Towards the end of September 2017, South Africa emerged from the recession with a second quarter growth of 2.5%. After several years of complex economic performance and relentless downgrades from global ratings agencies, it is a positive result. However, it is a short-lived one. The outlook remains dark as the country could see even more downgrades, this time from Moody’s and S&P Global Ratings.
The unemployment situation is dire. Existing downgrades are impacting on banks and the World Bank has made it clear that the 2.5% isn’t enough, cutting its economic growth outlook to 0.6% from its original estimate of 1.1%. Organisations are facing complex growth conditions and mercurial markets, tightening belts and cutting costs to ensure they are ready to ride the perfect storm hitting the South African economy.
But the challenge isn’t surviving in the current climate; it’s thriving within it. Organisations aren’t about to shrug their shoulders and walk away from these challenges. The situation can be changed and organisations can benefit. Agility, planning and the right resources not only ensure a sustainable legacy, but have the potential to ignite growth.
The World Bank’s country director for South Africa, Paul Noumba Um, highlighted the importance of innovation in transforming the country’s low growth environment. He was speaking in light of the South Africa Economic Update, Innovation for Productivity and Inclusiveness report released by the World Bank in September. Innovation is essential to improving the business climate and, to follow the tired cliché, unlock untapped potential.
The challenge facing most organisations is to find a profitable pathway between long-term sustainability and investment into solutions that will allow for growth and scalability. The juggle between staying in business and staying relevant has never been more complex. Harnessing the capabilities of digital has become critical as it allows organisations to compete for customer attention and differentiate from the noise. But it comes at a cost. However, which cost is higher: being left behind or managing the bottom line?
A study commissioned by Microsoft found that organisations that don’t transform digitally will be left behind. Many pundits predict that enterprises that ignore digital will be more than left behind: they will fail. Digital is more than hype, it provides the organisation with insights and capabilities that allow it to cut costs, improve productivity and enhance processes. Volatile markets and drooping currencies are affecting this investment, but if companies don’t have the ability to change alongside their customers or move ahead of their competitors they won’t exist in 5-10 years.
Cloud
Digital transformation must be tied to a strategy and allow for the organisation to optimise those processes that fit within this strategy. Random investment will do little more than add unnecessary bulge to the budget. Technology must do something for the business and it must be integrated throughout the business. Cloud, which is the ability to deliver computing services over the Internet, has changed the playing field significantly. This is especially the case within South Africa, now that the local infrastructure and connectivity challenges are being addressed. For those that want the benefits of digital without the heavy hardware investment, the cloud mitigates many of the challenges around cost and investment.
Two of the most relevant resources in supporting digital transformation are customer relationship management (CRM) and enterprise resource management (ERP). The former allows for real-time communication and customer-relevant information sharing, which helps make every customer interaction more meaningful and goes a long way in deepening client relationships. The latter provides businesses with a real-time view of virtually every facet of their operations from production and inventory, through to order processing. This solution allows for easy integration into existing IT systems, and offers companies seamless links into social selling software, enables employees to gain actionable insight and allows them to visualise these insights by turning data into easily comprehensible charts.
Integrated with one another and across all silos of the organisation, the ERP and CRM applications provide the business with one version of the truth. And with copious quantities of relevant data that can be used to make sustainable business decisions. The cost of implementation can be managed across licences and most reliable cloud service providers allow for scale, both up and down depending on budget and requirements. Pay as you go isn’t just for mobile phone packages, it is the go-to model to allow for scalable success in tight economic times. Few organisations are interested in the all-or-nothing approach anymore and they shouldn’t be, not when digital is available on demand.
One of the most relevant benefits of a digital transformation strategy is the insight it delivers. The value of business intelligence cannot be understated, especially in light of how it can provide crucial commercial insights. Understanding the financial impetus and impact of every silo, department and product gives the organisation an extraordinary view of the business. It is a view that was inconceivable even five years ago, but if an organisation doesn’t have access to it over the next five years, then it will at a disadvantage.
A survey undertaken by International Data Corp and Microsoft found that those organisations that have invested in digital transformation have seen measurable results. In South Africa, 32% have seen better scalability and flexibility with 33% appreciating access to data anywhere at any time. Digital transformation is not just a marketing tagline, not for those that recognise its importance in the digital age. It enables the business ecosystem, giving organisations the sharp edge needed to slice through economic instability and maintain long-term scalability.
- Kethan Pharboo is chief marketing and operations officer at Microsoft South Africa
