Altron has identified more than 100 artificial intelligence (AI) use cases across its business and customer operations, as it steps up investment in the technology to improve productivity, customer experience and software development.
The technology group’s AI factory, developed to help South African businesses adopt and deploy AI, is already delivering operational benefits, including improved document processing, more efficient customer support and faster software development.
Speaking to ITWeb last week following the release of Altron’s interim results for the six months ended 31 August, CEO Werner Kapp said the group was seeing significant value from its AI investments, although the initiative was not primarily intended to generate direct revenue.
“The AI factory for us, it’s not about revenue. We don't expect us to announce two years from now we’re going to make half a billion with revenue in the AI factory. That was never the intention,” he said.
“We’re not a big cloud hyperscaler. We sort of provide it. We really did it to be able to invest in this technology to bring it to South Africa for our corporate customers.”
Kapp said the group is already using AI to improve customer operations, particularly in its Altron Digital business, which provides outsourcing services.
One application involves a large customer operation supporting 250 sites and processing more than 1 000 calls a day.
The workload placed pressure on employees, profitability and customer experience, prompting Altron to deploy AI to help manage the volumes, he explained.
“We’ve deployed AI there really at scale, which is helping us just to handle those volumes a lot better.”
Kapp noted that the deployment has resulted in significant improvements in customer satisfaction and profitability, while enabling the business to handle more work with the same number of employees.
Another application involves helping external customers manage document workflows more efficiently, while AI-assisted coding is accelerating software development within Altron’s platform businesses.
“The way we can now accelerate the development of new code is just unbelievable, which again improves our speed to market.”
Kapp said Altron has also prioritised AI training across the organisation, starting with its executive team before extending the programme to employees.
“We call it AI everywhere, so really embedding AI throughout the organisation.”
He stressed the importance of responsible AI adoption, saying employees need to understand how to use the technology effectively and safely.
“I think the reality is to make sure we remain relevant and our people remain relevant within the South African economy and globally.
“If a human combines with AI, you can get great outcomes.”
AI investment
Asked when Altron expected its AI factory investment to generate a return, Kapp said the group was less concerned about a specific financial payback timeline than the broader value the technology could deliver.
He said Altron can provide an expected break-even timeline for its current investment, but is already discussing further investment to expand the value the AI factory can generate.
“We're prepared to invest more in this just because of the value that we see.”
Kapp added that the strong internal adoption of AI had been particularly encouraging.
Strong revenue growth
Altron's AI push comes as the group reported its strongest revenue growth in five years, with profits growing faster than revenue during the reporting period.
Kapp said the results reflected progress in the group's multi-platform strategy, which focuses on higher-growth, higher-margin and annuity-driven technology businesses.
“The strongest revenue growth in five years is really pleasing. What's even more pleasing is that profits are growing faster than revenue.”
He also highlighted cash generation, with cash conversion increasing 33% year-on-year.
The group's performance was supported by continued contributions from its platform businesses, particularly fintech and Netstar, as well as a turnaround in Altron Digital.
Altron Digital accounts for about 30% of group revenue. Kapp said the business increased revenue by 8% year-on-year, outperforming a market growing at about 4.5%.
He said the performance was particularly encouraging given that some of Altron's largest competitors are growing at roughly half that rate.
The multi-platform strategy has also changed the group’s earnings profile, with platform businesses now contributing more than 90% of its earnings before interest, tax, depreciation and amortisation.
Kapp said the strategy has shifted Altron towards more scalable businesses with stronger unit economics and greater recurring revenue.
“When I joined Altron, we were making about R490 million worth of profit for a full financial year. Four years later, we made over R600 million worth of profit in the first half of the year,” he said.
He said the group is now focused on building a stronger business through technology platforms, people and sustainable returns.
“We're excited to build not just a bigger Altron, but a better one – strong technology platforms, good people, good returns and sustainable value for customers, partners and the country.”
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