Survey finds that despite challenges, medium businesses in South Africa are not lagging when it comes to digital modernisation.

Medium businesses in South Africa, those with 500 or fewer employees, are not lagging when it comes to digital modernisation – but challenges like talent retention, funding and attitudes of leaders remain.

This is according to an IDG survey Spotlight: The State of SMBs and IT today, commissioned by Dell Technologies and Intel, covering the motivations and challenges that medium businesses weigh as they adopt digital technologies.

According to the survey, 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.

51% cited competing with new competitors and start-ups 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 macro-economy.

Dell Technologies added that 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.

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.

Doug Woolley, Managing Director at Dell Technologies South Africa, said, “South Africa’s medium businesses are clearly not lagging behind the digital modernisation curve. 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.”

Despite the many challenges, South African medium businesses are upbeat, research showed.

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.”