Top 3 IT Challenges in South Africa

Top 3 IT Challenges in South Africa

At ImprovIT we’re proud that we work across diverse industries and territories. It gives us new ideas, perspectives and experience; and allows us to work with some really talented IT people.

One of these is Leonie McManus in Johannesburg, South Africa. She’s been working with us for three years now, after Chris Renn and I originally met her while we were all working for Gartner earlier in our careers. She’s a specialist in ICT benchmarking, strategy and research (she’s also part of the Forrester team in South Africa, and a director of McManus Consulting).

We asked Leonie to tell us about the South African market and what senior IT leaders can do to navigate their specific challenges and drive their IT forward.

Leonie told us:

“There are three main areas I see as key to the African perspective –

  1. Cost
  2. Service levels
  3. IT resources
1. Cost

A large percentage of senior IT leaders here use ‘IT spend as a percentage of revenue’ as their key benchmarking metric or KPI. However, this can be incredibly misleading: the ‘correct’ percentage varies enormously by industry and even if you get that right, it doesn’t necessarily mean that you’re spending money on the right things!  So it’s OK to use this as one metric, but it’s really important that it’s used in combination with other key indicators.

The often-repeated phrase ‘you can’t manage what you don’t measure’ is so relevant to the South African market. If you don’t have a stake in the ground – a baseline – then you’re just shooting into the sky.

Even comparing your own performance year on year is a worthwhile exercise so you can see internally if you’re heading in the right direction and improving your IT. If you can compare yourself to external peers (whether within your industry or geography, or both) then that’s even better!

We (along with most other major IT Consultancies) advise our clients to include a benchmarking clause in every outsourcing contract. Together with your service provider, you decide who does the benchmark and when; you both pay 50% of the cost and you stipulate up front how you will implement the findings. Five years is a long time, and if you don’t benchmark regularly, how will you know whether you’re paying a good price and receiving the best service for your money throughout the contracted period?

Another really important challenge we have in South Africa (and in many African countries) is that our currency is very volatile when compared to major currencies. This makes budgeting accurately near impossible because some of the IT components, such as software, are sold in Dollars, Pounds or Euros. When our clients set their budgets working on a current exchange rate, they can find that they have a big hole six months later purely as a result of currency fluctuations. We therefore always advise our clients to work to a 12-month rolling average when working with other currencies. This ensures that they stay up to date and we have visibility of any issues as soon as they arise.

We have also found that one of the key areas where SA companies can gain efficiencies is by better negotiating renewal and software contracts. Software costs represent a large portion of IT budgets and have been increasing due to the adoption of subscription-based strategies and migration to the Cloud.

2. Service levels

Once you know how much budget you should be spending on IT, you need to link the spend to the service levels that are right for your business i.e. adjust your spend in line with user expectations.

For instance, the difference between 98% and 99% network availability can be enormous, so you need to really understand your business requirements and then adjust spend according to the right service level so you’re not over or under serving the business.

Of course the business also needs to understand that they cannot just demand the highest service level possible – there is a price tag associated with higher service levels and they need to be aware of it. There should be a show-back or chargeback mechanism in place, that takes this into account.

There is an increasing trend towards IT cost recovery, and some companies have also adopted a ‘cost plus markup model’, thus moving towards a profit centre model for IT.

3. IT Resourcing

In our territories we traditionally have fewer IT people delivering services and they therefore have much broader responsibility. This is obviously a big risk to the business as the impact is really felt when people move on.

We’ve seen, post-COVID, that there is a very high churn of IT staff, and they are seeking opportunities where they feel appreciated and rewarded. They’ve seen that remote work is possible, and are demanding hybrid workplaces and a better work / life balance. If you can offerthat, and ensure that you align the right number of IT people to each area of the business, it can transform your performance in these unsettled times and beyond.

Outsourcing and cloud services are often the natural choices because of the lack of people or expertise within an organisation, but they aren’t necessarily always the right choice for every business. Cost saving should never be the sole reason to make big strategic decisions like this, as investing in the right people might be a much better use of your resources.

If you’re considering cloud migration, it’s essential to first benchmark where you are at the moment in terms of costs and performance; as without that baseline, it will be very difficult to validate, defend or manage a cloud migration strategy.”

If you’re an IT leader in Africa looking to improve your IT and get more for your money, give Leonie a call at +2782-904-3773 or leonie@mcmanus.co.za. Not only is she a top independent IT expert, she’s also a joy to work with.

ImprovIT are McManus Consulting’s benchmark partner for the Southern African market.

ImprovIT were founded by former colleagues of Gartner, IBM and HP to help senior IT leaders make the critical decisions that will maximise their technology investments.

We’re completely independent and impartial specialists in the use of IT Measurement, Modelling and Benchmarking. We offer a premium boutique service at a fraction of the price of our larger competitors.

ImprovIT are an independent business and technology consultancy. We were founded by former colleagues of Gartner, IBM and HP to help senior IT leaders make the critical decisions that will maximise their technology investments. We’re completely independent and impartial specialists in the use of IT Measurement, Modelling and Benchmarking.