South Africa’s small-to-mid size enterprises (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.
According to the findings of a whitepaper, Taking The Fast Track To ERP Innovation Is Essential For SMEs, released by the IDC in collaboration with Microsoft South Africa, these businesses – as core drivers of economic growth and job creation – simply cannot afford to have disparate and disconnected legacy systems that fail to enable rapid decision-making to meet business and customer needs.
They need a flexible, integrated, scalable and end-to-end business management and enterprise resource planning (ERP) solution to connect their financials, sales, service, supply chain, stock management and operations. This, in turn, streamlines business processes and improves customer service and interactions.
“However, the whitepaper found a mismatch between business priorities and the outcomes of current solutions,” says Jon Tullett, senior research manager at IDC Sub-Saharan Africa. “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.”
But business managers are struggling with ERP products – and in many cases with IT platforms in general – which are taking too long to adapt to their needs: 28% found solutions to be too slow, and 25% said it failed to deliver return on investment (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 ERP applications were unreliable and error-prone.
“Changing business, customer, partner and employee expectations and needs mean that 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,” says Karin Jones, director: business applications at Microsoft South Africa.
Cloud-based solutions have seen strong growth, particularly for enterprise applications, which has also been accelerated by the pandemic. “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,” says Tullett.
“South Africa’s growing adoption of cloud is also marked by an expanding middle class of businesses; SMEs accounted for 16,2% of software revenues in South Africa 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.”
This is largely due to the benefits and value that the cloud offers, including security, scalability, adaptability, flexibility and mobility, as well as connecting people, processes, and data for a complete view of the business and its needs. “Tapping into the power of the cloud means that businesses can ensure continuity, which is critical in the face of ongoing uncertainty and a challenging operating environment, particularly for small and medium-sized businesses,” says Jones.
Even so, the whitepaper found that SME ERP managers voiced clear concerns about deploying a new solution, with risk of data loss and high operational costs topping the list of considerations: 58% of ERP managers were worried about data loss and 41% were concerned about operational costs.
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