Is South Africa ready for tech disruption?

Lawrence Jones

Thursday 21 December 2017

The business models and practices of Uber, WhatsApp, Netflix and other tech disruptors are gradually transforming the world. We look at the technologies gaining momentum in South Africa and talk about why they have the potential to transform businesses and lives.

The rapid adoption of new technology is transforming the way South Africans work and live, claims a new report by Dimension Data. Almost 50 per cent of businesses see technology as the source of competitive advantage, with an incredible 89 per cent of those surveyed naming mobile devices and business apps as essential mechanisms to drive process improvement.

“This consumerisation of IT is happening at a faster pace in Africa than anywhere else,” claims Gary Davies, Sub-Saharan Africa Sales Manager at content-streaming firm Exterity.

A recent Google report found that there are 1.4 connected devices per person, a 47 per cent increase since 2014. At current levels, South Africa will experience similar levels of connectivity to the UK and US in a matter of years.

The impressive growth in mobile usage is a clear example of the growth in connectivity across the nation. Behind it is the potential to transform the way people work, live and consume.

Adam Poulter, Managing Director of online streaming service VUBIQUITY International believes this disruption is putting customers in the driving seat. “Digital transformation creates consumer choice, and for the vast majority of the South African population, this represents their first real choice to participate as media consumers.”

Mobile tech

South Africa is a connected nation, and a recent report by Effective Measure demonstrates that the mobile market is growing rapidly. Download speeds across platforms are impressive too, with low latency levels. “The country is a leader with four operators already providing 4G/LTE coverage across major population centres,” Davies says.

By the end of 2017, the number of mobile users will be over 18 million, a figure forecast to reach 25 million by 2022.

Where South Africans show reticence is shopping on mobile, with 48 per cent refusing to purchase via mobile connections, something not shared by mobile-first consumers in the UK or US. A recent KPMG report into disruptive technologies suggests that shoppers are concerned about the security of their data when shopping online.

The recent data leak by Uber suggests consumers may be right to be wary, but this concern may be misplaced. “In the mobile payment space, for example, South Africa is far ahead of both the US and the UK,” Poulter says.

Breaking down the barriers to online payments is something that financial institutions are taking seriously. In the same report, KPMG claims that financial institutions are upping their game, spending up to $1 billion on blockchain technologies by the end of 2018.

While there are issues to overcome, Davies believes South Africa is in a strong position on the adoption curve, and urges businesses to concentrate on mobile.

“Focusing on the smartphone as the primary interface between consumer and business can help IT to leapfrog some of the multi-platform challenges that technological evolution caused in earlier adoption across US and UK markets,” he says.

Cloud adoption

The mobile transformation is welcomed by businesses that can see the changing behaviour of consumers. To unlock the power of transformative tech, businesses will need to embrace the power of the cloud.

The cloud is a driving force for new business models, with consultancy firm Nebula claiming that 93 per cent of South African businesses are either developing or implementing a cloud strategy.

The establishment of two Azure cloud data centres in Johannesburg and Cape Town in 2018 is clear evidence of a shift towards more agile platforms, and the establishment of South Africa as a natural hub for regional expansion.

An emergence of companies like Microsoft into the local market is likely to see a shift away from the personal clouds favoured by business to more powerful and reliable public clouds. It will also accelerate the adoption of software-as-a-service (SaaS) models that are gaining popularity across the rest of the world.

AI, VR and IoT

The creation of a solid, secure and reliable public cloud serviced by strong connectivity is the basis for the transformative technologies like artificial intelligence (AI), virtual reality (VR) and the Internet of Things (IoT).

The question of whether South Africa is ready for AI has been asked by Accenture, which found some gaps. In a recent report, it found that South Africa needs to fundamentally shift its thinking about AI, planning strategically for its adoption. Where AI can support businesses is in tackling the perpetual security risks, particularly in banking and finance.

South African businesses need to forge their own path, harnessing the power of technology in a way that works locally. The opportunities for tech like 3D printing, augmented reality and IoT are clear, but technology has no borders, and with global giants eyeing up a piece of this expanding market, South Africa needs to get serious about tech transformation.

What is encouraging is a growing  number of home-grown disruptors, and perhaps more importantly a growing number of public and private opportunities for gaining funding.

South Africa is in an interesting position, able to learn from the challenges and mistakes experienced in developed markets like the UK and US. The entrance of global players in both infrastructure and service delivery make it a clear target for investment and growth, so it will need to learn these lessons quickly.

The disruptive technology trends we predicted for 2017 are likely to continue into 2018, but local businesses will need to act soon to gain a competitive advantage – or they could end up disrupted by the disruptors.