Effects of digital disruption in Africa

Posted on August 20, 2017 12:00 am

In my view, digital disruption is simply the situation where digital technologies penetrate existing industries.In Africa, the disruption is hitting hard the broadcast media, advertising, technology and telecoms companies being affected by digital disruption far more than any other industries, according to a new study your blogger has a copy. Some 52 per cent of African chief information officers say their companies have been affected by digital disruption which is 34 per cent higher than two years ago.But despite this, African companies are more likely to have personnel in place to deal with the challenges, with 18 per cent employing chief digital officers, about 40 per cent lower than the global average.The findings represents the views of 2,500 technology leaders from 25 African countries.The data, collected from June 2016 to July this year, found two-thirds of companies report digital disruption as a very significant change to business, driving them to create new business models and bring new products and services to market faster than they ever have before.According to the data which I’ve analyzed, the most affected by digital disruption now are broadcast media, advertising and technology companies as well as telecoms. The demand for big data analytic skills has also leapt to the number one most scarce skill, skyrocketing to almost ten times higher than the next most sought-after skill, which expert describer as change management, the key of businesses on the forefront of digital technologies is the use the internet to actively seek and communicate with customers and suppliers, create an internal digital systems for reordering supplies, invoicing, and production operations and linking internal systems to suppliers’ and customers’ systems.The data shows that 2016-17, only 10.3% of African businesses took orders through the internet and these were disproportionately in the areas of information and media technology, wholesale trade and manufacturing. Agriculture, forestry and fishing, finance and insurance and health and social assistance were relatively untouched, with only one in five businesses taking internet orders.Businesses were more likely to place orders with suppliers, compared with customers, through the internet. Presumably much of this trade in goods and services is ad hoc as only 11% of businesses had formal online ordering through their website and only 8% provided online payment facilities.Disruption in Africa is highly evident across customer experience, operational improvements through cloud technologies and existing traditional business models are being challenged. Overall the impact is more noted by African technology leaders because they are experiencing high levels of change across all of these elements of disruption simultaneously.One of the research authors whom your blogger was able to talk to said digital disruption was being felt more by Africa businesses because the region was a target market for new and emerging technologies. The author added that Africans preference for using digital is the driver for significant investment in the digital experience through sophisticated digital platforms.

The researchers believes that the demand from clients and customers is a key element enabling digital disruption in Africa.The emergence of chief digital officers roles in Africa organizations is also in significant growth mode compared to the previous years.This shows that African businesses understand the need for focus of digital activities and outcomes. Although digital is pervasive across all business functions, the need for accountability, data and reporting of value is often best achieved through the inclusion of the chief digital officers in the corporate suite.Africa tech leaders were also more likely to increase staff in 2017, with 44 per cent planning to hire, which was 9 per cent more than the 2015 average.The shift in operational priorities of chief information officers continues, with driving operational efficiencies remaining the top focus. Cost saving is also falling in importance as a chief information officer priority in Africa, down to 38 from 47 per cent in 2015. The priorities that are growing in influence are external in nature. Twenty two per cent more chief information officers in Africa are developing innovative products and services for the business in 2017, and driving revenue growth is up 5 per cent.The report data showed Africa has a more diverse IT leadership with 15 per cent of respondents female IT leaders, ten per cent higher than the 2015 average. Whereas most African householders would regard using the internet to buy and sell products a prosaic activity, its penetration into African industry is not the dominant channel most businesses use. According to the data, only 15% of businesses linked their internal ordering systems, 12% had internally linked invoicing and payment systems, 8% had linked production and service operations and less than 5% had linked logistics systems in 2016-17. The numbers having automatic links with external suppliers and customers is similarly low at around 9% each.Businesses which have these sophisticated linked IT systems are vastly more productive that those that do not, although researchers were not able to establish a causal connection.Such businesses are much more likely to have introduced new products, operational processes, managerial changes and marketing methods into the business in the previous year. Surprisingly, they are not start up firms and on average they have been in operation for about 20 years. It is not surprising, they are much more likely to be an exporter than businesses without these systems.It is difficult to say what this means for African business, whether the uptake of linked IT systems is low, appropriate or too high, if we just view this data on its own. However, I would think that efficient, accurate, fast and comprehensive information systems would be a high priority for industries located in Africa from the big markets in the developed world.The successful creation of high value-adding jobs in Africa depends more and more on contributing to highly competitive value chains, and most technology leaders agree that removing coordination and imperfect information obstacles is priority for their business. The report recommends that African governments use new technologies to improve service delivery, provide more choices, better target services and cut costs. African governments can also use technology to help the community get the most out of infrastructure. But to get there, researchers say African governments will need to run trials, share data among agencies and with the public, and overcome their risk-averse culture.

Contador Harrison