Surveyed South African SMEs struggle to gain return on investment (ROI) from their enterprise applications, as a result of a mismatch between business priorities and the outcomes of their current solutions.
This is one of the key findings of a white paper, titled “Taking the fast track to ERP innovation is essential for SMEs”, released by research firm IDC, in collaboration with Microsoft South Africa, during a webinar this morning. It is based on a survey of up to 250 SME employees across all verticals in Johannesburg and Cape Town.
According to the research report, SA’s SMEs face unprecedented pressure to transform their operations with agility and speed to keep up with the pace of change and adapt to business, industry and market challenges.
However, business managers said they are struggling with ERP solutions – and in many cases with IT platforms in general – which are taking too long to adapt to their needs: 28% of surveyed managers found the solutions to be too slow to meet productivity timelines, and 25% said they failed to deliver ROI.
Lengthy, costly and complex deployment and implementation processes, and disruption to the business were also identified as challenges, with 21% saying implementation took too long and 15% saying enterprise resource planning (ERP) applications were unreliable and error-prone.
“The white paper found a mismatch between business priorities and the outcomes of current solutions deployed,” said Jon Tullett, senior research manager at IDC Sub-Saharan Africa, during the webinar.
“Business priorities centre around customers, skills and brand, with 87% of enterprise application decision-makers saying that attracting and retaining customers is a top priority, and 81% pinpointing development of talent as well as reputation and brand awareness as key concerns.
“Organisations which take a more mature approach in deploying applications and business processes which support a more productive environment will be in a better position to grow the business, reskill employees and even hire more human resources.”
While a lot of the traditional solutions are not meeting their expected ROI, it is not fair to say they are not delivering any business value at all. They are merely falling out of alignment with what the business needs, especially considering the dire need to pivot more quickly to respond to the requirements presented by the COVID-19 crisis, Tullett pointed out.
Accelerating cloud adoption
Failing to reap the rewards in tech deployments often results in loss of revenue, complex customer services and a tarnished brand reputation, according to the study.
“Changing business, customer, partner and employee expectations and needs mean organisations need a well-integrated and streamlined business management and enterprise application ecosystem – and the new generation of ERP solutions provide the integration, automation and security delivered by cloud-based capabilities,” said Karin Jones, director of business applications at Microsoft South Africa, also speaking at the event.
Cloud adoption has seen a 25% growth year-on-year across all business sectors in SA, particularly for enterprise applications, which have also been accelerated by the pandemic, notes the study.
“South Africa's growing adoption of cloud is also marked by an expanding middle class of businesses. SMEs accounted for 16.2% of software revenue in SA in 2019, a share which is forecast to grow to 18.5% of a market worth more than $3.2 billion in 2024. Most of that growth, particularly in SME customers, will be driven by cloud adoption of enterprise applications,” added Tullett.
“During the peak of the COVID-19 pandemic, ERP was one of the areas which saw the greatest movement towards cloud, driven by specific factors, including speed of deployment, minimum disruption and rapid ROI.”
Share