Chapter 2 DEFINING THE IT INDUSTRY

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1 Chapter 2 DEFINING THE IT INDUSTRY 2.1 Introduction As technology convergence proceeds apace, setting the bounds of the IT Industry becomes ever more difficult. Inevitably, standard definitions in long use become outdated and perhaps even misleading. This needs to be offset against the clear requirement to maintain comparable statistics in order to discern trends and to make inter-country comparisons. This study uses the OECD definition of the IT industry as outlined in Section 2.2 and will, where possible, categorise the results obtained into the Standard Industry Classification system (SIC) and the North American Industry Classification System (NAICS). 2.2 Applying the OECD Definition of the IT Industry The OECD definition of the IT industry forms the foundation for this study: it is a compromise, limited to those industries which facilitate, by electronic means, the processing, transmission and display of information, and it excludes the industries which create the information, the so-called content industries.the definition would include the following International Standard Industrial Classification (ISIC Revision 3) codes: Table 1: International Standard Classification (ISIC) codes Manufacturing 3000 Manufacture of office, accounting and computing machinery 3130 Manufacture of insulated wire and cable 3210 Manufacture of electronic valves and tubes and other electronic components 3220 Manufacture of television and radio transmitters and apparatus for line telephony and line telegraphy 3230 Manufacture of television and radio receivers, sound or video recording or reproducing apparatus, and associated goods 3312 Manufacture of instruments and appliances for measuring, checking, testing, navigating and other purposes, except industrial process control equipment 3313 Manufacture of industrial process control equipment Services -- goods related 5150 Wholesale of machinery, equipment and supplies 7123 Renting of office machinery and equipment (including computers) Services intangible 6420 Telecommunications 7200 Computer and related activities Source: United States Government Site: SAITIS Baseline Studies 3

2 The important points to note about this definition of the IT industry is that it includes: a) A variety of manufactured goods, including television transmitters and receivers, electronic components and computer equipment. This would also include the manufacture of networking equipment such as routers and modems; b) The wholesale and rental of computers and office equipment such as faxes and photocopiers; c) Group 6420 (Telecommunications), which covers services supplied by fixed line operators such as Telkom, as well as services supplied by mobile network operators such as Vodacom and MTN. Effectively, the revenue earned by organisations such as these would be included in that allocated to the IT industry; d) Services Computer and related activities would include professional services such as computer consulting, software integration and the provision of outsourced services such as software maintenance; e) Content providers are excluded - although the equipment they might use would generally be included. Therefore, makers of videos and movies would be excluded whereas manufacturers of video equipment would be included. 2.3 Definition Constraints In South Africa, the Standard Industry Classification System (SIC) system is commonly used. It corresponds in large measure to the ISIC classification; however, the coding system is different. In this document SIC will be used unless otherwise stated. The use of the OECD definition and indeed the SIC classification codes have a number of constraints for this study. These are: The SIC codes, in particular, do not adequately reflect the reality of technology changes that have occurred over the past decade or more, and are hardly used in South Africa outside of a few Government agencies. Accordingly, industry specialists (such as BMI-T and the PricewaterhouseCoopers (PwC) Technology Forecasts), associations and companies offering mailing lists do not normally classify their data in this way. Data captured using another classification scheme has to be mapped onto the SIC (or NAICS) codes, with a corresponding loss of accuracy. South Africa has traditionally been a user and distributor of technology developed elsewhere, and has, and has always had, a relatively small manufacturing industry. The SIC system has a heavy emphasis on manufacturing, with little differentiation in the areas that concern South Africa (e.g. in the area of services). Many South African companies show a high degree of vertical integration. They do not, for instance, report separately on the manufacture of smart cards in a business which manufactures, markets, distributes, integrates, develops software and maintains smart card SAITIS Baseline Studies 4

3 systems. Therefore, it may be difficult to extract meaningful information from these companies that corresponds with SIC categories. This report is likely to be read by a wide audience. Therefore, it is important to provide the output in a relevant way. 2.4 IT Usage by Industry category BMI-TechKnowledge, whose data has been used extensively in this report, uses vertical sector definitions as employed by International Data Corporation (IDC) world-wide. A cross-tabulation based on overlap of sectors and some estimation was used to map the IDC/BMI-T sectors to requirements of this study. This mapping is notional, and not exact. According to this mapping, the following sub-sectors and specific large organisations are included in the re-mapped sectors in this report. Manufacturing (SIC Division D) This sector includes the following sectors under manufacturing and distribution. Iron and Steel (SIC Major Group 33) Light and Heavy Engineering (34) Pulp and Paper (26) Petrochemical (29) Chemical (28) Food and Beverage (20) Non food Consumables (21) Automotive (37) Electronics ( 36) Mining (SIC Division B) This sector includes all facilities that mine minerals/quarrying of ore and the like. This sector is large in its contribution to the South African economy, but makes up only 3% of the overall IT market spend in South Africa. Retail (SIC Division G) All retail sectors by SIC classification. Wholesale (SIC Division F) All wholesale sectors by SIC classification. Finance, Insurance and Real Estate (SIC Division H) BMI-T s Banking and Finance sector includes all banking institutions, including the South African Reserve Bank, Development banks, as well as brokers, portfolio management firms and the Johannesburg Stock Exchange. BMI-T s Insurance sector includes short term and long term insurance companies as well as pension fund administrators and medical aid societies. Real Estate is estimated from secondary sources on the proportion of small and medium organisations that are in the real estate sector. Services (SIC Division I) BMI-T s research and education sector includes tertiary educational institutions, as well as research organisations such as the Council for Scientific and Industrial Research (CSIR) and the South African Bureau of Standards (SABS). SAITIS Baseline Studies 5

4 Other services categories are estimated from secondary sources on the proportion of small and medium organisations that are in the services sector (excluding those specifically nominated in other categories). Public Administration (SIC Division J) This sector includes national, regional and local government. The following specific large departments, inter alia, are included in this sector: Central Computer Services / State IT Agency South African National Defence Force South African Police Services Transportation, Communications, Electricity (SIC Division E) BMI-T s transport sector includes Transnet Group including South African Airways, as well as all other providers of transport services. BMI-T s Parastatal Utilities sector includes Telkom, Eskom, SA Post Office, SABC and other smaller state-owned enterprises. Agriculture, Forestry and Fishing (SIC Division A) Estimated as a proportion of BMI-T s Other category, which includes all sectors not yet mentioned, excluding home office (e.g. agriculture, building and construction and entertainment). Construction (SIC Division C) Estimated as a proportion of BMI-T s Other category, which includes all sectors not yet mentioned, excluding home office (e.g. agriculture, building and construction and entertainment) SIC and NAICS Classifications Tables of the SIC divisional structure plus the broad SIC/NAICS correspondence tables can be found in Appendix 2. Information emanating from the Survey will generally be classified into SIC/NAICS divisions only. The second level groupings are included for completeness and will be used where meaningful data is available. The major groups associated with SIC divisions are provided in Table 2. Table 2: SIC Divisions and Groups Division Groups Description A Agriculture, Forestry and Fishing B Mining C Construction D Manufacturing (Includes Major Group 35: Industrial & Commercial Machinery & Computer Equipment and Major Group 36: Electronic & Other Electrical Equipment and Components, except Computer equipment) E Transportation, Communications, Electric, Gas and Sanitary Services (Includes Major Group 48: Communications) F Wholesale Trade (Includes Major Group 50: Wholesale Trade durable goods) G Retail Trade (Includes Major Group 57: Home Furniture, Furnishings, and equipment Stores) H Finance, Insurance and Real Estate I Services (Includes Major Group 73: Business Services and Major Group 87: Engineering, Accounting, Research, Management and Related Services) J Public Administration Source: United States Census Data, SAITIS Baseline Studies 6

5 Where the SIC classification loses definition in the South African context is in areas which are of interest to South African business such as Major Group 73: Business Services. Because of the strong and diverse growth of business services of various types, it would be useful to have a deeper classification available here. 2.5 Categorisation of Jobs and Skills in the IT Industry Overview of Adopted Categorisation for the Study This baseline study has adopted the categorisations developed by the ITNQF, since these were based on studies of international models, and particularly the New Zealand model, which was felt to be closest to South African needs. It is also of interest that these categories match well with Canada s Occupational Skills Profiles Model (OSPM) developed by the Software Human Resources Council. The ITNQF categorisations also tie in closely with the domains defined in the Sector Education and Training Authority for Information Systems, Electronics and Telecommunications Technologies (ISETT SETA) (see Section 7.3.3) and will dictate the occupations which are covered, as well as the areas of unit standards and qualifications Definitions of Jobs and Skills The ITNQF categorisations for jobs and skills are described in Table 3 below: Table 3: IT Domains as defined by the IT National Qualifications Framework (ITNQF) IT Domains Responsibilities Illustrative Job Types Compute Computer operations includes the performance of day-to-day routine physical and logical operations of computer hardware and software, in support of the delivery of an agreed IT service Data Communications and Networking The creation and maintenance of overall network plans encompassing data, voice, text and image processing to underpin IT and IT strategies in support of organisational strategies. Management of the network infrastructure for the delivery of business applications where they are required in the organisation. First line incident handling Routine start-up and close down Maintenance of operating plans and schedules All job functions relating to the: design development manufacturing installation maintenance implementation and operation of computer networking and data communications and Support: Production development manager manager controller Storage / DRP specialist Shift analyst Submissions controller Print support Network manager Network controller / planner / consultant / designer Technical specialist Systems programmer Voice specialist Wide area technician SAITIS Baseline Studies 7

6 IT Domains Responsibilities Illustrative Job Types End User Computing The functions for equipping users with the IT knowledge and skills, which enable effective job performance capabilities. Hardware and Computer Architecture The design, manufacture, installation and support of the hardware infrastructure. Information Systems and Technology Management Support the achievement of goals and objectives of the organisation through management of [IT] resources. Not provided Functions include being able to assemble, install, maintain, upgrade, service and repair information technology equipment Management of resources Align IT with strategic organisational direction Manage change Increase efficiency / effectiveness of organisations Plan and deliver IS services Maintain professional IT standards Ensure continued organisational survival Ensure continued service delivery IT Project Management Desktop support manager Service hub manager Desktop support planning / Co-ordinator Help desk operator/consultant Installations technician IT manager Facilities manager Technical architect Installations technician IS manager IS Director Technical services manager Logistics manager Systems manager IS consultant, Communications specialist Technical infrastructure specialist Database administrator Change control Information Technology Education, Training and Development IT job skills training Ensure efficient and effective job skills training, as prescribed by (deducted from) job profiles. Analyse skills of employees/job holders to ensure correct training. For skills gaps determine and source training, or design and develop training to address gaps. Evaluate the effectiveness of training and ensure trainers are skilled appropriately. Training manager Training officer Support officer Information Technology Sales and Marketing Job functions relating to the marketing and selling of IT related products Have an awareness of and understanding of the application and use of hardware and software products and applications. traits of particular technologies and / or products. Purchasing manager Sales Relationship manager Account manager Purchasing consultant Sales consultant Administrative officer SAITIS Baseline Studies 8

7 IT Domains Responsibilities Illustrative Job Types Systems Development To write and maintain standards for the developing of IT solutions covering the following areas of competency. Business Analysis, requirement analysis, design, construction, testing and deployment, evolution and maintenance, quality analysis, software configuration management and development infrastructure. Development of IT solutions for organisations Manage resources Plan, estimate, implement and maintain programmes of systems development Time management Budget management Quality management Use information systems tools and support services Link technology and the user to enhance the efficiency of the organisation Profession: and Support: Project manager Project leader Applications development Manager Business analyst Systems analyst Analyst programmer Systems engineer / developer Technical specialist Internet / Web developer Web master DTP / graphics / multimedia developer Security / firewall engineer Internet consultant Support Person Source: ITNQF Forum Standards Generating Body (May, 1999) SAITIS Baseline Studies 9

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