In November 2016, a BMI-TechKnowledge (BMI-T) report, compiled on behalf of global technology firm, Citrix, revealed that local business leaders were failing to acknowledge the importance of digital transformation.
After conducting interviews with 329 business leaders and technical respondents from 254 companies across industries from finance and manufacturing to health, education, and media, they found that “digital transformation readiness” was not a top priority for SA’s business decision makers.
Over 50% of respondents confessed that they were investing in new technologies simply to “keep the lights on”, rather than leveraging these innovations to give them a competitive-edge.
Fast-forward to the middle of 2017 and the picture may be improving but only marginally so. According to market analyst firm Frost & Sullivan, digital transformation among SA telecoms operators is still in the early stages, especially when one compares our local telcos to those in developed economies.
For example, in 2016, IT spend stood at 3.9% of operators’ revenue in developed markets. It was between 2.3% and 3.3% for local operators over the same period, according Frost & Sullivan. Deepti Dhinakaran, a senior research analyst for the Digital Transformation Practice at Frost & Sullivan, attributes this to the country’s relatively lower connectivity rate.
Perhaps quite unsurprisingly, the report did cite the mobile communications market as a key contributor to SA’s current digital transformation. And Dhinakaran acknowledged that local telecoms service providers are leveraging the popularity of mobile communications to boost uptake of various digital offerings.
What Dhinakaran is seeing in the local telecoms space, is that South African operators are responding to changing industry dynamics by expanding their offerings to cater to different needs and different segments of the market.
“Market consolidation is rampant in the South African telecommunications services market, as operators are looking to build the capabilities required to position themselves as end-to-end ICT and digital solutions providers. It is evident that aggressive service diversification, increasing market consolidation, and organisational restructuring are crucial to enabling South Africa’s telecommunications operators to transition towards becoming exceptional end-to-end digital services providers,” he says.
So, where to from here?
Figuring out how to boost digital transformation will be a focus at the upcoming Growth, Innovation and Leadership (GIL) Africa Summit hosted by Frost & Sullivan Africa in Cape Town in August.
According to Hendrik Malan, partner and operations director at Frost & Sullivan Africa, in order for South Africa, and Africa more broadly, to make real digital transformation strides, they require a fundamental shift across processes, functions and customer engagement. Basically, making this shift calls for businesses to take the time to develop a real, strategic digital strategy.
“Growing expectations from digitally empowered customers require enterprises to align their digital business strategies with their core business strategies,” he says.
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