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The East African : May 19th 2014
The EastAfrican OUTLOOK MAY 17-23,2014 e -AF R ICAN Businesses now struggle to contain cyber insecurity The≥e is a widening ≥ange of tech vulne≥ability and huge losses in value tied to innovation A JOINT REPORT The EastAfrican is rapidly migrating into digital form on open and globally interconnected technology platforms. As that happens, the risks from M cyber attacks become increasingly daunting. Criminals pursue financial gain through fraud and identity theft; competitors steal intellectual property or disrupt business to grab advantage; “hacktivists” pierce online firewalls to make political statements. Research McKinsey conducted in partnership with the World Economic Forum suggests that companies are struggling with their capabilities in cyberrisk management. As highly visible breaches occur with growing regularity, most technology executives believe that they are losing ground to attackers. Organisations large and small lack the facts to make effective decisions, and traditional “protect the perimeter” technology strategies are proving insufficient. Most companies also have dif- ficulty quantifying the impact of risks and mitigation plans. Much of the damage results from an inadequate response to a breach rather than the breach itself. Complicating matters further for executives, mitigating the effect of attacks often requires making ore business value and personal information worldwide complicated trade-offs between reducing risk and keeping pace with business demands. These findings emerged from in- terviews with more than 200 chief information officers, chief information-security officers, regulators, policy makers, technology vendors, law-enforcement officials, and other kinds of practitioners in seven sectors across the Americas, Europe, the Middle East and Africa, and Asia. We also drew on a separate McK- insey executive survey on cyberrisk, supplementing this research with an analysis of McKinsey Global Institute data on the value-creation potential of innovative technologies. It showed that the economic costs of cyber-crimes could run into the trillions of dollars. Product companies, such as hi- tech firms, are most concerned about industrial espionage. The leaking of proprietary knowledge about production processes may be more damaging than leaks of product specifications, given the pervasiveness of “teardown” techniques and the legal protections afforded to product designs. Service compa- “We found no correlation between spending levels and risk management maturity.” BRIEFS Technology companies indecisive on what to sell Technology companies are finding it hard to decide what to sell to a diverse audience, a new study from integrated communications agency, Text100 shows. According to the study, based on interviews with 1,900 IT decision makers across the globe, an average of six people are involved in the purchasing decision-making process. Although 55 per cent of companies have the head of IT making the final decision, 42 per cent require the top management, to sign off while 22 per cent require the board of directors sign off. Kenya to start electronic procurement system nies are more concerned about the loss and release of identifiable information on customers and about service disruptions. According to McKinsey’s ongoing cyberrisk maturity research, large companies reported cross-sector gaps in their risk management capabilities. Ninety per cent of those most recently surveyed had “nascent” or “developing” ones. Only 5 per cent were rated “mature” overall across the practice areas studied. We found no correlation between spending levels and risk management maturity. Some companies spend little but do a comparatively good job of making risk management decisions. Others spend vigorously, but without much sophistication. Even the largest firms had substantial room for improvement. In finance, for instance, senior non-technical executives struggled to incorporate cyberrisk management into discussions on enterprise risk management and often couldn’t make informed decisions, because they lacked data. Concerns about cyberattacks are starting to have measurable negative business implications in some areas. In hi-tech, fully half of the survey respondents said they would have to change the nature of their R&D efforts over time. There is concern, as well, that cy- berattacks could slow down the capture of value from cloud computing, mobile technologies, and healthcare technologies. Tucker Bailey, Andrea Del Miglio and Wolf Richter work at McKinsey China’s Huawei aims fo≥ $70b ≥evenues in fou≥ yea≥s A SPECIAL CORRESPONDENT The EastAfrican HUAWEI IS probably one of the least-known of China’s growing fleet of large multinational corporations — but it’s aiming to get much bigger in the coming few years. The global telecommunications equipment maker based in the southern Chinese industrial city of Shenzhenhas gradually expanded its reach — first as a supplier of networking infrastructure to developing markets and most recently as a maker of smartphones — to become the second-biggest telecom equipment maker in the world. The company’s biggest claim to fame may be the uproar that ensued when it attempted to buy server technology firm 3Leaf Systems in the US in 2011. Huawei ultimately abandoned the acquisition after a US government panel moved to block the deal on national security grounds. Huawei officials have said those concerns were unfounded, and are now pushing ahead with an ambitious plan to double the company’s revenue by expanding internationally as it advances into the market for tablets and other cent and 20 per cent from the current 5 per cent, while reducing its telecom equipment business revenue to 50 per cent and 60 per cent from the current 75 per cent. “We started two new businesses three years A Huawei stand at a show in Dubai. The firm intends to grow its footprint globally. Picture: FILE consumer goods over the next decade. So far, Huawei’s biggest handicap has been its lack of brand name recognition, especially outside China. Scott Sykes, Huawei’s vice president for international media affairs, said Huawei plans to expand the share of sales of consumer products inits total revenue to 25 per cent by 2018, from the current 20 per cent. The company also plans to increase its enterprise business, which sells equipment for use in corporate data centres in campus networks to between 15 per ago,” Mr Sykes said. “One is called the consumer business group, which designs smartphones, tablet computers and Wi-Fi devices, and [Internet-delivered television] boxes. It accounted for about 20 per cent of our revenue mix, or $9 billion in 2012.” The enterprise business group is typical of Huawei’s origins as a supplier of network equipment in that it designs storage servers and transaction processing servers and makes communications platforms for corporate virtual private networks (VPNs) and switching technology for corporate campuses. Despite the hurdles it faces in the US mar- ket, Huawei is doing well, Mr Sykes said. “We are a more than a $35 billion company, and had an 11 per cent increase in our revenue in 2013. We anticipate that in the next five years we will grow by a compound annual of 10 per cent. If we achieve that, by 2018 we will be a $70 billion [revenue] company. Knowledge@Wharton Kenya’s National Treasury plans to roll out an electronic procurement system in July, as part of efforts to automate and streamline government financial management processes and procedures. The government has started training suppliers in readiness for the rollout, which will be conducted in ministries, departments, agencies and the counties. Henry Rotich, Treasury Cabinet Secretary said the system will increase control over the entire lifecycle of a procurement transaction — from procurement planning to payment. 31 Cabinet Secretary Rotich. Pic: File Rwanda seeks to raise telcoms tax to 10pc Rwandan telecommunications service users may pay more for services if a Bill tabled in the country’s Lower House goes through. The Bill seeks to increase the telecoms tax rate from 8 per cent to 10 per cent from July 1. This will increase the country’s tax base but is likely to see telcos shift the burden to customers. The government aims to raise Rwf2 billion ($2.9 million) in the next fiscal year to help fund the aRwf1.7 trillion ($2.5 billion) budget. Africa urged to invest in Internet infrustructure Africa countries should invest more in infrastructure that enables the continent to host more of its Internet-related content within Africa, rather than in Europe and the US. Mark Tinka, head of engineering at fibre-optic cable company Seacom said African Internet users are starting to enjoy the benefits of faster access to key web resources and lower latencies as telecom providers step up the rollout of content delivery networks (CDNs), but charges remain high.
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