South Africa’s 2018 Q2 and Q3 negative economic growth means that the country’s economy is in a technical recession.
And while Business Services is one sphere showing growth (of 1.9%, along with Finance and Real Estate), this does not mean that the ICT sector – a major partner and supporter of business in the digital age – can look forward to plain sailing in the coming year. In addition to local challenges, there are greater global trends at play that will undoubtedly affect South Africa.
Market demands driving industry development
Whether big corporate, government entity, SME or home user, all customers want the same thing from communications providers: more for the same price. More data. More speed. More efficiency. And more flexibility in terms of payment models and “untethered” but secure movement between devices.
These market forces will certainly drive industry decisions in 2019. Faced with the data explosion, providers will need to assess how they keep up with that growth, and future-proof their organisation. Then there’s the issue of cost, especially since technology outlay is largely priced in US dollars. For example, mobile operators who invested so heavily in 3G and 4G are now looking at the requirements of 5G, and how to fund the infrastructure investments required when their income is largely flat, particularly in US dollar terms. Although not a new issue, 2019 will force ICT sector players to problem-solve based on both the market’s demands and their own budgetary constraints.
A move to the edge
Internationally and locally — as the cloud becomes the major basis of computing power and digital services — data centres, which support these capabilities and store-related information, are moving closer to the edge – namely their users, who insist on improved performance to enhance their own efficiencies and market competitiveness. In a South African context, this shift reflected in the arrival of Azure Data Centres in Cape Town and Johannesburg during the tail-end of 2018, with Amazon’s AWS following hot on their heels.
A positive sign, this change indicates international acknowledgement of South Africa’s (and Africa’s) economic potential. And ICT players have a key role to play, helping to advise on the location of the mushrooming new vendor-neutral centres so that locations of computing power are diversified and optimised for high-priority economic sectors. This is a break from the previous situation, where a couple of larger, highly-centralised and resource-intensive data centres were the norm.
2019 looks like it’s going to be more about the acceleration of existing ICT and digital economy trends than the emergence of brand-new technologies. This said, one of the most notable changes worldwide is the transplanting of processing power from desktops and devices to the cloud. Moving forward, expect our screens to act more like terminals while edge data centres are where the actual computing takes place.
The Internet of Things is becoming reality
A lot has been said about AI and IoT but 2018 finally saw theory solidify into reality. Within a home context, we’re seeing more legitimate “smart spaces” with the proliferation of smart TVs and other appliances to join smartphones and watches. Everything is connected via the Internet, communicating in real-time to provide a fluid, interconnected experience.
In a corporate environment, meanwhile, new office designs and infrastructure upgrades are prioritising integrated systems. As more people see the practical benefits of these online systems – such as the relatively simple but practical ability to check parking bay availability from your phone – there will be a greater uptake in 2019. Providers will be expected to provide the backbone of reliable high-speed fibre connectivity that these cloud-based systems require. Those venders with a broader solutions basket should also promote their security offering, to ensure simultaneous compliance and business continuity for customers in an environment that is high-risk for data theft and compromise.
Human data analysis as a solution for the economy
As for using digital transformation to revitalise South African job creation in 2019, the potential and example is there, if some fundamental change takes place.
Looking north to Kenya, that tech-minded African nation is employing thousands of young people in data-capture and ‘gig economy’ roles that handle work from other countries – in much the same way India built a name for outsourced call centres. The basic principle is that AI does a lot, but the intelligence of systems still needs to be programmed. Human involvement is very much a part of these digital processes, and this is what young Kenyans are doing: interpreting and translating information for machines to analyse. Obviously, this also provides the opportunity to provide more and more value-add to these initial basic processes and workflows.
This successful scenario is one that South African decision-makers would do well to examine and draw inspiration from. Similar ventures, adapted for the local business context, are likely to help bolster the South African economy for the online future, opening the country to global, digital-enabled opportunities while creating more jobs for digital-savvy young citizens.
By Byron Clatterbuck, CEO at SEACOM