PricewaterhouseCoopers (PwC) is the world’s largest and indubitably the most respected and trusted professional service organisation. It provides a wide range of advisory and assurance services to companies and industry and is naturally significantly involved in providing advice about conducting business over the Internet.
To see how the local PwC operation is involved in the field of electronic business transactions, discussions were held with Doug Franke, the Director of the PwC Southern Africa e-Business Solutions Division. While the present article mainly addresses the business of PwC and what it provides for its clients, some of the problems of e-business and e-commerce are so generic that it was decided to use Franke's expert opinion to focus on these in a second article that will appear in the next issue of eSecure. Here, we will look at the future of e-business, both globally and in South Africa in particular, how far we are along the value-added chain and the apparent failure of the dot.com businesses.
Doug Franke, Director of PwC Southern Africa e-Business Solutions Division
Naturally PwC is heavily involved in business over the Internet and they have tackled the problem of providing advice in a rather unique way through the creation of their e-business Gold Team, whose activities are coordinated by Franke.
The Gold Team, PwC: Back: Bernard du Plessis, Gerhard Bredenoord; Middle: Wilhelm Krige, Ernst Maritz, Anton Sinovich; Front: Richard Mackinnon-Little, Doug Franke
PwC e-business Gold Team
The concept of the Gold Team dates back to the days when PwC first entered the electronic commerce and business marketplace. For PwC, 'e-business is business', and the Internet for them was just another, albeit very powerful, technology tool. The customers of PwC in South Africa (40% by market capitalisation of the JSE) are big clients with big problems and major challenges, and PwC realised that any successful e-business solution required inputs from all parts of its business operation including legal, consulting, assurance, tax, security and so forth. The Gold Team is a virtual team of partners and managers who represent these different service offerings of PwC, and also includes their industry-specific experts. The word virtual is used merely because all the individuals concerned have their own defined jobs, and they come together as a team as required by clients who for example may want to establish a new on-line marketplace.
The relevant Gold Team members meet with the client and pool all their pertinent expertise to analyse the implications for the new business and its customers. It thus provides major clients with immediate, relevant strategic advice and services across their business. According to Franke, the PwC worldwide concept of the Gold Team is working well in South Africa. He believes that significant value has been provided to clients by convincing them not to proceed with certain e-initiatives at this point in time. "Many clients believe that they need to enter the e-space now, at any cost, and after reviewing the strategy and business case, we come to a different conclusion." While millions of rands have been saved in concluding not to proceed with an initiative, there have been many exceptions to this norm, the best public example perhaps being the company Attix5. This is a pertinent example because as the use of the Internet is global, the opportunities for South African companies providing solutions and services is also global and a key role played by PwC is to assist these companies in operating beyond our geographical borders.
There are misperceptions here that PwC has acquired the company Attix5, but the truth is that it has merely acquired a minority equity stake. The Gold Team assisted Attix5 when it approached PwC with its technology and sought assistance in bringing it to market. According to Franke their technology is 'incredibly useful and relevant' and allows back-up of files automatically, securely and remotely over the Internet. The problem in today's world of highly-mobile consultants and executives is that much of a company's critical data is stored on laptops. A recent Gartner study found that up to 50% of critical corporate data now resides on laptops, desktops and other remote devices. The majority of this data is never backed up. The solution offered by Attix5 gets around this problem through highly secure back-up every time the laptop user logs onto the Internet. The back-up of course takes place in the background and does not affect any other applications the user is running. The solution has global opportunities and PwC is helping Attix5 with its international roll-out.
While the role of PwC and its strategy is to help customers, not take them over, in this situation the decision was taken that if the company can provide significant value then why not share in both the risk and the rewards. Some of the value-added service already provided was the investigation of the scalability, functionality, and quality management of the Attix5 product to make it globally acceptable. They also made use of global strategy experts, and their top global cryptography expert to ensure the integrity of the system's cryptographic processes. The power of the firm is exploited by leveraging their global network to achieve an accelerated roll-out. For the smaller client like Attix5, the confidence of having PwC invest in the idea rather than just charging a substantial fee for nonrisk bearing advice is highly attractive. This concept of payment through equity acquisition could be repeated but does not represent a change in the overall strategy of PwC.
The bandwidth and cost dilemma
A major problem for the local growth in the use of the Internet, that affects PwC directly as well, is the lack of bandwidth availability and the high cost we pay for the use of it through the Telkom monopoly. Franke quoted as an example that many US homes (with cable modem) have more bandwidth available than the whole of the PwC complex in Johannesburg that has a staff of 1700 and the American user pays a minute fraction of what Telkom charges. The bandwidth availability and cost issues are something that government must give urgent attention to. South Africa has major opportunities for winning service contracts in hard currency countries and carrying these out locally in a low cost environment. While human resources here are relatively cheap, the high cost of bandwidth could stifle these opportunities and the economy would lose out on foreign exchange as well as job opportunities. Franke believes that with our low cost-base, and being within the same time zone as much of Europe, the opportunities for SA as a call centre base are enormous, again if we had the low cost bandwidth capacity to sustain it.
PwC in South Africa is a leader in the provision of professional services to a multitude of global on-line initiatives including interactive gaming. Here they provide trust, security and risk management services around payment and e-business systems. These tasks are done from South Africa because of the low cost-base and high level of expertise. For PwC, as a global company, it does not matter where its actual people are located as long as the 'best person for the job' is utilised.
As a general comment on e-business, Franke believes that it is not all 'doom and gloom', especially in the B2B and e-government space, but that we are still in the early days of the acceptance and cost-effective implementation of the technology offered. The whole culture of using the Internet is becoming both more acceptable and pervasive. The road map of where we are going will be covered in the follow up article to this in the next issue of e-Secure.