Dell Technologies announces new survey results looking at digital modernisation trends among South Africa’s medium-size organisations.
Medium businesses are the backbone of modern economies. They also stand to gain significantly from digital technologies, which create new levels of efficiency and competitiveness, not to mention revenue stream opportunities.
Yet how are medium businesses – companies with fewer than 500 employees – responding to modernisation? Every market has a slightly different story to tell, so Dell Technologies and Intel commissioned IDG to develop a report on different medium business markets, including South Africa. The survey, Spotlight: The State of SMBs and IT today, is an insightful look into the motivations and challenges that medium businesses weigh as they adopt digital technologies.
“South Africa’s medium businesses are clearly not lagging behind the digital modernisation curve,” said Doug Woolley, Managing Director at Dell Technologies South Africa. “The challenges they face are often the same as the major markets. But there are also unique approaches that fit the contexts of Africa and her many different regions. It shows a business sector in touch with its communities and customer requirements.”
The project surveyed over 1,500 respondents across 11 European countries and South Africa. Locally, more than 50 respondents provided insight and are spread across sizes of organisations from 100-199, 200-349 and 350-499 employees, but with 87% of them being in the two higher categories. They represented a wide array of sectors, with almost a quarter from the banking, finance, investment and insurance sector.
Overall, local medium businesses rated their ability to use IT for competitive differentiation very highly: 53% saw it as very good, while 43% rated it as quite good and cited budget restrictions as the greatest barrier. 4% rated their ability as ‘not bad’ – no company chose the lowest tier. This reflects previous research that South African businesses have been proactive about adopting digital differentiators. Though those trends were previously identified among enterprises, it’s also the case for medium businesses.
Challenges cited by medium businesses
What challenges do local medium businesses face? 51% cited competing with new competitors and startups in a changing marketplace, while 43% were concerned about cash-flow issues or lack of budget to invest in infrastructure. Nearly as many are worried about their ability to attract and retain talent and the same number, 40%, pointed to the state of the macroeconomy.
Yet unlike their European peers, South African medium businesses are less concerned about the impact of rules and regulations. By far, growing their businesses was the primary concern among respondents.
Talent retention led the concerns around managing IT, cited by 15% of the surveyed medium businesses. This was followed by information security risks (13%), cost of in-house IT skills (13%), and vendor management of service level agreements (11%). Training staff on new software (28%), the time demands of security challenges (17%) and strategic alignment with the business (15%) dominated challenges around supporting business needs. Helpdesk response time and limited productivity budgets were also mentioned.
The survey covers many different aspects of digital modernisation, including security. For example, spyware, targeted attacks, ransomware, insider attacks and data privacy were all flagged as the most significant security concerns.
A positive IT outlook
Despite the many challenges, South African medium businesses are upbeat. 42% ranked IT as one of their best opportunities to grow their businesses, and 40% regard it as an important source of competitive differentiation. But a large majority – 68% – said that despite IT’s importance, business leaders still don’t understand its value.
The market is nonetheless excited about the opportunities that arrive through digital technologies. 47% saw data analytics as the most important opportunity, while 45% cited cloud and 42% looked towards AI. 3D printing and 5G also feature.
When asked which factors will help their companies be more creative and effective through IT, 55% cites greater use of mobile devices. 53% chose modernising systems and software. Only 2% had no plan.
“To compete more effectively against new companies,” the report stated, “South Africa’s midsize businesses are changing quickly and showing a determination to lead in IT that should stand them in good stead in a world where every company is becoming a software company and where digitisation of processes is central to success. South African respondents provided highly distinct attitudes, and they clearly fall into the camp of fast movers.”
There are additional revelations in the final report, available at here: The State of SMBs and IT today
By: Varun Chhabra, SVP of Dell Technologies Product Marketing
We recently released a sponsored report from Enterprise Strategy Group that looked at multi-cloud complexity, its costs, and how bringing consistency to all these environments can create value for an organization. You can read the report here.
There are many points to take from this research; it’s well worth your time to go through the full report. If you are in the process of formulating your cloud strategy the insights here can be helpful to you. More than anything else, though, this research puts in stark terms something we have seen consistently in the market. It highlights the massive gulf between potential benefits and the existing reality of cloud deployments.
Consider the numbers. Fully 80% of respondents – senior technology decision-makers at midsize and large companies – say they see strong value in hybrid. In this report hybrid cloud was defined as having consistent management across multiple public and private clouds. Yet only 5% say they have achieved their goals of having a consistent hybrid cloud. What do we make of this gap?
It shows that while there is much work to be done organizations believe in its value and should work quickly to realize it. Leaders believe in the technology and strategy but are struggling to piece it all together in a coherent, effective way.
Maybe this gap is indicative of how people have approached their cloud strategy so far. Often, they didn’t start with a coherent, thoughtful, centralized strategy. Almost every company adopted the multi-cloud in a more decentralized, organic way. Now, they are having to work to create some cohesiveness of approach across the entire organization.
A rising split between ad hoc multi-cloud and consistent hybrid cloud
The data shows other interesting trends. While you might have guessed that consistency would be a way to simplify IT management the benefits went well beyond fewer hours worked. Among the most interesting points to come from the report:
- Consistent management seen as an obvious cost cutter. Surveyed orgs say they expect consistent IT management tools for private and public cloud to cut costs 19% on average.
- Data is safer with consistent data protection. When asked about the prospect of using consistent infrastructure management tools across private and public cloud locations, [respondents said] they would expect to reduce the number of security breaches, application outages, or other events affecting its public cloud-resident data by 30%, on average.
- Developers benefit too. 96% of surveyed orgs say they expect consistent IT management for private and public cloud to make it easier for developers to push code to production
- Perhaps an unlikely source of innovation. 74% of surveyed orgs said they expect consistent IT management for private and public cloud to increase innovation pace
This shows that while IT benefits greatly from centralizing the cloud strategy and deploying tools that span all the cloud environments, it might be the business and the end users who see the most benefit from this strategy.
Closing the gap between multi-cloud reality and potential
The report shows the distance that many companies still must travel to achieve their goals in the multi-cloud. It also shows clearly that those companies that have made strong investments in the right on-premise infrastructure – modern, performant, and that are consistent – have strengthened their position and their business results.
The good news: it is not too late to bring order and centralized strategy to your cloud deployments, or to strengthen your data center. This data shows that the value is available to you today, not in the distant future.
ESG Research Insights Paper “The Cloud Complexity Imperative: Why Organizations Must Unify and Simplify the Management of their Sprawling Multicloud Environment” commissioned by Dell Technologies, VMWare and Intel Corporation, February 2020. Results are based on a survey of 1,257 IT decision makers from 11 countries and benchmarking consistent operations management across both public cloud and modern on-premises private cloud infrastructure. Actual results will vary. Full report: https://www.dellemc.com/en-us/cloud/hybrid-cloud-computing/index.htm#overlay=/collaterals/unauth/analyst-reports/solutions/cloud-complexity-imperative.pdf