CFOs resistant to the Fourth Industrial Revolution says research from World Wide Worx

Despite the hype, cost and skills are what's holding 4IR tech uptake back, says Arthur Goldstuck.

World Wide Worx in partnership with SYSPRO has released a new research study called “Fourth Industrial Revolution in South Africa 2019: Enterprise uptake and expectations for emerging technologies”. The report delves into current and planned uptake of emerging business technologies like artificial intelligence (AI), robotics, virtual and augmented reality, the Internet of Things, and blockchain. 

The research found that “the technologies that make up the fourth industrial revolution (4IR) have yet to be adopted with any enthusiasm by South African enterprises”. 

According to World Wide Worx managing director and principal analyst on the 4IR research project Arthur Goldstuck, the most surprising finding was the lack of enthusiasm for AI, despite the marketing hype that suggests every large business is embracing it. 

“Only 13 percent of corporate South Africa is currently using AI and, of the rest, 21 percent, plan to adopt it in the next 12 to 24 months,” Arthur said. 

The research revealed that one of the obstacles to this adoption is the cost of skills for implementing AI. Of those not using AI, 41 percent cited cost as the key reason. 

“The research suggests that companies are pulling back from these technologies that make up the fourth industrial revolution because they realise the cost of implementation goes beyond hardware and software, and that it’s really about skills,” Arthur explains. “The problem with this is that these skills are in very short supply, therefore they are usually expensive.”

Arthur explains that, for this reason, the 4IR turned out to be a very expensive exercise more than it was complex or ‘scary’. 

According to Arthur, the CFO, who is responsible for managing the financial implications that adopting these technologies will have for the company, are therefore “quite resistant” to the 4IR. 

“Traditionally, intended uptake of new technologies shot up once education, awareness and knowledge increased,” Arthur says. “Now, however, we are seeing the flip side of the coin. A year ago, 63 percent of those not using AI said they planned to use it in the future, and not a single company cited cost as a reason not to do so. A year and much hype later, the market seems to have woken up to the realities of obstacles like skills and cost, and the proportion of those planning to use it has plunged.”

The research also showed that after Robotic Process Automation (RPA), which automates business processes through software “bots”, has become readily and cheaply available from numerous service providers, 37 percent of South African enterprises are using robotics compared to 6 percent a year ago. It has moved to the forefront of corporate strategy. 

The study shows that the uptake of emerging technologies varies dramatically across technology categories and industry sectors. Virtual and augmented reality is used by a little more than a third of enterprises, but intended usage among the rest falls to below 10 percent. Blockchain, the technology for distributed ledgers that validate every step in a transaction process, is currently used by fewer than 10 percent of respondents.

The one stand-out sector, in which South Africa leads the world, is the Internet of Things (IoT). The study revealed near-unanimous usage, with 92 percent of enterprises having adopted IoT. However, this is largely a factor of the ubiquity of vehicle tracking and fleet management technology, which began as telematics, and has evolved into a sub-category of IoT.

“The combination of high usage and a strong increase in current and planned usage of IoT technology shows corporates are getting returns from existing IoT implementations,” says Arthur. “As the technology becomes cheaper to obtain and operate, smaller companies will have the ability to compete in productivity with much larger corporates.”

This is one of the key benefits of such emerging technologies, the study suggests: once the skills requirements are addressed, they become a commodity that any organisation of any size, from start-up to giant corporation, can leverage equally. For now, however, companies are having to make cautious choices. This is revealed in the finding that a mere 3.1 percent of enterprises use a combination of robotics and AI. Of the rest, only 3.6 percent plan to do so.

“The report reveals quite dramatically the extent to which corporate South Africa seems to have a clear sense of what it needs and doesn’t need from the emerging technologies,” says Arthur. 

“The fourth industrial revolution will be cherry-picked, based on what will differentiate a business, rather than representing wholesale take-up of technologies for their own sake.”