FEATURE: What you need to know about digital transformation

Reading Time: 11 minutes

The global war against COVID-19 is central to all developments, as a third of the world remains on lockdown in attempts to conquer it. A few industries stand to benefit by regarding this crisis as opportunity. One of these is the technology space. In this series titled, COVID Tech, SABC News’ Tshepiso Moche reports on coronavirus-related tech developments in South Africa and globally. In the first edition, he looks at an app developed to help government trace those infected by COVID-19.

As many businesses across the world continue to feel the effects of the lockdown due to the deadly coronavirus pandemic, experts believe that several business owners will be forced to change their business model – and go digital.

During the lockdown, lots of businesses were forced to close, some temporarily while others put a stop to their activities permanently. As a result, millions of people lost their jobs and there is a growing fear that many more will join the queue in the search of jobs as the pandemic continues to wreak havoc across the globe.

In South Africa, all sectors of the economy from informal to formal are affected by the lockdown and restrictions.

Co-founder of Nite Owls clothing designers, Lazarus Mashai, who is based in Tzaneen, Limpopo, says the lockdown and its regulations have had a rippling effect on his business.

Mashai says they have resorted to using social media platforms such as Twitter and WhatsApp to communicate and to sell their products due to fears of contracting the virus.

In the sound clip below Mashai explains how his business survives during these difficult times:

Like Mashai, many South African businesses have also been forced to implement new operations including remote working and social distancing among other things.

The COVID-19 pandemic has changed how businesses operate and companies had no choice but to rethink their business model to stay relevant during these difficult times many countries find themselves in.

According to market research company, AskAfrika, the use of video calling platforms such as WhatsApp, FaceTime and Skype has increased by 63% more than in the past, in just week 7 of the lockdown.

These communication tools have now become part of most people’s daily lives as they communicate with their colleagues who are also working from home.

Matt Brownell, head of brand marketing at Yoco, says since the easing of lockdown some restrictions, SMEs are starting to see a bit of growth.

Many businesses were forced to close their doors during level 5 of the lockdown.

In the sound clip below, Brownell explains that although some sectors are still struggling, other businesses have seen a turnover of 9% since the easing of some restrictions:

Under Level 3, for instance, restaurants are now allowed to operate while sectors such as hairdressing salons remain closed. The ban on the sale of alcohol has also been lifted while the ban on cigarettes sales remains effective.

Many businesses, without a doubt, will have to implement immediate digital change if they want to survive. The potential benefits of digitalization for various industries across different sectors are evident.

Fourth Industrial Revolution (4IR) technologies such as artificial intelligence and blockchain technology are fast-tracking the digital transformation in numerous sectors across the globe.

According to the World Economic Forum (WEF), post-COVID-19 will be more urgent than ever to find intelligent and data-driven solutions to the most pressing problems.

The organization further says as African governments continue to battle the immediate response to the coronavirus crisis, there is a parallel focus on the future and what an economic recovery will look like.

“As per the World Economic Forum’s Human Capital Index from 2017, employers across the region already identify inadequately skilled workforces as a major constraint to their businesses, including 41% of all firms in Tanzania, 30% in Kenya, 9% in South Africa and 6% in Nigeria,” says WEF.

This week, SABC Digital News’ Tshepiso Moche (TM) spoke to Bluegrass Digital CEO Nick Durrant (ND) about the challenges and benefits of digital transformation [post-COVID-19].

TM: Do you believe that more and more business owners will now expedite the process of transforming their businesses to operate digitally?

ND: Firstly, we are in an unprecedented period in our history. These are not normal economic challenges we usually go through in a downturn. These are instant and severe, with regulations prohibiting certain industries to even trade at all – digitally or not.

Bear in mind the country was in a difficult economic position before the pandemic. Digital transformation has been highlighted and spoken about for the last 10 years. As businesses, we know things are changing and we need to adapt. The pandemic has only highlighted this more and for many accelerated the need for innovation and change.

Digitizing your business may not result in success for everyone. It is not the silver bullet. We are very much in survival mode as business owners. Some businesses were impacted immediately – think hospitality, events companies, restaurants and tourism. Some may be impacted later, or over a longer period as market conditions and demand subside further – think business services, B2B supply chains which take time to feel the impact.

All businesses need to evolve with technological advances. This is nothing new here, we have been transforming as people and business for decades, even centuries. We are now in the next 4IR. If we don’t get on board, we will get left behind. Our customers demand and expect, the business must adapt and change in order to continue.

So, yes all businesses need to think and operate digitally. From the spaza shop using digital payment services or social media to promote their business to the large enterprise that needs to continue to innovate to remain relevant to their customers.

TM: How can businesses that are struggling now tap into the digital space? What tools and skills do they need to have and what should they take into consideration as they enter into this ‘digital economy’?

DN: The obvious place to start is how you acquire your customers. Every business needs customers and it is where the journey starts for any business. There are plenty of free tools available to profile your business. It is a given you need a website so customers can find and learn about your product or service.

This can be promoted through search engines. We have various other social channels at our disposal to spread and grow a following. Think Facebook, Instagram, Twitter, YouTube and even channels like WhatsApp are being used as ways to communicate and take orders through this pandemic.

E-commerce is a no brainer for any product sales or retailer, and with the advent of social commerce with Facebook Shops, you can extend your shop front through these social channels.

These are the obvious places to start and then you can address every touchpoint in your business with a more digital, less manual solution, from taking payments, invoicing, processing, manufacturing, delivery and so on. Even your suppliers will be left behind which runs their own businesses. If you think about it, the fact is some companies only want to now work with suppliers who can digitally connect to their remote order systems.

TM: Does it then mean that if you operate your business online, when countries are hit by a pandemic like COVID-19, your business won’t be negatively affected?

ND: It does not mean that you are not going to be impacted as a digital business. At the end of the day, you are running a business and normal business principles apply. However, you may be in a better position or have a better opportunity to get through the difficult period because you can continue to operate, sell products and generate revenue.

We have seen innovative moves by traditional business-like restaurants or fitness business pivoting to E-commerce or online selling. Those that have been reactive and moved quickly to online may survive the pandemic.

TM: What are some of the challenges and risks of operating your business digitally?

ND: Some of the key risks reside around the security of digital platforms. We have read the stories around companies losing customer data or money to hackers. We are also putting our trust in systems that primarily live in the Cloud, which are interconnected to various other digital parts of the business. In order to connect, we need an internet connection, electricity and in South Africa we have experienced challenges around the cost of access to internet, power outages which also affect access. This sort of downtime for small business is crippling.

If you offer your products online, there are more challenges around getting your business found on the internet. This global level of competition means you are fighting to be seen, so for many, a well-designed and user-friendly website is important, because customers have expectations. Your online profile and search engine ranking, SEO and social media channels are all important, but can be a challenge. At times there seems so much to do!

But at the end of the day, you need to understand your challenge and determine how you are going to overcome that. At the end of the day, every business has strength and weakness, opportunities and threats!

TM: In your opinion piece, you stated that some companies which had a strong social media presence do have some benefits… Why do you think that having a strong social media presence played a vital role in this instance?

ND: Social media is playing a larger role. The internet generation is growing up and your customers of the future are those which are “plugged” into these channels every day. Your social media channels are becoming more important from customer acquisition, servicing and loyalty.

Such is the emergence of the term “social commerce”. We see the key social media owners recognise their importance with brands and business now selling through these channels. Only in the last few weeks have we seen the launch of Shops across Facebook and Instagram.  We have seen recently the launch of Shops by Facebook.

Even WhatsApp added some E-commerce functionality in 2019 with a catalogue feature for its app WhatsApp Business. In South African, we have seen many companies quickly set-up WhatsApp channels in order to communicate with clients during this lockdown.

TM: You also mentioned that this pandemic has provided many new opportunities for digital transformation, what are those opportunities?

ND: For some the pandemic has been a massive threat, almost leading to instant end of life scenario for some businesses. I have friends in tourism and events which have closed. When you are forced by regulations not to trade at all, it becomes difficult to even transform, but I have also seen innovation with these industries providing virtual eventing or tourism opportunities.

Many have taken up the challenge. This may mean innovating at light speed to simply survive. For those who are successful and embrace the opportunity, may also be provided with a silver lining to provide them with new channels for their business, almost future-proofing their business. As business owners, some of us will recover and we know normality will return, but some things will change forever and those businesses that survived and innovated will end up with new business channels.

Take restaurants, we have seen so many shifts online in a matter of days, pivoting to find customers online because of the lockdown rules. Using E-commerce, social media channels to reach customers and creating orders for them to continue operations, maintain jobs and survive. Out of this, we will see new businesses emerge.

TM: Is it an obvious case that if one converts his/her business to operate digitally, it will succeed?  

ND: It is a statement that needs much more unpacking. Nothing is obvious, but we all know that we need to start operating digitally. Our world is becoming digital connections from our personal lives to running our businesses.

The lockdown has meant in some cases complete cease of how we sell to our customers. Traditional bricks and mortar businesses have been forced to close their doors, but in many countries, E-commerce was allowed to continue. Take Amazon in the US has seen massive growth due to the lockdown. More locally, E-commerce businesses were the first to be able to operate. It does not equal success, which is dependent much on you.

More locally, companies that are fighting to survive and driving change quickly, will more than likely survive over those that don’t. As customers we have certain expectations, as business owners we need to compete. It is not a case that we can stand still, we need to move as the world changes.

Impact of COVID-19 lockdown on e-commerce Takealot CEO Kim Reid

In April, it was reported that Takealot had lost around R350 million in the three-week lockdown – as only some goods could be sold.

That was when the country was on Level 5.

In the video below, the SABC speaks to Takealot CEO Kim Reid: