The biggest trend in 2016 will be the balancing act that companies face: to optimise core processes, while simultaneously building innovation capabilities that generate competitive advantage.
This dynamic has been spoken about for the past couple of years – in largely abstract and conceptual terms.
In 2016 the reality will hit home and IT decision makers will be forced to make bold decisions to protect their organisations from losing ground.
The risk of falling behind”… it’s starting to become a reality
Evidence is starting to categorically show how digital transformation has a direct correlation with company performance. Those with faster rates of transformation and more aggressive adoption of Cloud, Social, Mobility, Big Data and the Internet of Things, are manoeuvring into new areas of opportunity.
Secondly, South African businesses are being thrust into direct competition with powerful digitally-native companies – the likes of Netflix, Uber, Spotify, AirBNB, Whatsapp, and many others that are revolutionising local industries at breath taking speed.
Those that remain flat-footed – relying on ‘legacy’ infrastructures, cultures, processes and business models – are now clearly losing ground to pure-play digital entrants, as well as those faster-evolving traditional organisations.
Dealing with disruption
In Gartner’s framework of bimodal IT, classical ‘mode one’ principles of stability, efficiency and security, are combined with the more modern ‘mode two’ principles of agility, innovation, and exploration.
The misconception is that for organisations to deal with the threats of disruption, they need to shift all their focus to mode two. In reality, 2016 will demand a dual focus on both ‘modes’ of one’s IT estate.
Against the backdrop of a weak rand and tight economic conditions, optimising and fine-tuning one’s current environment is, in fact, just as important as building a new innovation and digitisation capability. Broadly speaking, organisations can extract costs by following the four principles of consolidation, elimination, simplification and automation.
This balanced approach to both the run and the build requirements of IT modernisation is what we term: ‘accelerating the core, owning the future’.
To truly own the future, organisations will be required to fully leverage their strengths (such as customer bases, financial assets, skills and capabilities and brand perceptions) and take bold moves to pivot their businesses, even cannibalising some of their own revenue streams.
Outsourcing and right-sourcing to unleash new digital opportunities
A key aspect of surviving digital disruption is fundamentally repositioning the IT division from cost-centre and support function, to a value-adding digital transformation enabler. Outsourcing can go a long way to achieving this:
By outsourcing the management of day-to-day operations, the IT team can focus on innovation, new technologies, transformation, and influencing business strategy. They no longer have to focus on the people and skills issues involved in system maintenance.
By smartly pulling on the economies of scale and experiences of outsourcing providers, the IT team can de-risk its forays into emerging new technologies. With Cloud platforms provided by the partner, the team has a low-cost, low-risk environment to explore new ideas – failing fast where they must and productionising successful experiments.
Translating global trends into local solutions
South African consumers and businesses lag behind the first world in key technology areas like connectivity speeds, smartphone adoption and Cloud computing adoption, for example.
A central theme of 2016 will be South African organisations taking the best of global innovation and blending it with local customer dynamics, to achieve the optimal digital strategies.
For example, we will see eCommerce finally starting to flourish in an African context. Embedding more sophisticated eCommerce tools will start to become the norm for companies in various sectors, across the continent.
By Gavin Holme, Country Head, Africa – Wipro Technologies