Companies across the board are looking to digitalisation as the new way of doing business. Digital transformation and the Fourth Industrial Revolution are being touted as the way forward for successful companies. While the IT industry is selling the concepts and tools of digitalisation to customers, it’s important for distributors and resellers in the market to undergo their own digital transformation journey.

We talk about digitalisation all the time, but what exactly does it mean? And how should companies in the IT channel space think about – and achieve – their own digital transformation journeys?

“Discussions around digital transformation in South Africa are putting companies across industry sectors under pressure to embrace it or risk losing relevancy to competitors,” explains Desmond Struwig, executive head of digital at Decision Inc. “But, despite all the buzz around the term, the focus should remain on standard business practice while leveraging access to information and technology to operate more efficiently.”

He points out that there is so much sensationalism around digital transformation, that many organisations get lost in the rush to implement the latest and greatest technology tools without considering their business merits.

“If digital transformation is to be effective in the channel, conversations around the topic need to be simplified and focused on showcasing the reality behind digital.

“Fundamentally, it is all about increasing access to information, allowing richer use of data, and harnessing advancements in technology to drive efficiency and simplicity.”

As an example, he points out that, in the project management space Decision Inc has worked with a client to develop a mobile application which provides realtime access to data from large infrastructure projects for both government and the private sector.

“During the project, data is created with automatically generated reports that enable stakeholders to see how the work positively impacts local communities from project level all the way up to a national level. In this instance, digital transformation is focused on digitising a paper-based environment and democratising access to data for all approved stakeholders.”

Another example is work in industrial measurement and preventative maintenance where certain sites can generate more than 250 000 data points over an inspection period which can last a few weeks.

“Where, previously, that data was manually transcribed by employees to a spreadsheet. Digitising the process meant that Internet of Things (IoT)-enabled devices were linked to a mobile app that transfers the data directly from the site being inspected to the device.

“Not only does this result in streamlined operations but also a better allocation of resources for the customer and the ability to overlay real-time analytics onto the data for preventative maintenance analysis.”

In the application, digital transformation is more than just an enabler for companies to operate effectively, Struwig says. “It has significant potential from an employment perspective as well. Educational institutions need to move away from a knowledge-based structure towards an innovation and capability-based environment. This provides students with the skills required for a digital world.

“Ultimately, digital transformation has two aspects. Firstly, there is the business change required to remain competitive. Secondly, it is to give people the opportunity to accelerate their thinking outside the box and enabling them to drive transformation themselves in their chosen industries.”

The advent of the digital age is challenging South Africa’s ICT channel by putting more power in the end-customer’s hands and elevating customers’ expectations of the experience they should get from their suppliers, says Anton Herbst, group strategy director at Tarsus Technology Group.

To succeed in this environment, resellers and distributors need to take a two-speed approach to digital transformation: using technology to optimise internal processes, while also creating disruptive and innovative digital-native businesses.

Herbst believes that the biggest challenge the channel faces is shifting from a product-centric approach to a customer-centric mindset.

“In the past, we differentiated ourselves by our vendor partnerships and the product lines we carried. By offering the right product sets, we could achieve the highest margins,” he says.

“But the rise of direct channels, the shift towards as-a-service business models and growing global competition means that customers have more power than ever before. With products now available across multiple different channels and in new formats – such as cloud delivery – we need to evolve.”

Herbst says Tarsus Technology Group has focused on the customer experience as the most important driver for digital transformation. It has taken a two-pronged approach: building digital businesses such as its cloud-enablement company, Tarsus on Demand, on one hand, and using advanced digital technologies to streamline internal processes in order to deliver a smoother customer experience in its traditional volume business, on the other.

“We realised that we needed to control the value chain better than we were, which meant gaining better visibility into the supply chain and automating manual processes,” says Herbst. “The world’s leading digital companies like Apple and Amazon have a complete view of the value chain, through to the end-user, and that’s the example we aim to follow.”

One of Tarsus’s main focusses for transforming its volume distribution business is delivering a fully integrated supply chain that includes strong logistics capabilities. This is underpinned by a warehouse management system that enables a high level of speed and transparency in interactions with the channel and end-customers.

This helps the company to deliver a consistent customer experience across multiple channels, while boosting internal productivity and efficiency. “The next level for us is to achieve better integration between our data flows and product flows to the reseller and end-user,” says Herbst. “We need to be able to serve the needs of an on-demand economy.”

Following the deployment of the automated warehouse management system, the Tarsus Technology Group is rolling out robotic process automation (RPA) in its in-bound shipping department. The RPA pilot project has seen Tarsus Distribution create a software robot to automate logistics paperwork and data capture. This has vastly elevated the efficiency of these processes.

At the same time, Tarsus is managing a shift to new business models, such as as-a-service, which will cannibalise some of its existing revenue streams over the longer term. “We need to manage this transition carefully since it affects every aspect of our business – from human resources to cashflow to the way to we sell to how we reward salespeople,” Herbst says.

One of the biggest challenges in digital transformation is getting the human element right – culture, leadership and skills, says Herbst. “We have created new jobs and new job families in our business – especially in data, process and customer experience,” he says. “We are also skilling people up in digital technology to prepare them for the work of the future.”

Old corporate hierarchies are breaking down, replaced by flatter and more collaborative organisational structures. As technology replaces manual processes, Tarsus is re-training people to take on new roles in the business. And there is a constant need to strike right balance between the human touch and slick, automated processes in customer interactions, says Herbst.

Riaan Graham, sales director for Ruckus Networks, sub-Saharan Africa, agrees that, as businesses move towards strong digitalisation strategies, the channel itself must transform if it is to service the businesses of the future and thrive.

What’s more, he says that the slow-down in the market following the recession and the decline in the average selling price of technology  means that success has to be achieved in a tight economy.

This is coupled with the fact that, while the channel often moves some of the world’s most advanced technology, they too have legacy processes that need to be digitalised. And, given the requirements in the market for a strong channel that can deliver, the transition into a digital era has never been as important as it is today.

“The key is to build a successful channel ecosystem,” Graham says. “Distributors are looking to drive up service capabilities and enhance skills and resources to ensure customers get the support and technical expertise they require.

“The vendors on the other hand need to differentiate themselves in the market, in terms of services and value-adds.

“It is this symbiosis which initiates partner investments – from skills development, discounts and increased margins all the way through to specific incentives and business lead generation. As a result, the channel needs to embrace digitalisation and disruption to innovate, if we are to truly embrace the future of distribution.”

Andries Janse Van Rensburg. channel manager at Westcon, agrees that, despite moving some of the world’s most advanced products and technology through it, the channel itself needs improvement in multiple areas.

With push from vendors and pull from customers, the channel is ripe for transition into a new digital era, he says.

“Customer methods and expectations are shifting. How they acquire information about products/solutions, how they purchase and what they expect from their distributors, is changing. What’s more, tools, data and analytics have become more and more available, meaning that the traditional approaches and go-to-market strategies need to evolve.”

Customers are accessing more information online and, in several cases, interacting with, trialing or even purchasing products without ever interacting with a seller. As a result, the channel needs deeper analytics, mobile driven strategies and data-driven decision making.

In addition, a channel equipped with the right information and anywhere connectivity can be more responsive to customer requirements and expectations.

“Inflexible partner terms and conditions, predictivity holding stock levels and general inflexibility can have massive impact on margins, especially as distributors move to become more adaptive and accommodating in line with customer requirements,” says Van Rensburg.

“As a result, vendors and partners need to work closely together to develop and deliver opportunities into the market that provide greater strategic insight, richer margin and longer-term customer engagements through delivery models that truly work and ones that disrupt and transform the supply chain.”

What’s more, digitalisation can have a massive impact on the channel environment from a process efficiency point of view – taking away a lot of the manual routine tasks, which also improves accuracy and frees up human capital to focus on more strategic deliverables.

This naturally speeds up processes and response times, and can go a long way to reducing costs. Technologies and automation also allows for data to be mined for valuable business insights which can be translated into new strategic deliverables or actions – which allows for more adaptability and responsiveness.

Understanding the challenges and opportunities that exist for African resellers in a digital age is critical, Graham adds.

“Essentially, it’s about creating a channel with a structure, value proposition and margin model that is unique and compelling and the only way to do so, is to really understand your partners – which should become an extension of your business. Digitalisation adds another layer to the mix and should be embraced to transform the channel for the better.”

Muggie van Staden, MD of Obsidian Systems, believes his company has been responsive to the digitisation imperative, quickly adopting and enforcing system automation, by using the enabling tools that are available to anyone.

“There is a proliferation of tools that allow for easy orchestration, monitoring and scaling of services,” he points out. “Staying ahead of technologies and looking for disruptive models, such as containers and collaborative platforms that enhance DevOps cultures, safeguards provisioning infrastructure for development on new products and services. This is where the world is heading … everything is being driven by software.”

Many companies see digitalisation and the relevant strategies as the low-hanging fruit of cost efficiency, Van Staden says. “But building operational excellence is key to this strategy as opposed to simply cutting costs.

“In the majority of cases where value is created, this has resulted in increased cost – but definite value (such as increased customer base and market differentiation) is a big advantage.”

There are any number of technogolies that can give companies the edge inn digitalisation, Van Staden points out.

“Digitalisation, access to mobile applications and the democratisation of information sharing allows companies access to realtime live data. The ability to gain insight into consumer behaviour and experiential feedback can be a competitive advantage.

“The big data play is more about gathering the data, and having the ability to generate meaningful information for business decisions. Businesses that catch on to this and can use it to their advantage can actually turn mobile apps and social media in their favour.”

A new technology type that is coming to the fore now is the Internet of Things (IoT), and Van Staden believes this will have profound effects on the distribution model in the near future.

“If digital transformation is going to be the driver of competitive advantage, then IoT becomes the enabler,” he says. “The connectedness of people via multiple devices is growing, perhaps not on mobile phones –  however, with technology becoming smarter with machine learning and AI, more mundane automated processes in our homes will become connected opening the door to insight into our households.

“The future of the data flow will increase and the race will be how companies will benefit from that information.”

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