Automation of SACCOs - FSD Kenya

social factors. The first would be to generate as much cash flow as possible
in the long term with as little volatility as possible. The second would be to
increase outreach and inclusion with regard to financial services in the society
the SACCO operates in.
The business case will require an in-depth understanding of the financial
performance of the SACCOs. One of the fundamental challenges that it
needs to help analyse is if the business volume and profitability is sufficient
to independently support the acquisition of an application. Essentially the
depreciation and running costs of the system per user and year might not be
recoverable from cost reductions and increases in revenue that the system
directly or indirectly contributes to if the SACCOs model is too weak or too
small. Several SACCOs are currently underperforming 7 but this is not solely
due to poor use of IT. It could be that even if this factor is improved that the
SACCOs cannot realise the benefits due to other limitations and the automation
would lead to a loss. For smaller SACCOs it could be that, even if they realise
significant benefits, that the absolute value of these do not compensate for the
minimum cost of a competitive system. As regulatory compliance will be one
fundamental reason to automate it could be that a SACCO automates even if
the business case does not support it but at least the SACCO is aware of what
value has been lost in the short term and how to compensate.
The SACCO’s contribution to the automation
Once the SACCO has established what purpose the applications needs to fulfil
it needs to be specified how the application will do that in terms of detailed
functionality to deliver each business process. In order to do this the SACCO
will benefit from having business processes documented at a high-level or
at detail. Such documents will also significantly facilitate the gap analysis
conducted by the vendor to identify any need to customise and configure the
system. Without a proper gap analysis the vendor would struggle to make any
significant warranties or price the system, implementation and support. The
business case needs to be updated in parallel with the requirements gathering
to assess the financial viability of the specification that is emerging.
In addition to informing the internal decision process and contributing to the
functional specification, the SACCOs need to be able to establish relationships
with vendors, to assess them and negotiate an agreement for the application
acquisition, implementation and support. This requires in-depth knowledge of
the applications in order to evaluate prices and conditions.
Prior to implementation and to making any significant payment instalments
sufficient testing of the system is required. The vendors are responsible for
the technical and functional tests (component, integration, performance and
system test) but the SACCO needs to provide proficient users to enable the user
acceptance test (UAT). These users will need to have access to some kind of
7 WOCCU impact analysis.
AUTOMATION OF SACCOS: ASSESSMENT OF POTENTIAL SOLUTIONS • 33
documentation of the processes that the system needs to support, otherwise
the user acceptance test will be heavily dependent on the individual and take
an almost random character. The relevance of the user acceptance test is also
dependent on the experience and skill of the testers. An inexperienced user is
unlikely to be aware of the most challenging events or outcomes of the SACCOs
processes that should be used to stress test the system.
The automation will most likely be one of the larger projects undertaken by
the SACCO at any time and it is unlikely that the SACCO management will have
experience of managing such a project to ensure that it is delivered on time and
in accordance with requirements. If the SACCO fails to fulfil its commitments
to the process, the risk is that the vendor’s warranties for the implementation
will be void and the SACCO could be further exposed to delays and even quality
issues etc. As system implementation is a practically non-recurring event that
requires expertise outside the core SACCO business it is more effective to
obtain assistance from independent consultants who are experts in this field
than to take the risk of managing the project completely independently. It is
worth noting that even if the vendor has previous experience it will be from a
different perspective and they will not be objective.
6.1.2 Connectivity
None of the SACCOs the project has visited has achieved a branch network
that is continuously fully integrated in-real time or to any other practically
relevant updating frequency between the locations. The root cause appears
to be twofold.
Firstly the available infrastructure is insufficient or prohibitively expensive for
the SACCOs. The options available are mainly land or mobile networks provided
by the telecom operators, ‘lease lines’ or satellite networks. To achieve a full
integration of the application across a branch network dial-up is not sufficient.
Mobile telecom networks need to be of sufficient bandwidth as, even if the
vendors have tried to optimize, the applications would be as very slow when
integrated through e.g. 0.5-2mbit/s. The mobile networks do suffer from
disruptions and at locations in radio shadow there is no connectivity rendering
them sufficient for synchronisation and reporting on an infrequent basis only.
Satellite connections offer better reliability and bandwidth but at remote and
mountainous locations SACCO branches have proven unable to connect to the
satellite base stations as there is no direct line of sight. Lease lines provide the
most reliable option with the best bandwidth but as of yet SACCOs have found
this option very costly. Digital subscriber line (DSL) connections using the fixed
line telecom network would not completely resolve the issue as it is not yet
available in all locations where branches of the FOSA SACCOs exist.
Secondly the vendors do not appear fully capable of integrating the branch
network even when there is a connection. The cause for this remains to
be confirmed but it needs to be considered that the branches de facto are
currently not connected despite the vendors’ efforts.