Conversion Masters Degree in Information Systems ...

“Specification for an Internet-based business system for microenterprise development in the tourism industry” Presented at UMIST, September 2000

Denise Biggs Vulani Development Network Yvette Goussard, Constance Mtsweni, Andy Bytheway Department of Information Systems University of the Western Cape Funded by the International Development Research Centre Project number 100313

Specification for an Internet-based business system

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Abstract This paper seeks to outline an IT-based solution for microenterprise development in the tourism industry for businesses based in disadvantaged communities in Cape Town, South Africa. The business strategy, the Internet application and the analysis that determined their structures will be described. The critical success factors of access to markets and accurate information will be addressed. The business system is to be implemented against a background of underdevelopment. The future owners of the system are to be offered the opportunity to own and manage a high-tech business solution that will stretch their current thinking.

Keywords Microenterprise; Township; Tourism; ICT; Cape Town; Disintermediation; Portal; South Africa

Department of Information Systems, University of the Western Cape

September 2000


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Introduction Cape Town, South Africa has experienced a 15% per annum growth in tourism for the last decade. Some days it seems as if the world is coming to our doorstep. This has afforded many large and small businesses the opportunity to start up businesses in the city. Since the 1994 general elections, when the government changed hands, new players have emerged in the form of microenterprises1, operating from the disadvantaged areas or townships2 of Cape Town. Fortunately, unlike before the elections, they are able to operate their businesses anywhere in the country as long as they comply with the laws of the country and the industry. With the advent of the Internet, which makes global communications cheaper, the world tourism market has become more accessible to these micro enterprises. A pilot study was commissioned by the IDRC – International Development Research Centre, to ascertain if and how ICT – information and communications technology – can support microenterprise development, particularly those that are township-based, in the tourism industry. The SOMDITTI3 research project was assigned to the Information Systems department of the University of the Western Cape. A multidisciplinary team of academics, consultants, students, IT developers and entrepreneurs implemented the research. This paper outlines one of the outcomes of the research, namely the design of a business system to give microenterprise greater and more sustainable access to global markets. The attributes of the business systems and the process of defining these will be explained.

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Research methodology Methods used in the research include: •

models – for mapping the industry and benchmarking factors affecting business development

•

surveys – of tourists and producers

•

interviews - of various role-players in the tourism industry

•

literature search – paper-based and on the World Wide Web

•

observation – including participation as a tourist on a township tour and visits to townships

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reference group workshops

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networking and conferences

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collaboration with Cranfield University, England to determine outbound tourist demand

•

The anatomy of the industry was drawn up at the beginning of the research and has been tested by interviews with various role-players to determine its validity (Fig 2.1). The research model has been redrawn to reflect its relevance to the new business system (see Fig. 5.2.1).

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Microenterprise – 5 or fewer employees and / or less than R 500 000 assets and / or less than R 1 million turnover per annum

2

Townships have been described by some tourists as ‘Pre-Mandela settlements’. They are areas demarcated, during the apartheid era, for use by specific racial groups, usually Black Africans. They are characterised by large populations living mostly in informal dwellings or shacks and having low levels of infrastructure and municipal services.

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SOMDITTI – Support Of Microenterprise Development In the Tourism and Travel Industry


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M a r k e t in g A g e n t

A gen cy

P r o m o t io n s E n q u i ry

Packag e

B oo kin g

T ou r

V isit

In f l u e n ce G rou p

T o u ri st

R o u te L o c a ti o n

A v a i l a b i l i ty

T r an s a c t io n

Prod ucer

Pay m ent

S u p p l ie r

P r o d u c t /S e r v i c e M e m b e rsh i p E x p e ri e n c e S e r v ic e O r g .

Fig. 2.1 – Model of the tourism industry in South Africa

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Users of the business system There will be 3 primary categories of users of the business system, namely the microenterprises, potential clients or customers and the research team. Other important users that emerged as part of the research, namely international travel agents and influencers, e.g. media and friends and relatives, will be targeted in the longer term. What follows is an analysis of the data gathered on the factors affecting their participation in the business system.

3.1

Producers A pilot study of 20 microenterprises was conducted in the townships of Cape Town, South Africa. The study was conducted in 3 of the 6 local municipal areas that make up the Cape Metropolitan area, namely Tygerberg, Cape Town Central and South Peninsula Metropol. Additional input was gathered from interviews with other role players in the tourism industry in Cape Town. Collaborative research conducted as part of the MBA programme at Cranfield University, England was also used as input. Skill and attitude toward IT was assessed in a series of technical workshops. Producer questionnaires Producers were assisted to complete 3 questionnaires. The first was a general questionnaire to gather information on the entrepreneur; the business; the area in which it operates; growth; linkages; clients and sales; access to, and the use of resources, including information. The most significant findings of the general questionnaire were: •

8 businesses are tour operators; 4 restaurants; 5 crafters; 1 tourist attraction; 1 event manager and 1 NGO


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10 operate from home; 8 elsewhere in the townships; 2 outside of the townships

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70% have a post matric qualification

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80% own their own transport

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75% own or have access to a PC; 65% consider themselves computer literate

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95% deal with foreign clients / customers

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60% have regular customers and referrals

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80% said business is growing; an additional 10% cited health as an inhibiting factor

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the average age of the businesses is 3,3 years – 20% are less than a year old

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70% of the business have 5 or less employees

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70% work 12 or more hours per day, 45% are available 24 hours a day, 7 days a week

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60% said no one helped them to get started in business

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50% use networks to market business; 45% use tour operators; 40% uses the Internet4

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40% are members of formal networks, e.g. provided by tourism authorities; 25% are members of informal networks

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none referred to attractions in their area that were not man-made

A second questionnaire was used to determine the nature and quality of the relationships that the producers were engaged in with various role-players. Some producers were positive and optimistic about all their business relationships. The questionnaire was answered by 9 of the producers questioned in the general questionnaire. The drop out rate was due to time constraints and other factors, e.g. start-up businesses. The responses were: Role-player

No. of relation -ships

Status of relationship

Nature of relationship

8

Improving – 6; Same (1)

Supporter – 6; inhibitor (2); service provider (2) Supporter (s) – 3 Partner– 3; Supporter – 2 Rival – 1; Partner – 2; Supporter– 3; Inhibitor – 2 Partner – 1; Supporter – 4; Inhibitor – 2; service provider -2 Supporter – 3; service provider -3

Tourism & local authorities NGO Network / cluster Large tourism business Bank

3 5 8

Same – 2; Worsening – 1 Improving – 4; Don’t know - 1 Improving – 5; Worsening – 3

9

IT service provider

6

Same – 1; Improving – 5; Worsening – 3 Same – 2; Improving – 4

The same constraints are true of the questionnaire used to determine use of IT in the flow of goods, money and information. Findings are: •

none use IT in any form to move or track the movement of goods

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4 used IT to manage their finances, 2 used the Internet for banking

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7 used the Internet for the flow of information – 7 to liaise with clients; 2 for market research; 1 for generating ideas; 1 for training and 1 for performance management5

4

Respondents could choose more than one of the options in this question

5

Respondents could answer yes to more than one question


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Interviews There are 4 tiers of government active in the development and promotion of tourism, i.e. national; provincial; metropolitan and local. There are at least 8 official tourism authorities active in the Cape Metropolitan area. Some government activities seek to create an enabling environment, e.g. funding; advice; promotion; creating capacity, but others are intervening directly in the supply chain, e.g. supplying IT services; establishing businesses. One producer complained of the unfair competition created by 2 additional producer groups being started in this way in the same complex, offering the same products. Other government departments such as Social Services; Trade and Industry; Labour are also involved indirectly in tourism development. There are also large national initiatives to create jobs and alleviate poverty through tourism development. Most of this funding is targeted at community groups and not at individuals. Services offered at municipal level are not standardised. Recent changes in the municipal structure have left most respondents confused about whom they should pay their voluntary membership dues to and what they receive in return. The 3 top tiers each have a Web site. Provincial and Metro authorities offer hosting or linkages to their services. The quality of the service is based on price. Local Community Tourism Development officers, tasked with microenterprise and township tourism development, generally do not have a strong understanding of IT. Workshops In order to introduce the producers to IT that went beyond using e-mail and word processing, 3 full-day technical workshops, on ICT marketing technology and tools, were held. Theoretical sessions about business strategy and non-PC based ICT, e.g. cell ‘phones, were conducted. Practical sessions included how to create Web pages, MS PowerPoint presentations and MS Word based marketing tools. Third year Information Systems students assisted the team members by providing additional technical support during the workshop. All of the delegates were able to cope with the material but varying degrees of interest was shown in mastering it. Most delegates expressed a desire to be given more opportunity to attend such workshops. Cranfield 3 students on the Cranfield School of Management MBA programme conducted collaborative research. They questioned a focus group. Their study focused on the UK market but could apply to any Western country. They made the following findings: •

The mega travel sites are growing but feeling the pinch from paying reservation fees.

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This and the low looking-to-booking ratios discourage second tier and aspirant mega sites.

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There is a growing gap in the on-line travel market for niche businesses with nonbooking sites that have something interesting to offer the client.

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They also suggested that the producers should market themselves as a professional collective and not as a charity.


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3.2

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Clients / tourists Statistics According to Wesgro6 research, South Africa is Africa’s most popular destination and experienced a growth rate of 15% per annum over the last decade. In 1995, the Western Cape had 14.1% of the tourism GDP of South Africa against a population share of 9.1 Tourism contributes 6–7 % to the provinces GDP against a national average is 4-5%. Tourism is a strong and growing sector of the Western Cape economy. In 1996, visitors from overseas & non-neighbouring African countries contributed R 3,8 billion rand to the Western Cape economy. The 529 000 holidaymakers stayed for an average of 11.6 days. 98 000 people, who arrived on business, stayed an average of 5 days. Business travelers spent 50% more than holidaymakers. Tourist survey Students of UWC were recruited to interview tourists in high traffic areas of Cape Town during March and April 2000. They were asked questions on the following issues: - origin; visits to Cape Town; access to and use of the Internet; buying patterns; influencers; sources of information; resources while on holiday; etc. They were also asked if and what they had heard of the townships and whether or not they would visit a township and why. In total, 400 people were interviewed. To date 200 questionnaires have been analysed. Some findings are noted below: •

81% of respondents were first-time visitors to Cape Town

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62.5% booked through travel agents; 5.5% booked on-line

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61% had access to Internet

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Only 31 of these 120 (26%) had visited Cape Town sites. Only 2 could recall which sites

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35.5 % were visiting friends and relatives or were influenced by them to come to South Africa; 34.5% were in Cape Town as part of a tour; 16% were here on business; 2% came as a result of tourist promotion

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49% were staying in Cape Town for a week or less; a further 27% were here for up to 2 weeks

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71,5% said they had heard of the townships

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After being told something about the townships, 24 of the 53 (45%) of those who had not heard of the townships before the survey, said they would go there

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The most frequent words or concepts associated with the townships were poverty (20); underprivileged (17); black people (17); dangerous, scary, crime and violence (19); slums, shanties and squatters (11). Other words used were avoid; Apartheid; bad; big; crowded; dirty; racism;; unemployment. 2 positive comments allude to exaggeration, growth, vibrant.

Below is a table of responses to the questions about the townships and key words associated with each response.

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The Western Cape Investment and Trade Promotion Agency (WESGRO) is an independent agency supported by key development stakeholders. The agency, which builds on a not-for-profit association founded in 1982, was established by Provincial Law No 3/1996 to promote economic development and job creation in the Province of the Western Cape.


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Have you heard

Would you like

of the

to visit?

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Number

What reason – main concepts

townships?

N

?

1

N

N

28

No time (7); not interested (8); scared (4); no information (2); not recommended and seen enough in own country

N

Y

24

Interested (4); see (5); experience (4) part of Africa (2); different place; curiosity; Mandela; never seen one; curiosity

Y

?

12

Been to one (3); may be dangerous (2); feel uncomfortable

Y

N

69

No time (11); been to one (6); dangerous / scared – for self & children (12); not interested / no appeal (10); not that kind of tourist (5); too far; sounds bad; painful

Y

Y

62

See how people live (15); been to some (8); interest (8); see conditions (4); see changes (4);

different (3);

experience / learn (3); help people (2); paradox; Africa; culture

Cranfield Their findings with respect to demand for township business are as follows: •

People who had been to South Africa, and specifically those that had been to the townships, had a more positive image – of the townships

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They wanted an African experience when visiting South Africa, not a European one

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There were concerns expressed about quality and reliability of the supply chain

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The respondents said they would like to have a bundled service, i.e. a guided tour which would take in restaurants; crafters; etc.

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Hand crafted items vary in quality and design therefore sales on-line were not desired

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There was reluctance to book township events on-line as this removed the spontaneity of the experience

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Digital products; books; clothes and food were products that were selling well on-line

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Clients would like to sample digital products, e.g. audio and video

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They suggested having a recognised body such as the British Council or celebrities endorse the attractions advertised on the Web site


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Users’ needs There are 2 aspects to users’ needs, namely what they require from a business strategy or structure and what they require from an IT-based system.

4.1

Producers First and foremost the producers need to trust each other and have the feeling that neither the business system nor the role-players will betray their interests. They also need to work together as a cooperative in order to access funding from donors. The producers need to own the process and the system so that they can invest in it in the long term. They also need to understand how it benefits and impacts on them. In terms of deliverables, the IT system needs to achieve the following:

4.2

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Educate and influence potential clients to want to visit the townships and to do so through their businesses

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Provide accurate information on the townships, before and during a client’s visit to Cape Town

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Provide feedback on client satisfaction and suggestions on how to improve and develop product offerings

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Create opportunities for more business, repeat business, a wider range of clientele and a longer life with client

Clients Clients need to be able to trust the information they are getting and the people they are dealing with. Given that many people are concerned for their safety in visiting the townships, the reliability of information cannot be underestimated. They also need advance information of tourist related product offerings and guarantees that the businesses they want to deal with will be there when they arrive and that they will live up to expectations. They also need to know that if they recommend a person or place to a friend that it will be there when the friend arrives. Endorsements, referrals, standards and discussions will help to allay their concerns. They want to experience the look and feel of Africa. They need sensual input, such as images, audio and video, that conjures up an African mood. They want to experience the full spectrum of tourist activities in the form of a guided tour. They need to have fun, pleasant experiences, e.g. ‘meeting’ people through their profiles and interviews; seeing production; learning about a culture in transition; listening to a local radio station; etc. They need to know how they can help the situation but not to be made to feel guilty. They don’t need direct appeals for help but information on who to help and where to find them if they so wish. They also need to know that they have helped, e.g. stories of where tourists and tourism have made a difference to lives.

4.3

Research team The research team, which includes funders, needs access to the systems in order to measure the impact it is having with respect to stated objectives. They need to be able to trust the information they get from the system. They also need to have a good working relationship with all the role-players in the business system.


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How the business / system will work Once again, there are 2 aspects to how the business / system will work, business strategy or structure and an IT-based system.

5.1

Business strategy A cooperative will be formed that focuses on tourism that benefits community economic development. This alliance will be a new intermediary in the Cape Town tourism market that will serve to promote the products and services of microenterprise in the tourism industry in the townships collectively, thereby strengthening their position in the supply chain. The tourism related assets of the townships will be mapped, packaged and promoted. The cooperative will seek to attract the full spectrum of tourist products and services to its ranks. All components will be vetted by the cooperative for authenticity, quality and reliability. Partnerships will be formed with local communities to their mutual benefit. Support will be sought from international agencies and celebrities to endorse the quality of the products on offer. International travel agents will be approached to make them aware of the products available in the townships and the existence of the Web site. Funding will be sought from the various funding initiatives, which is unavailable to individuals but would support the cooperative. Capacity will be built within the cooperative to create and maintain the local content of a Web site or portal which will point potential clients to township tourism businesses (see below). The members of the cooperative will provide this local content as their ‘sweat equity’ portion of the portal. The research team will seek additional resources.

5.2

Application A web site will be developed to serve as a portal for township microenterprise in Cape Town. The domain name and look & feel have yet to be determined by the cooperative. Keywords will include township; African; Cape Town; South Africa; community-based; tourism; development; and others to be determined. Features will include: - calendar of events; travel guides; people and product profiles; newsletters; contact details; links and a discussion forum. The first 4 will be in PDF format so that users can download them and carry them with them when they are travelling. Maintenance of these will be through templates of each category. Endorsements will be sought and displayed on the Web site. The site will be hosted by UWC in the short term and will be created using a dynamic scripting language. Content will be stored in a SQL database. The Web server will serve pages with dynamic content collected from the database. Future features Depending on the success of the above process, further funding will be sought for advanced features, e.g. Web cam; video interviews; on-line Township ‘Time Out’-type publication; radio; postcards; searching. Maps based on a GIS system of assets mapped could also be considered. Samples of music and videos from the townships could be made available through the Web site. These would then be distributed using current off-line distribution channels.


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Phases of implementation

6.1

Start-Up

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Much of the first phase of implementation will be taken up with issues concerning the establishment of a cooperative of producers and their working relationships. Ownership and concomitant responsibilities will need to be assigned based on skills and availability of the individual producers. Producers will be trained in the use of the system and how to create local content, using various forms of hardware and software. They will be tasked with creating and maintaining the content of the system. At least the profiles of each of the townships in Cape Town and the profiles of each of the producers in the cooperative needs to be compiled. Local content needs to be gathered, vetted and packaged for other elements such as the newsletter before being entered into the database. Partners will need to be approached for endorsements and linkages to and from their Web sites if applicable. Additional marketing effort needs to be expended, e.g. a launch to the media; postcards to international travel agencies, highlighting the Web address. The IT application will be released onto the World Wide Web after being checked for accuracy of contact information, content and linkages. The discussion forum will be made available to clients enabling client-to-client (C2C) and client-to-business (C2B) communications through the system. Follow up between clients and producers would be possible via e-mail over the Internet.

6.2

Growth The content of the site needs to be refreshed regularly to ensure that visitors do not get bored. As business grows, the on-line communication between producers (B2B) will increase in order to negotiate and settle business dealings and to record activities. Effort will be put into drawing international travel agents to the site. They will start corresponding with the producers (B2B) and recommend visiting the site to their clients. The discussion forum will grow and producers will receive feedback from their clients and clients of other producers. This they will apply to improving and developing their product offerings.

6.3

Expansion More producers will join the cooperative. They will be trained in the dynamics of the cooperative and the mechanics of the system. Their skills will be harnessed or developed, as needed, so that they can contribute to the progress of the system. New features will be added to the system, e.g. radio; Web cam; interviews; e-postcards; etc. Information products will be offered for sale on-line (B2C). Bookings could be taken on-line as clients and travel agents learn to trust the cooperative and the system. These features will bring in new partners such as IT service providers, banks and revenue services. The system could be expanded to other urban and rural areas in the country, maintaining the focus on tourism that helps community economic development. The cooperative will package and provide services to tourists for their entire stay in Cape Town.


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Monitoring and evaluation As part of further research, the progress of the business system will be monitored and evaluated against expectations. The producers will receive feedback on their performance.

7.1

Business strategy The number of new producers and new products will be measured at regular intervals. The range of products and how they are packaged into tours will also be monitored. The number of visitors to the townships and the market share will be measured. Visitors’ books that advertise the Web site will be placed at each venue. Notwithstanding the constraints in getting accurate figures on business growth, the research will endeavour to measure changes in turnover, profit, asset creation, employment and product development within each enterprise as well as for the collective. Publicity in the media will be monitored as well as endorsements and new partnerships.

7.2

Application Quantifiable measurement of the performance of the application will include counting enquiries; site hits; use of the discussion forum; etc. Both producers’ and clients’ use of the application will be monitored. The degree of new, local content and the maintenance of information will be measured to determine the commitment of the cooperative to the site. Users of the site and their changes in demand will be measured by doing regular e-surveys. Online visitors’ books will also be used. Attitudes to the quality of information and visiting experiences will be polled. The feedback in discussion forum will be monitored to see if the producers find it useful and if they make changes to their businesses based on the feedback.


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Conclusion Township businesses cannot be relegated to the tourism backwaters of South Africa. They need access to a bigger share of the market and capacity to deal with the technology of the 21st century. Township tourism has a unique selling point and will not detract from business in other areas. The business system described above will complement these by offering a people-friendly, African view of the country and its people both on-line and off-line.


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References Books Burdman, Jessica. (1999) Collaborative Web Development, Strategies and Best Practices for Web Teams, Addison-Wesley Page, Stephen. (1995) Urban Tourism, Routledge, London and New York Porter, Michael E. (1990) The Competitive Advantage of Nations, The Free Press, New York.

Papers Wesgro (1998). Western Cape Tourism Trends Wesgro (1996). Tourism in the Western Cape: Key magnitudes on incoming tourists in 1995. Working Paper 1/96. Wesgro (1998). The macro economic significance of travel and tourism to the economy of the Western Cape. Working Paper 3/97 (Revised Feb. 1998). Cranfield School of Management. MBA programme, SOMDITTI (2000) Web sites: Cape Metropolitan Tourism – www.gocapetown.co.za Cape Town Tourism - www.cape-town.org.za Department of Trade & Industry – wwwdti.pwv.gov.za Government – www.gov.za SATOUR – www.satour.co.za Statistics South Africa (STATSSA) - www.statssa.gov.za University of the Western Cape – www.uwc.ac.za Wesgro – www.wesgro.organisation.za Western Cape Tourism Board - www.capetourism.org.za Various newspaper clippings From the Mayibuye Centre (University of Western Cape) archives www.museums.organisation.za/mayibuye


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