cost software options. This research has

shown that the key reason for Somaliland SMEs" failure to implement ICT to their business is

the lack of ICT knowledge, which leads to the failure to include ICT as a strategic and

operational tool for business.

The suggested ways in which Somaliland SMEs can use ICT to become competitive are:

1. Setup and ICT strategy for the business. This means a strategy of how technology will

be used to help the business achieve its objectives and optimize its business processes.

This would include choosing the type of technology; infrastructure and architecture that

will best achieve business goals and maximize benefits.

2. Align the business strategy with the ICT strategy. This means that the ICT strategy

3. Should support the business strategy. ICT should not run the business.

4. Identify ICT roles needed to make the adoption process successful. These roles are,

for example, the driver of ICT, the maintainer, or the administrator. SMEs should hire

knowledgeable staff or consults with ICT professionals.

The research has therefore indicated the need for SMEs to implement ICT in order to be

competitive. ICT adds value and will be a competitive tool when it forms part of the business

strategy and when the necessary ICT skills and knowledge are within the SME. All SMEs in

Somaliland need to seriously consider implementing more ICT, in order to remain competitive in

today's fast moving global knowledge economy.


List of References and Bibliography

1. Wikipedia and Webopedia

2. UNDP (2007) Somaliland ICT policy- E-readiness assessment report by conducted

3. Tilley, F. (2000) Small firms and information and communication technologies: Towar a

typology of ICTs usage. New technology, Work and Employment, 15(2).

4. Anell, B., Manniche, J., & Testa, S. (2004). Enhancing ICT Competence in Small & Medium

Sized Businesses. 13th Nordic conference on Small Business Research (NCSB 2004).

5. Hashim, M. K. (2000). SME‟s in Malaysia: Past, Present and Future. Malaysia Management

Review, 35(1), pp. 22-32.

6. King, W. R., & Teo, T. S. H. (1994). Facilitators and inhibitors for the strategic use of

information technology. Information and Management, 27, pp. 71-87

7. Lacovou C., & Benbasat, I. (1995). Electronic data interchange and small organizations:

adoption and impact of technology. MIS Quarterly, 19, 465-485

8. Lim, T. M., (2006). Outsourcing to Ensure Successful ICT Systems Implementation and

Maintenance, available at http://www.infotech.monash.edu.my/news/media.html, dated-

24/08/2006.

9. Liao S., Chem Y, Liu F., & Liao, W. (2004). Information technology and relationship

management : a case study of Taiwan‟s small manufacturing firm. Technovation

10. ICT and SMEs' Competitiveness in South Africa by Lloyd Modimogale, University of

Pretoria.

11. Bunduchi, Raluca (2004) The role of internet technologies in the management of Business

relationships by

12. Karine Iffour (2005) SMEs as ICT users – Standardization perspective – Brussels

13. ICT Usage in SMEs: Empirical Study of Services Sectors in Malaysia by Syed Shah Alam -

2005


Appendix A: The level of ICT application in Somaliland

SMEs survey questionnaire

Instruction: please make tick (/) or any understandable sign in the boxes provided in front of

the answers

1. What is your company‟s Name ___________________

2. What is the size of your company (number of employees)? _____________

3. How many computers do you have in the company? _________________

4. How many are networked (LAN)? _______________

5. Do any of your computers at work have access to the Internet?

Yes No

6. If yes how many are connected to the internet? _______________

7. if not, specify why

a. High internet cost

b. No need

c. Don‟t how to use

8. How many employees are connected to internet? __________

9. What type of external connection to the internet does your company have? Tick all that apply

Dialup Connection

DSL

Wireless

Don‟t know

Other, Specify ______________________________

10. For which of the following purposes has the company use the internet?

Email

Information Search

Monitoring the Market

Communication with public authorities

Information about employment opportunities

Other, Specify __________________________________


11. Does the company have or plan to have a website? Yes No

If you do not have a home page, please tick all the reasons for not having a home page:

Not useful for doing business

Can‟t afford development and maintenance costs

Technology is complex

Not ready for

If Yes, What functionality and content does your web page have?

Access to catalogue price list

Contact information

Post-sales services

12. What ICT utilities/applications does your company use? (Tick all that apply)

General office software

Communication; email, VOIP etc

Information sharing through the Internet

Peachtree Accounting

Specialist software packages

Other (please state)

13. What ICT Operating Systems does your company use? (Tick all that apply)

Microsoft Windows 2000

Microsoft Windows XP

Linux

Unix

Other (please state)

14. How many IT trained staff does your company have? ________ Users _________ Technicians _________

Programmers/Software developers ________


15. Which of the following telecommunications services does your company use?

Never Once a month Once a week Daily

Telephone

Fax machines

E-mail

Internet

Audio conferencing

Video conferencing

V-SAT

16. Which of the following barriers are constraining the use of ICT in your institution

Barriers Majo

r

Mino

r

None Remarks

1. Cost of equipment

2. Availability of technical support

3. Internet service providers

4. Telecommunication bandwidth

5. Staff understanding of value of use

6. Lack of management support


Endnotes

1 An individual who uses a computer

2 An IT specialist who can repair or maintain computers.

3 An individual who writes programs.

4 A local consultancy offers a service to assist tech-knowledge-strapped SMEs to maximize IT

investments.

5 Refers to skills, technologies, applications and practices used to help a business acquire a better

understanding of its commercial context. Business intelligence may also refer to the collected

information itself.

6 Customer relationship management (CRM) consists of the processes a company uses to

track and organize its contacts with its current and prospective customers. CRM software is used

to support these processes; information about customers and customer interactions can be

entered, stored and accessed by employees in different company departments. Typical CRM

goals are to improve services provided to customers, and to use customer contact information for

targeted marketing.

7 Enterprise resource planning (ERP) is a company-wide computer software system used to

manage and coordinate all the resources, information, and functions of a business from shared

data stores.

http://www.webopedia.com/TERM/U/computer.html

http://www.webopedia.com/TERM/P/program.html

http://en.wikipedia.org/wiki/Business

http://en.wikipedia.org/wiki/Customer

http://en.wikipedia.org/wiki/Data_store

The level of ICT application in Somaliland SMEs?

Documents

Transcript of The level of ICT application in Somaliland SMEs?