The effective application of information systems within SMMEs for long term competitive advantage

Abstract

It has been shown that the South African insurance landscape takes up an important place in the African continent, contributing nearly three quarters of the total African insurance sector (Paul, Twala & Marwala, 2012). The industry landscape has shown development at a compound annual growth rate (CAGR) of 11.7% between 2004 and 2008. The life insurance industry is assumed to grow at a CAGR of 8.3%. Small, medium and micro-sized enterprises (SMMEs) are important role players in every economy and provide a major contribution to the gross domestic product (GDP) and employment. Many South African enterprises have in the past focused on local markets, but more recently SMMEs have been forced to respond to competition in the global market as markets expand. The role of SMMEs is considered critical in terms of poverty alleviation, employment creation, and international competitiveness. However, resource limitations have made it difficult for many SMMEs to enter new markets and compete effectively. The effective application of information systems (IS) are viewed as a way for SMMEs to become more competitive and drive business benefits such as cost reduction, improved profitability, enhanced customer service, new market growth opportunities, and more efficient operating relationships with trading customers and partners. There are an increasing number of new opportunities and competition in the marketplace because of business globalisation. The marketplace and business globalisation dynamics have a major influence on SMMEs and their operations. SMMEs require a critical evaluation of their internal processes and seek out solutions to be able to sustain their growth and competitiveness. This research study adopted an inductive approach to describe the rational process of establishing a general proposition on the basis of observing particular facts. An in-depth case study is used to explore the multiple perspectives of the complexity and uniqueness of SMMEs. One-on-one interviews were conducted to collect data from 17 financial advisors using an interview guide with semi-structured questionnaires. The data were analysed through the process of thematic coding which is common in case study research, and labels were assigned to form and organise the themes in groups and categories. Ethical consideration was presented before data collection commenced, and the autonomy, self-respect and human dignity of all respondents during the data collection process were considered. The findings reveal that financial service providers (FSPs) have a different understanding of IS, what competitive means, and what it can do for a business.