Category: Business

Read Adedeji Olowe’s take on business, business models, and other transformational topics about business in Nigeria, Africa, and the world.

Will the database move into the cloud?

In 1999 when senior vice president Marc Benioff left Oracle to create Salesforce.com, many thought he was headed for a cliff at full steam but 10 years down the line, software as a service (SaaS) is a matured business model. Online productivity applications have joined the fray and are maturing at a brisk pace (Say Google Docs, Zoho).

In our modern enterprise, the database is a corner of most of the software architecture and I ask myself, will the database move into the cloud too? Will I be able to implement applications and point it to a database somewhere unknown?

The benefits are obvious – zero hardware configurations, zero backups (hey, I could spend a million dollars for that!), titanium grade security protection, etc. But should things fail, I have loss of data staring me in the face. With that I could get a jail time or be bankrupt depending on what data is missing.

These are interesting times.

Smart Organizations: The Buck Stops with the Executives

In continuation of my analysis of smart organizations, I have since discovered the importance of leadership. The leadership defines the direction the organization goes. Great organizations are known to have great leaders. They define the direction and determine what is important, the culture and the future of their domain.

Until the leadership of an organization knows the benefits of creating an efficient system and work towards it, efforts by the underlings would never amount to anything. Sometimes it is easy to go for strategic meetings (very boring meetings!), create policy documents but until words can be matched with action, nothing comes out of it.Smartness and the desire to be efficient is not enough to create a smart workplace, it must be a defined Organizational culture. It drives better than policy frameworks. Culture taps into the emotional fundamentals. Do you think people are crazy about Apple products because they are the best? No! They create good products but the culture and the hype (Reality Distortion Field) drives the buzz! In Nigeria, you can easily know bankers that work with old generation banks from new generation banks by the culture, the drive to excel, the aggressiveness, the can-do attitude. This is what the leadership needs to create  an attitude of wanting to be the best; not only in the market, but in how things are done. In being the smartest organization!

Why wouldnt the leadership of an organization create an efficient environment? Are they clueless or too busy to focus on the fundamentals?

Most of the current executives are not young enough and could have missed out of the smart revolutions that the internet and new technologies have introduced. Many of them went to prestigious schools such as Harvard, Yale, Oxford, etc for MBAs but the impact of that on revolutionary ideas has not been felt in majority of these organizations. Would things get better when the new crops of young executives start to take over or would they also have missed out on the new waves that would be defining how businesses are run in a few years?

The Nigerian economic space is developing fast, with the financial services sector on the forefront. By the end of the year when all financial organizations would have the same year end; new avenues must be exploited for growth in an insanely competitive space. While excellent marketing skills would bring in required growth in assets, smartness of the organization would determine the profit that can be eked out.

What makes a smart organization

Of recent, I have been thinking deeply about what makes an organization to be smart. Or deeper still, what defines a smart organization. I am thinking about real life attributes not some fancy buzz words from smart pants consultants.

If someone should ask me, I would say a smart organization is one that reacts quickly to market changes, whose components (resources, employees) are used in the most cost effective manner delivering above average return on investment. So a lot must be expected from each organizational unit. Assets must be deployed in the most cost effective manner and results must be squeezed out. These are just rambling thoughts but one day, I will come around to codify it.

Why should we have smart organizations? My own answer is so simply stupid: It makes employees happy! From my little life experiences, the workers are the first to get stressed up when things don’t go smoothly. Like some people I know will say, they willl “Fi eje se!” (use blood to run it!). If things can run faster, better, more efficiently with less input and more time to either party away (Friday night is sacrosanct) and do better things, I should be less stressed up.

December 31 FYE: Implications for the Nigerian banks

 With the drive of the current administration of the Central Bank of Nigeria, CBN, to take the Nigerian financial sector to be at par with international standards, the recent pronouncement for all banks to have the same financial-year-end comes as no surprise. In more sophisticated economies, the financial institutions usually close their books at the end of the fiscal year. With this, regulators, analysts, investors and other gamut of interested parties in between have a clear cut idea of what their economy is doing.

The last 3 years since the CBN handed down the shore-up-your capital declaration, the financial sector, especially the banking industry, has witness a rapid growth. But that hasnt come without its own baggage of issues. With banks closing their FYE at different times, each was clamming one flag-post position or the other while the average Joe sits there bewildered; not knowing who is where.

The new FYE directive will solve that problem once and for all. 

For one, competition would be keen and cut-throat. Now that the end has come for year-end-deposits balances would be adjusted by markets which would now force bankers to look for deposits more aggressively. Competition is not really a bad thing as customers could now call the shots. Since deposits would be in short supply, any bank that wants to close the year on a positive note must find a way to delight its customers. 2009 would probably be a good year to be a banks customer. This could induce an increase in deposit rates; forces of demand and supply, with demand outweighing supply.

Also, this would definitely sieve the big players from the fringe players. The top ten positions would be keenly contested and there would probably be severe punishments for any bank caught in the bottom 5.

Since every bank would be closing its book by December 31st, industry pundits, and the rest of us mere mortals, can at last know the real size of the Nigerian economy. Massive account to account from one bank to another for year end is about to come to an end, the winner truly takes it all. Since the CBN depends on the figures provided by banks for year end to determine the size of banked funds in the economy, this would give us an accurate snap shot of where we truly are.

Another winner here is the NDIC. The NDIC takes an insurance premium from every bank based on the size of their deposits by December 31st. Legends have it that December 31st usually has banks recording the lowest deposit in the year which miraculously increases few months after. This is the time for NDIC to take its own pound of flesh.

The biggest question of all is how will the few heavy weight auditing firms be able to handle the 23 banks within 2  3 months when their books are due to be submitted to CBN for vetting? How will the CBN audit all these banks at once? Does that mean that there would be a scramble to employ more auditors?

This is really an interesting time.