South Africa's businesses are slowly adopting digital transformation, but many still lag.
This is according to the Dell Technologies Digital Transformation Index (DT Index). The survey found that only 8% of South African businesses are 'digital leaders'.
The DT Index, which was completed in collaboration with Intel, maps the digital transformation progress of mid-size to large companies and examines the digital hopes and fears of business leaders.
Customer demands
The study reveals 13% of South African heads of business believe their organisation will struggle to meet changing customer demands within five years and 19% fear they will be left behind.
The DT Index's calculations are based on companies' perceived performance in the following areas: delivering against the core attributes of a digital business, their existing IT strategy, workforce transformation strategy and planned investments.
Two years after the DT Index's initial launch in 2016, Dell Technologies and Intel more than doubled the scope of the research, from 16 countries to 42 and benchmarked 4 600 businesses, using the following groupings: digital leaders, digital adopters, digital evaluators, digital followers and digital laggards.
The DT Index tracked movement across various groups. For instance, 23% of businesses are now categorised as digital adopters. These companies have advanced digital plans and innovations in place to power their transformation.
However, the DT Index also reveals too many companies are still in the bottom two groups, meaning they are either moving too slowly, or don't have a digital plan in place.
According to the research, 90% of South African businesses are facing major impediments to digital transformation today.
The top five barriers to digital transformation are the lack of the right in-house skill sets and expertise; data privacy and cyber security concerns; lack of budget and resources; regulation or legislative changes; and lack of alignment and collaboration across the company.
Dell says these barriers are hampering digital transformation efforts. For instance, 77% of South African business leaders believe digital transformation should be more widespread throughout the organisation. Only 16% strongly agree they will disrupt rather than being disrupted within five years.
"We've talked about being on the cusp of tremendous change for some time now. That's no longer the case," says Doug Woolley, GM of Dell EMC South Africa.
"The next digital era has arrived and it's reshaping the way we live, work and conduct business. Which means that time is of the essence. Genuine transformation needs to happen now, and it needs to be radical."
Overcoming barriers
The research indicates businesses are taking steps to overcome their barriers, along with the threat of being outmanoeuvred from more nimble, innovative players.
"Although progress in these areas is patchy or slow, we can see this with 64% of local businesses using digital technologies to accelerate new product/services development; 64% of businesses building security and privacy into all devices, applications and algorithms; and 53% striving to develop the right skills sets and expertise in-house, such as teaching staff how to code," Woolley says.
The survey found that 60% of the respondents are sharing knowledge across functions, by equipping IT leaders with business skills and business leaders with IT skills.
Companies are also turning to emerging technologies and cyber security to power (and secure) their transformation.
For the planned investments within the next one to three years, the survey found 65% of South African businesses intend to invest in cyber security; 49% intend to invest in Internet of things technologies; 46% intend to invest in multi-cloud environments; 41% intend to invest in flash technologies; and 34% intend to invest in compute-centric data centre design.
A small but significant number of businesses are planning to experiment with nascent technologies. Some 20% will be investing in blockchain, 18% in quantum computing and 20% in virtual reality or augmented reality.
"It's an exciting time to be in business. We're at a crucial intersection; where technology, business and mankind meet to create a better, more connected world," adds Woolley.
"However, only technology-centred organisations will reap the rewards offered by a digital business model, including the ability to move quickly, to automate everything and to delight customers. This is why digital transformation needs to be a number one priority."
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