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A Focus on Digital Transformation in South Africa

Published on 26 Nov 2020

South Africa is still on the list of developing countries and it’s economy has been further strained by Covid-19, so for businesses operating in the current landscape, digital transformation is a means of survival. Adopting digital technology, along with a digital mindset throughout the organization, allows businesses to recover as well as respond to changes quicker, as it enhances, as well as speeds up processes and enables agility.

We have selected two articles that explore the state of digital transformation in South Africa – how businesses are adapting, as well as the challenges and trends. We also found a report by Deloitte, Africa – their first edition of the Digital Disruption Index – South Africa, which gives great insight into how organizations in South Africa are navigating the current digital landscape.  

Brent Haumann, our Managing Director, Africa, also discusses what is threatening South Africa’s ability to maintain the pace of digital transformation.

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Digital transformation's impact on businesses within South Africa

In this article, we read how digital transformation is changing the way businesses operate. The benefits of transforming digitally are far-reaching, so much so that governments are incorporating digital and ICT transformation programs into their national plans. 

“Within South Africa, The National Development Plan 2030 (NDP) that was published in 2012 emphasizes how ICT will underpin the development of connected information society and a vibrant knowledge economy that is more inclusive and prosperous.”

We are reminded that digital transformation doesn’t only involve technology, but rather fundamental changes in an organization’s business processes, as well as the workforce.  This doesn’t come without challenges though. It is noted that in Africa, the lack of experienced network engineers is hampering the development of internet infrastructure, which means organizations can’t take full advantage of new technologies, such as IoT, AI, blockchain technology and big data. As such, the need for investments in human development and digital skills is highlighted. 

South Africa can leverage technology to further enhance its strength in the mining, agricultural and financial services sectors. Notably, the mining sector is already using digital technology to analyze data and increase efficiency.

 

The path to digital revolution for businesses in SA

The importance of transforming digitally to remain relevant and competitive in today’s environment is highlighted in this article.  Considering the speed of digital, traditional businesses that maintain the status quo will quickly fall behind.

Reynhardt Uys, The group chief experience officer at Immersion Group, shares insight into “adopting and adapting to the way the digital revolution is changing business.” To begin,  Uys gives a definition of digital transformation. We are reminded that it is not just about integrating technology, true transformation involves a holistic approach, involving all areas of the business.  

And in terms of how SA companies are adapting to digital transformation, Uys points out that many companies are beginning to embrace the concept of being technology-led, but still human-centered.  He notes however that while new technology is being implemented because it’s trending, it is not yet fully understood and therefore not being used to its full potential. And also that implementing such tech doesn’t necessarily equate to digital transformation.

Uys discusses the key principles to ensure successful digital transformation in the workplace – with a specific focus on digital design and employee experience. He then speaks about the tools needed, and gives guidelines on developing a digital transformation strategy.  Regarding digital trends for 2020, Uys mentions 5G, ‘smart’ developments, and data analytics. Read further to learn more.

 

Digital Disruption Index – South Africa 2020

This very insightful report by Deloitte Africa is “based on a survey among senior leaders of South African-based organizations and Deloitte Africa’s long-standing research into digital, innovation and the future of work”

Deloitte Africa targeted business leaders “responsible for shaping the digital strategy beyond the realm of technology.” It’s important to note the key difference between a business ‘doing digital’ – which translates into simply automating existing processes and ‘being digital’ – where budgets, people and resources are refocused and the entire organization reinvented.

“One-third of organizations surveyed still do not have a coherent digital transformation strategy, and of the organizations that do, their strategy is often not adequately underpinned by budgets, people and other resources.” 

Key hurdles, preventing organizations from achieving the ultimate goal of ‘being digital,’ were identified as being a lack of confidence in digital leadership and an inadequate talent pool –  “46% of senior leaders are not confident to successfully lead an organization in the digital economy.”

It is noted that access to the right digital skills is a challenge for organizations in the early stage of transformation and there is additional concern around the  digital skills pipeline in South Africa – “Only 24% of senior leaders believe there are enough school leavers and graduates with the right digital skills in South Africa.” Be sure to read the full report for more great insights.

 

What factors threaten the pace of digital transformation in South Africa?

There are many contributing factors that impact the pace and scope of digital transformation.

Here are my top 4 issues that threaten the pace of digital transformation in South Africa:

Data: The foundation of digital transformation is data. Without the ability to access and perform analysis on customer data, an organization’s digital transformation initiatives will be stifled. For traditional banks and insurance providers, the ability to access and interrogate information held on legacy platforms is a challenge.

Priorities: Although digital transformation is an important initiative, it is typically not the most urgent. This is especially true when the expert resources that are involved in the day to day operations and management, are also the team driving digital transformation.

Legacy thinking: Large ships change course very slowly. Changing the culture and mindset of a decades-old business to think digital-first is a huge undertaking. This can result in federated initiatives which result in a lack of cohesion. In direct contrast, fintech and insurtech startups do not have this legacy to deal with.

Brain drain: Digital skills are in massive demand and the pool of resources is contracting. Political and economic uncertainty is driving an exodus of experienced individuals across all disciplines and digital is no different. Consequently, employees skilled in digital transformation initiatives are scarce.

Despite these challenges, progress in cloud technology, mobile infrastructure and broadband will accelerate the speed of transformation in the next 5 years. There will be more collaboration between larger organizations and smaller, more nimble tech companies in order to quickly ramp up their digital transformation.

Brent Haumann

Managing Director, Africa

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