Computer Warehouse Group (CWG Plc), at the twilight of a five year strategic plan to take the company in a different direction into a more robust subscription business model, paused to evaluate the progress achieved, and the impact on her hitherto traditional business, underpinned by technology sales and support to major enterprises in Africa.

According to Austin Okere, group chief executive officer, “we crafted the plan code named CWG2.0 in 2010, realizing back then the pervasiveness of cloud computing, and the major enablement for this in our region following the increase in broadband access from 0.65tb to a combined capacity of 9Tbits per second. We were very clear that while our tremendous growth over the years had been propelled by our traditional businesses in hardware and software sales and support, and VSAT bandwidth vending, these represented mature and declining margin businesses, the import of which have been evident in our recent Financial Statements”.

The uptake of the company’s New Cloud products not only in Nigeria but also in Ghana, Cameroon and Uganda proves that  her emerging business model of providing cloud services on a subscription basis is scalable, repeatable and transferable, albeit relatively more sustainable and profitable.

Following her listing on the Nigerian Stock Exchange in November last year, the company has vigorously pursued her CWG2.0 initiative with the commissioning of a tier 3 Data Centre and the release of many products, which have been solely locally developed, or in collaboration with other innovative Companies such as MTN Nigeria, Diamond bank and Ericsson among others.

According to James Agada, chief technology officer of the group, ‘CWG2.0 is all about the freedom to dream and the passion to execute. CWG2.0 defines the future direction of our company. In summary it is a social impact investment initiative directed towards empowering the African Entrepreneur.’

CWG2.0 comprises products such as SMERP, an online resource planning solution that enhances proper business inventory management by business owners; Openshoppen, an e-commerce site that provides multiple shop owners the opportunity to open virtual shops online, complemented by an integrated secured payment gateway, thereby allowing online buyers to pay for products and services with their cards.

CWG2.0 also includes a Payment Terminal Service Provider (PTSP) smart grid solution, and various cloud services which promote the Cashless policy initiative of the Central Bank of Nigeria.

The company’s SMERP product has received increasing interest, with different channel partnerships being developed for rapid deployment of the product.  There is a lot of interest for this service from individual merchants, banks and other organizations that support SME business.

CWG is currently nurturing relationships with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the Bank of Industry, as well as other Agencies charged with the support and growth of Small and Medium Enterprises in Nigeria to take advantage of her vast offering.

In addition, CWG has entered into strategic partnership with SES Astra, a Satellite Services provider to provide teleport and platform services for the pioneer satellite-based free to Air and free to View digital Television system that will launch commercially in Q4 2014.

According to Gbadebo Adesina, head of Power Business at CWG, ‘the audacious plan to privatize the power sector has unveiled a new revenue opportunity for us, as we have partnered with a company in India to provide a key solution to address the technical and non-technical loses in power distribution. Our solution which provides an effective medium for energy audit and revenue assurance is currently undergoing proof of concept with two of the largest DISCOs in Nigeria, and we expect that this new line of business will be at implementation stage by Q3 2015’. 

‘With the full launch of this solution, CWG shall generate an additional source of revenue, not unlike the volumes witnessed during the telecoms boom earlier in the decade’ he continued.

According to Remi Adeloye, CWG financial controller, ‘CWG’s 2014 first half of the year revenue of N8.3b is 16% below 2013 N9.9b, while Gross Profit N1.6b is 23% below 2013 N2.1b. The lower H1 revenues is a reflection of the continued decline in margins on traditional IT infrastructure business due to commoditization and competitive pressures, as well as viable alternatives in the Cloud Computing Frontier’.

Continuing, Mr. Adeloye said ‘the financial position of the group remains strong with adequate liquidity, leverage and efficiency ratios. H1 2014 Current ratio improved to 1.5 as against H1 2013 which was 1.4 signifying strong liquidity and adequacy of working capital to meet transactional needs. Also CWG’s leverage Debt to Equity ratio remains low at 9% as against 10% in 2013.’

Emphasizing the imperative in the shift in strategy, the CWG Boss, Mr. Okere added ‘we consider the refocusing of our business into a subscription based model as a dual advantage play. In addition to being a more sustaining strategy, it maximizes our social impact investing on the economy of Africa, and helps to create jobs by empowering entrepreneurs in the countries of our operation. The dip in our H1 numbers while expected, will be more than compensated for when the full import of CWG2.0 comes fully on stream by H2 2015.’

With the rebasing of Nigeria’s Gross Domestic Product (GDP) to $509.0b (N80.3trillion), capturing the recent growth effects in sectors such as telecommunication and the movie industry (Nollywood), and with the fast growth of the ICT sector, contributing about 8.3% of current GDP, Mr. Okere’s optimism is not far-fetched.