South African companies urged to speed up digital transformation

Wits Business School's Brian Armstrong says companies that have failed to transform do not grow.

South African companies should take digital transformation seriously as failure to do so could affect their share prices in the long term, Wits Business School’s digital business chair Brian Armstrong told guests at the Finance Indaba 2018 in Sandton on 3 October.

Companies that have failed to transform have shown only one percent growth in their share prices over 10 years, Armstrong said.

“However, those that have embraced digital transformation and provided digital services have delivered 10 percent in annual compound rate of growth in their share prices.”

The uptake of digital transformation has been slow in South Africa and Armstrong describes many of the manufacturing companies as “digital rookies”.

 

The country’s financial services have been lagging behind, but the sector is now on the cusp radical transformation, he said.

For instance, South Africa’s short-term insurance sector has been slow to go digital, losing out on gross written premiums (GWP) opportunity estimated to reach R115.2 billion by 2020, according to an Accenture’s 2016 survey.

South African customers preferred digital insurance solutions and readiness for digital engagement, the survey found. About 80 percent of 1,500 insurance customers across South Africa were ready to purchase insurance products online.

“In order to become insurance providers of choice, short-term insurers should harness the power of digital technologies to imagine their business models around customers,” according to William Mzimba, chief executive officer of Accenture South Africa and Sub-Saharan Africa.

Most experts believe that companies that have taken digitisation in ways that are far-reaching and aggressively innovative well beyond automation and networking have been few, but have done well.


Brian said: 

“The untransformed companies always claim that they do not know how to do it. But what they need to know is that their most valuable asset is data.” 

He added that there is lots of value for shareholders in digitisation.

He concluded that the great secret is about knowing where to play and how to win. Growth will come when companies invest in the right segments at the right time, he said, adding that right portfolios produce growth.