While SA ranks ahead of India, Brazil, and Russia on digital competitiveness, the country's digital adoption prowess has not yet translated into industrial growth.
This was the word from Raghav Narsalay, MD of Accenture Research, unpacking the latest whitepaper findings based on research conducted by Accenture in partnership with the Gordon Institute of Business Science (Gibs), released yesterday at the Gibs/Accenture event in Johannesburg.
The report reveals that although South Africa's digital economy based on its strengths in areas such as technology skills makes it stand out among its emerging market peers. However, the country's digital adoption has not yet translated into driving industrial growth.
The report surveyed senior executives from 23 leading South African companies in manufacturing and production sectors, who formed part of the larger global survey group of 1 000 decision-makers spanning over 20 countries.
"SA's growing maturity in the digital space, along with heightening executive intent to adapt digital is really not translating into driving national growth. While the country's DGP growth has gone up by a few notches this quarter, if you look at the slow growth in the manufacturing industry, you will understand that it is not something that is driven by the implementation of digital technologies. So digital per say is really not seen as a contribution to South Africa's growth in comparison to its ranking on the international structure," explained Narsalay.
South African companies, according to the report, also tend to mimic digital strategies of large industrial nations which prevent them from contextualising digital strategies to their own industrial reality and as a result, often fail to customise their offerings to meet rapidly changing customer expectations.
What is most troubling, notes the report, is the performance of South Africa's manufacturing sector, where growth has been flat for a decade.
"For South African companies to generate the improvements that will enable them to leapfrog to digital leadership, they must reinvent their operating models completely and rethink production and value chains. To succeed, companies need to move to what Accenture calls "industry X.0", which is the full digital reinvention of how companies and industries work by leveraging the combinatorial powers of digital," Narsalay pointed out.
Yusof Seedat, director at Accenture Research, said to facilitate this change, local companies need to build an ecosystem of suppliers, distributors, start-ups, and customers, which will allow them to scale new business models rapidly.
"Companies must reimagine and rebuild their businesses as smart, connected, living and learning entities to digitally reinvent their industry.
"They also need to build their core engineering and production systems around digital technologies that drive new levels of efficiency. They need to ensure that physical machines and software systems are synchronised to unlock previously-unseen cost efficiencies - thus driving up investment capacity," he added.
The report further highlights that local companies need to build a 'digital-ready' workforce, use digital to focus on customer experiences and outcomes, and carefully balance investment and resource allocation between the core business and new businesses to synchronise innovation and growth.
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