Convergence: Where are opportunities, challenges?

Tuesday October 13 2020

Music has been digitised and streamed online, allowing people to listen to it whenever and wherever they want. PHOTO | COURTESY

By Justus Lyatuu

The journey towards a digital future has already started, with some industries converging operations to enjoy the returns on their investments.
 In the business world, keeping costs at bay while maximising efficiency ranks high up among the targets.
If two or more entities can come together to form one bloc or a new team with one purpose and vision to achieve that end, hence the term convergence.
With the Coronavirus disease (Covid-19) still on rampage, this trend is only getting entrenched. This mode of operation suits tough times like these occasioned by the Covid-19 pandemic.  
Proponents of convergence believe that this model will eliminate unwanted costs and create a leaner but efficient team.
Take for instance, Nation Media Group (NMG) which decided to go the convergence way three years ago. NMG in Uganda owns NTV and Spark television stations; The Daily Monitor, The East African, and Ennyanda, a local sport publication.  This is in addition to two radio stations-KFm and Dembe FM, let alone various vibrant online platforms and publications it offers such as My Wedding, without forgetting the courier side of the business.
Under the convergence arrangement, print journalists file stories in three or more platforms owned by NMG that include TV, radio and still write for the newspaper.
Mr Sam Barata, the general manager- Commercial at NMG Uganda, says the company started by converging top management.
He further explains that the ‘top’ of sales, finance, human resources , IT and editorial were converged on the top of that. However, the key departments of sales and editorial have further converged but at the bottom, “We left it to grow organically.”
“We gave it time. We started doing it on a project basis where we identify projects and work on them in a convergence style, you will not find one doing only for TV, print or radio. We have been able to score major successes,” he says.
The biggest challenge is the staff culture and attitudes. “What we are trying to create is run on different cultures so you have to find a balance which is not easy,” Mr Barata explains, adding: “Convergence means I’m changing who you are, and what you do. It requires you to do things from different sections.  But with convergence, this forces people to adapt to a new way,” he says.
Efficiency will reflect in how the company performs. 
Mr Barata argues that sometimes people fail to realise that the company is evolving; moving away from being a media company to a profit company. With convergence, people should be willing to change.
“As all this is happening, the market is also changing. That also pushes the growth, our readers, listeners and viewers are moving on and we have to be ahead of them or find them where they are,” he says.
What convergence  requires 
Mr Barata says all this requires new skills for both the managers who are leading the convergence and staff who will work in that new environment. 
“Skill sets must be refreshed to fit into the new arrangement, for instance, technology takes centre stage. I should be able to do things in time, both at TV radio and the newspaper. All this needs new skills,” he says.
He adds, “If you handle it very well, it’s a major win for everybody because it creates efficiencies. You will find resources which were underutilised doing very well and giving you more.”
Mr Barata admits that in the short term, it reduces on the workforce as you put human resources where you had gaps and deploy where there is a shortfall.
“For me who runs sales operations for NMG, I no longer need to have a team for radio, online, paper and TV. I have a team that does everything. But we are still not where we want to be as a Group but slowly, we shall get there,” he says.
Additional advantages include reducing redundancies.
“We used to have HR managers TV, Monitor Publications now we have one HR, the NMG,” Mr Barata explains.
Mr Denis Kakembo, the managing partner, Cristal Advocates, believes convergence makes sense for local groups of companies, instead of duplicating services that are used across the board of the entire business.
He adds; “Convergence reduces costs of operations such as salaries and taxes.”
“You may lose out when shared hubs are not located in Uganda, meaning your people lose out in employment. But it is a good initiative of cutting costs of developing servers in every country you operate in,” he says.
Ms Susan Khainza, Chartered Financial Account, says the advantages of convergence lies in cutting costs and enjoying the economies of scale.
She explains that if you have suppliers, companies are able to get better rates and pick ideas from each other which is good for the businesses.
However, Ms Khainza says the downsides may be lack of socialisation and focus. 
“Employees can lack focus especially if the convergence is on an international or regional scale,” Ms Khainza says.
Share cost 
Companies should have separate accounts and each should contribute but the revenues should remain with the individuals units.
Khainza argues, “If you mix the revenues, the problem will be like socialism which doesn’t work in business where some will benefit more than what they put in.”
“Each should contribute to the cost at certain percentages but the revenue should be given to the individual business unit first then consolidated,” she says.
For instance,  “NTV, Daily Monitor have their budgets. So there should be an individual budget then a master budget. If there is a lawyer that presents NTV, KFM and Daily Monitor, each business unit should contribute to that cost of the lawyer.”