When you hear the words load shedding, the connotation may easily bring to mind inconvenience, but for small businesses, it has a darker implication, of risk to their actual survival.
This was one of the outstanding results to emerge from the recent SME Survey 2015, as prolonged power failures pushed crime to second place as a prevalent issue keeping South African SME owners up at night. “With power failures cited by 71% of respondents, the issue rates at almost exactly double the importance of crime, which came in at a distant second, at 36%,” noted Arthur Goldstuck, the MD of World Wide Worx and principal researcher for the SME Survey.
No power to the people
He elaborated that this category is driven to a large extent by those concerns that are highest in the public mind – with SMEs having attributed their sleepless nights to crime, the high cost of fuel and interest rates, in the past.
While these results became apparent when power failures were featured in the survey during the first incidences of load shedding several years ago (2008), at that time load shedding came well below crime.
Goldstuck explained that the reason why we have witnessed such a massive jump for this category now is largely due to the cumulative effects of ongoing load shedding. “While load shedding has been punted as a temporary problem, it is clear that businesses fear that it is going to be with us for the foreseeable future,” he added.
Big impact on small business
The impact of load shedding on small and medium enterprises can also be more crippling and devastating than on their larger enterprise counterparts, which are more likely to have generators to weather the storm.
“While big companies have the infrastructure, client bases and capital to cope with the challenges highlighted in the survey, many small businesses, which have the potential to be active players in the South African economy, do not have the financial muscle and resources to overcome these challenges,” added Ethel Nyembe, head of small enterprise at Standard Bank.
Exacerbating matters, is that load shedding in 2015 has a more severe impact on businesses than it did seven years ago, with the power being shut off for longer periods. However, the load shedding risk doesn’t just end at businesses having to contend without power for up to half a working day (if not more). There are ripple effects too. For example, when the power does return, there is also concern about the potential for transformers to “blow” which in turn can endanger office equipment appliances.
For businesses, there is also the very real risk of suddenly losing valuable data, which pushes the need for ongoing backups to the fore. “Backing up less than on a daily basis can prove disastrous for an SME, yet the figures demonstrate that the proportion of SMEs doing exactly this has risen from only 30.5% to a still low 40% in 2015,” lamented Goldstuck.
He pointed out that part of the problem is that few SMEs associate power failures with the need to back up data, and yet unexpected load shedding remains one of the events most likely to lead to a loss of data.
Far reaching consequences
The impact of load shedding on SMEs goes beyond those businesses themselves, to have a deleterious impact on the country’s economy as well. Nyembe pointed out that large organisations are no longer the primary focus for growth and job creation, but rather that the biggest emerging economies today are driven by SMEs as key drivers for economic growth, innovation and sustainable employment.
Amid this rather dark and dire picture, it was Rectron that brought a sliver of light. Elaine Wang, Microsoft business unit manager at Rectron pointed out that with the ever-looming possibility of load shedding, there was “no better time” for SMEs to consider a cloud solution for their businesses.
“Given limited capital for expensive infrastructure, public cloud offerings are a great way to ensure that SMEs are protected against loss of data and downtime. These solutions also ensure that they are able to stay up to date with the latest in technology offerings while paying on a per user or per usage basis,” she concluded.
While load shedding and power failures may be SMEs nemesis in 2015 and beyond, it seems as though cloud could be one of their saving graces.