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Digital transformation has the power to enable organisational activities, processes, competencies and models to be transformed. Despite this, there are numerous challenges for digital transformation in Africa. In particular, business culture and technology have the potential to stand in the way. So what are the challenges faced by South African companies and how do they compare with those of African companies?
In South Africa, there is a tendency towards legacy culture, which severely hampers companies’ ability to accelerate digital innovation. There is a lot of bureaucracy, such that administrative procedures are excessively complicated and decision makers are hindered by a lack of confidence. Decisions are made by committee, which takes a lot of time. The lack of focus on using fewer resources and spending less time, which is in direct contrast to practises employed in the rest of Africa, coupled with ever-increasing budget constraints, presents huge challenges for digital transformation in South Africa. Put differently, as is the case with many start-ups, South African companies often do not incorporate Lean thinking in their product development and management practices. This is very different to the rest of Africa, where many companies are naturally more entrepreneurial, lean and agile.
Unlike in the rest of Africa, companies in South Africa do not prioritise the solving of business problems and exploration of new market opportunities. Rather than adopting an outside-in approach like the rest of Africa, South African companies typically adopt an inside-out approach, not taking customer perspectives into consideration first. On the other hand, African companies constantly investigate their business model, with the intention of finding new opportunities to unlock new value for their customers, partners and themselves.
IT departments in South Africa tend to be bloated. They lack agility such that flexible and fast decisions are difficult to make. On the contrary, in the rest of Africa, IT departments are lean, meaning that decisions are a lot easier to make and businesses have the opportunity to leapfrog IT infrastructure and resource issues.
In Africa, mobile money is ubiquitous. Companies such as M-pesa have leapfrogged the market, where mobile money is more prolific than cash or card. This has a big impact on digital transformation as consumers are already using these types of services. IT departments are either small or non-existent in Africa. In South Africa, on the other hand, IT vendors have locked down the market, making decisions and business direction vendor and technology-driven rather than about the business strategy.
Given that we live in a globalised economy, the barrier to entry is lower than ever. Smaller international companies are increasingly able to bring new products to the African market. This means that South African consumers are more frequently exposed to innovative products and services offered by global companies that provide a seamless customer experience. The consumer’s mindset progresses at a faster rate than local companies can keep up with. Consequently, there is a growing gap between new digital customer experience and South African businesses’ ability to supply it, making local enterprises ripe for disruption. Conversely, there’s less of a gap in Africa, as customers are at the forefront of business awareness. In Africa, digital technology is allowing smaller and larger companies alike to bring new products to the market at a faster rate and on a massive scale.
Unfortunately, South African companies, are seemingly unwilling to consider alternatives to the current IT approach. In Africa, the mindset is more mature and more aligned to Europe, such that organisations seek the right contemporary solutions for their businesses. Although there is a substantial gap between business fit and processes and core system functionality, with some big businesses running much of their processes in spreadsheets, African companies are looking at digital transformation as a strategy, attaining the knowledge and staying abreast of developments and thinking about products and customers strategically.
Despite South African companies beginning to appreciate the malleability of their business models, to look at where their threats lie, and look at how they can turn these threats into opportunities, there is definite scope for improvement. South African companies stand to learn important lessons which would allow them to focus more time and resources on identifying and capitalising on new business opportunities through digital products.
Download the eBook “The Challenges for Digital Transformation in Africa” to learn about the other challenges to Digital Transformation in Africa.