Why Digital Transformation Forms The Backbone Of Economic Recovery
As global governments seek to lead the way in building back stronger, more resilient and interconnected economies, facilitating accelerated digitalisation for business will be mission-critical. The pace of evolution as necessitated by the events of 2020 provided a glimpse of what is possible – we now stand at a critical juncture, with the available tools to truly revitalise and reimagine vital industries.
The building blocks laid today must supplement and support the ability to ‘work from anywhere’, empower data innovation, and realise the mass potential of multi-cloud flexibility. The opportunity to deliver a digital-first recovery and build a pathway towards the future of work is here. Technology stands poised and ready to meet these ambitious objectives.
Understanding the DNA of local economies is key to the enablement and provision of optimum support for what is an increasingly diverse business environment, spanning large entities as well as Small and Medium Enterprises (SMEs). SMEs account for 90% of business, and more than 50% of employment worldwide, they form a critical facet of our economic ecosystem.
According to the World Bank, formal SMEs contribute up to 40% of national income (GDP) in emerging economies – and these numbers are significantly higher when informal SMEs are included.
It is fair to say they are the backbone of the global economy.
Traditionally, smaller businesses have been slower to digitise than larger counterparts, however, according to the OECD, 70% of SMEs significantly intensified their use of digital technologies due to the 2020’s global crisis. According to a thought leadership piece published by McKinsey, “SMEs across South Africa represent more than 98% of businesses, employ between 50 and 60% of the country’s workforce across all sectors, and are responsible for a quarter of job growth in the private sector.”
The article goes on to say that SME’s should use technology to grow their reach and efficiency at lower costs in order to overcome their scale disadvantage when compared to larger organisations. It is vitally important that this segment of the economy is supported in its quest to thrive in the digital era – and this means matching their ambitions with speedy, connected, and personalised services.
The same is true for large businesses which are often motivated by a desire to improve or expand existing technologies when determining locations for Foreign Direct Investment (FDI). With access to tech a key driver in attracting global FDI, digital transformation will prove to be a key determinant in laying the infrastructure to sustain and enable economic growth in the future.
With the share of FDI stock in global GDP increasing from 22% to 35% between 2000 and 2019, it is imperative that digital infrastructure can meet growing demand and support evolving economies in the years ahead.
Context is everything. For a business of any size to thrive it must exist within an environment that supports its growth, as survival is about more than individual resources or capabilities.
