The 'Digital Corporation in South Africa 2021' study, undertaken by technology market research firm World Wide Worx, shows that one-in-four medium-sized and large companies in South Africa are fully digitally transformed and that about one-third of companies will not insist that employees return to offices, indicating a move to a hybrid work strategy.
However, if the proportion of companies that have advanced digital transformation initiatives is included, about half of companies in South Africa are digitally transformed, and a further one-third of companies have embarked on digital transformation strategies, says World Wide Worx CEO Arthur Goldstuck.
The study interviewed decision-makers from 400 medium-sized and large companies in South Africa, with about one-third of respondents being from companies in the manufacturing sector.
Medium-sized companies, with 51 to 200 employees, were more likely to be fully digitally transformed. However, compared with large companies with more than 200 employees, a larger proportion of medium-sized companies had also not started with any digital transformation strategies.
Further, 49% of medium-sized companies increased spending on information technology (IT) compared with 44% in 2020, which while not massive, is statistically significant. This does indicate that medium-sized companies are slightly more nimble than larger companies, says Goldstuck.
Almost half of the 400 respondents indicated that their companies had invested more in IT than in the previous year, which indicates a strong awareness of the need to embrace technology to enable companies to continue operating, as well as to equip employees to work from home.
Meanwhile, the manufacturing sector has further closed the gap with the level of digitalisation in other sectors, but faces challenges owing to the physical processes and complexities of implementing automation and other digital technologies.
“Automation is a key element to improve efficiencies, but it is more costly to implement in the manufacturing sector. The main goal of any investment in digital technologies and information and communications technology (ICT) by manufacturers is to reduce production time and improve efficiency.”
Further, the picture of automation is vastly different in the manufacturing sector than in other sectors because of the specific needs and processes, with more than 90% of respondents from the sector indicating that they aim to achieve higher output and produce varying products as the single largest benefit of automation, says Goldstuck.
Other objectives for automation projects in manufacturing include having more accurate data, being price competitive with offshore companies and to improve product quality and customer satisfaction.
“The barriers to implementing ICT in manufacturing are different. The primary barrier is the high cost associated with automation and robotics. Updating production technologies is difficult and expensive because of the investments in the existing systems. The cost and complexity of automation are the key barriers to adoption in the manufacturing sector,” he says.
Further, similar to other sectors, quality is the key factor in buying decisions and is more important than the cost of the investment. It is not just buying the equipment and resources required to digitally transform, but operating the systems is critical for manufacturing's adoption of digital technologies.
However, the study concluded that, given the complexity of digital transformation and the uneven nature of digital transformation, as well as the fact that about one-in-five digitalisation projects have been significantly impacted on by the disruption of the Covid-19 pandemic, there is not yet a new normal or new way of working for businesses in South Africa.
“Companies have become far more demanding. Factors like relationship and future-proof of solutions, each cited by 86% of respondents, indicate a more discerning customer and the full set of criteria becomes almost a rule book for IT providers. The new normal is not only about providing for digital and mobile needs, then, but also about servicing a new kind of corporate customer,” says Goldstuck.
“Emerging technologies such as artificial intelligence, machine learning, big data and robotics are yet to become top budgeting priorities. However, what is a positive trend is that we are seeing IT spend being allocated to almost every aspect of the business and operations, laying a solid foundation for future transformation,” says industrial enterprise resource planning company Syspro solution engineering head Deirdre Fryer. Syspro is one of the partner companies in the study.
Further, IT multinational Dell Technologies South Africa confirms that technology has served as an enabler to remote work since the onset of the pandemic.
While most companies have embarked on some sort of digital transformation pre-pandemic, efforts to digitalise slowed with the need to focus on remote working set-ups with connectivity standing out as a priority, says Dell Technologies South Africa systems engineering director Greg McDonald.
“There is a direct correlation between how transformed an organisation is and how equipped it is to facilitate remote work. The Fourth Industrial Revolution is here and budgeting priorities show how organisations are mobilising in response to this, with business intelligence, cloud computing and software-as-a-service at the top of the spending list,” he says.