South Africa’s financial institutions continue to face a wide range of business challenges that are driving the need to manage risk, control costs, accelerate innovation and enhance operational efficiency.

As firms strive to meet these growing requirements and build smarter operations, SunGard has identified five trends driving the adoption of managed services in South Africa over the next 12 to 18 months:

* With more capital being diverted to manage new regulatory requirements, firms are increasingly migrating operations to managed services environments to help control risk and costs. Concerns around security, however, will mean that financial services firms in South Africa will favour outsourcing ventures with proven services providers that can demonstrate superior security, resiliency, scale and a strategic advisor approach.

* Siloed infrastructures are slowing innovation and hindering go-to market strategies for new products and countries, negatively impacting growth initiatives. This is driving South African firms to invest in managed services that can scale to span multiple operating units and end-to-end processes across Africa.

* Multi-system environments and vendor relationships increase costs and create a lack of common standards and measures. In order to instil best practices and smarter operations across the organisation, South African firms will look to consolidate their vendor relationships and achieve systems rationalisation through outsourcing.

* The need to ensure regular and seamless upgrades to mission-critical applications is driving more South African institutions to outsource day-to-day maintenance, particularly in the state-owned sector. Outsourcing back-office, manual functions also allows firms to focus on nurturing a talent pool that can help grow the value-adding areas of the business.

* Parastatals (state-owned organisations) are under pressure to upgrade ageing infrastructures but face funding challenges to be able to do this. Outsourcing certain technology functions will help firms free up financial resources, allowing them to maintain overall control of business processes and focus on core business objectives.

“The South African financial services industry is experiencing new challenges including growing consumerisation and the rise of technology-centric business models. Coupled with increased competition, these are driving organisations to embrace more agile ways of running their operations.

“Adopting managed services will allow them to focus on their core competencies and be more responsive to market trends and opportunities. Uniting business strategy and technology with the right provider will be key to ensuring future success,” says Wayne Speechley, executive, cloud and communication at Internet Solutions, a local SunGard hosting partner.

“South Africa has experienced rapid growth in consumer adoption of financial services, and its corporations and state-owned organisations are becoming increasingly sophisticated in financial management. The country’s finance industry is therefore under pressure to cater for increased demand for financial services, address diverse regulations and improve operational performance.

“This is driving a greater need for firms to strengthen their systems and processes. Managed services will play a vital role in helping them boost their back office functions and re-focus resources on strategic initiatives that can help drive performance and growth across Africa,” says Brian Anderson, head of business development, South Africa, SunGard.