Two years ago, Accenture warned that organisations failing to embrace data, artificial intelligence, and technology would risk being left behind by their competitors.
By Edna Eason, technology lead for Accenture, Africa
A year later this prediction came true as organisations ranked technology as the most disruptive force in organisations in 2023 and rocketed to the top of the corporate agenda.
This means that if you are not thinking about how your organisation should shift with the rapidly evolving world of technology you are already behind. A sense of urgency is paramount, particularly as South Africa falls behind its global counterparts. But what drives this transformation? It begins with constructing a solid technological foundation on which all technological advancements are built – the digital core.
Accenture defines a digital core as the driving force underpinning an organisation’s unique reinvention ambitions. It is composed of distinct yet continuously interacting technologies, including digital platforms, data, and AI.
This core is supported by a digital foundation that features composable integration – systems that can be easily connected and customised for flexibility – a cloud-first infrastructure that uses online storage and processing over external servers, a continuum control plane that provides operations visibility across the digital landscape and security by design.
Security is a critical component, safeguarding data and systems from threats and unauthorised access to maintain trust and functionality. Powered by generative AI, these technologies – digital platforms, data, AI, etc – link systems and automate data maintenance, breaking down silos and facilitating interoperability with minimal human involvement.
These separate elements must connect and interact seamlessly to create a holistic digital ecosystem that enables dynamic, efficient, and scalable operations.
Organisations that are miles ahead on their transformation journeys are called Reinventors. In 2023, these technological trailblazers made up 8% of companies surveyed, investing heavily in their technological capabilities. They embrace a new way of working, breaking down organisational silos and using data and AI to their full advantage – an attitude we call “reinvention readiness”.
Today, 83% of organisations are following their lead and are speeding up their reinvention efforts. These organisations are reaping the benefits and growing at a rapid rate and reinvention strategies have one thing in common: a strong digital core.
So how can organisations embrace “reinvention readiness”? It hinges on mastering a trio of critical tenets. Only 3% of companies surveyed have cracked this code and, as a result, have experienced significantly higher performance, with a 60% boost in revenue growth and a 40% increase in profitability.
The first tenet, which we have already explored in depth, is the establishment of a robust digital core. Organisations must customise their digital core to fit their unique requirements and adhere to industry-leading standards, ensuring it includes all the crucial elements discussed above and facilitates seamless integration.
The second tenet involves maximising the impact of technological investments by increasing annual spending on innovation by 6% or more. These investments must go beyond maintenance and toward innovation. High “flip size,” or the rate at which IT spending shifts towards innovation, correlates with better performance. By cutting inefficiencies, optimising cloud costs, and automating operations, companies can redirect savings into redesigning processes, launching new products, and exploring new markets.
Proactively managing technical debt, the third tenet of reinvention readiness, is also crucial. Companies should allocate around 15% of their IT budgets to address technical debt, ensuring their systems remain current and effective.
While AI and generative AI are an essential part of a strong digital core, they can introduce further technical debt if not properly overseen leading to issues like poor interoperability and inaccurate responses. Balancing the remediation of technical debt with forward-looking investments allows companies to keep their tech systems up to date while fostering continuous improvement.
The importance of a strong digital core cannot be overstated. However, only 13% of executives surveyed are “extremely confident” that they have the right data strategies and the core digital capabilities in place to effectively leverage generative AI. Confidence in embracing this new way of working can only come from forging the right partnerships and seeking expert advice.