Tag: business

Disruption is an inescapable and growing threat across industries in South Africa. Accenture’s (NYSE: ACN) 2020 Innovation Maturity Index shows that the majority of South African companies are vulnerable. That’s because they are playing it safe. It’s risky. The winners are innovating!

As the success of digital giants like Netflix, Google and Amazon illustrate, innovation is the source of the disruption. It is also the antidote to being disrupted. Accenture’s research bears this out. The companies that are beating disruption, just 7 percent of South African companies compared to 14 percent of companies globally, are innovating, using digital technologies to grow and reshape their core businesses into new businesses.

As part of its Innovation Maturity Index study, Accenture conducted interviews with 100 South African C-suite executives from 14 industries to understand how their businesses are preparing for, and are positioned to deal with disruption. Their responses are cause for concern:

  • 75% expect their industry to be disrupted by new innovations in the next three years, especially from new competitors and technologies.
  • 50% say they are not prepared for disruption.
  • The research indicates that all industries are facing disruption, but 85% (versus 70% of companies globally) of South African companies are highly susceptible to future disruption.

Why is innovation so important in South Africa right now?

“South Africa is facing enormous challenges, including high unemployment, low skills levels and declining productivity and competitiveness. To stimulate economic growth, it needs to address fundamentals like improving infrastructure, healthcare, education, and broadband reach and costs. Rapid advances in digital technologies offer both business and government a way to rapidly address key issues, introducing efficiencies and new business models, and opening up immense opportunities for value creation,” says Vukani Mngxati, CEO of Accenture in Africa. “But unleashing that value requires a strong innovation capability.”

“In South Africa, and globally, the gap between companies on the winning side of innovation and those being disrupted by it is growing,” says Rory Moore, Innovation Lead for Accenture in South Africa.

“When companies are in the middle of disruption, they typically make cautious moves, focussing their energies and resources on the core business that generates most income and profits. Unfortunately, as disruption escalates and business growth begins to moderate, companies that have not kept pace with change – by, for example, adopting new technologies to increase efficiencies and business agility, innovate and enter new markets – find themselves ill-equipped to compete. For them, the economic opportunity is often visible but unreachable; it cannot be attained with their existing business models or capabilities.

“Companies that aim to drive growth and thrive in the digital era have much to learn from the disruptors – the high-growth companies that are on the winning side of disruptors.

What do Innovation Champions do differently?

“Companies that thrive in the age of disruption actively innovate. They have, and are investing in innovation aggressively. And they take a focussed and decisive approach to innovation: it is change-oriented, outcome led and disruption-minded,” explains Yusof Seedat, Accenture Head: Global Geographies Research, Growth and Strategy.

These companies build deliberate innovation structures and they embed innovation in their everyday business by adopting seven innovation practices – they are hyper relevant, network-powered, technology-propelled, asset-smart, inclusive, talent rich and data-driven.

“Of these practices, becoming data driven is the alpha trend among Innovation Champions,” notes Seedat. “It powers a ‘wise pivot’, enabling these companies nurture and grow their core while also growing and scaling new business.”

“Playing it safe could cost companies in South Africa everything,” says Mngxati. “Companies must innovate, adopting new technologies and approaches to strengthen their core and pivot to the new if they hope to hold their position in a disrupted market. Taking the first steps now can help them build a foundation that will enable them to grow, compete and thrive in a digital era.”

By Phillip Inman for The Guardian

The coronavirus could cost the global economy more than $1tn in lost output if it turns into a pandemic, according to a leading economic forecaster.

Oxford Economics warned that the spread of the virus to regions outside Asia would knock 1.3% off global growth this year, the equivalent of $1.1tn in lost income.

The consultancy said its model of the global economy showed the virus was already having a “chilling effect” as factory closures in China spilled over to neighbouring countries and major companies struggled to source components and finished goods from the far east.

Apple told investors earlier this week that it would fail to meet its quarterly revenue target because of the “temporarily constrained” supply of iPhones and a dramatic drop in Chinese spending during the virus crisis.

Carmaker Jaguar Land Rover, adding its voice to a chorus of companies complaining about supply problems, said it could run out of car parts at its British factories by the end of next week if the coronavirus continued to prevent parts arriving from China.

Oxford Economics said it expected China’s GDP growth to fall from 6% last year to 5.4% in 2020 following the spread of the virus so far. But if it spreads more widely in Asia, world GDP would fall by $400bn in 2020, or 0.5%.

If the virus spreads beyond Asia and becomes a global pandemic, world GDP would drop $1.1tn, or 1.3% compared to the current projection. A $1.1tn decline would be the same as losing the entire annual output of Indonesia, the world’s 16th largest economy.

“Our scenarios see world GDP hit as a result of declines in discretionary consumption and travel and tourism, with some knock-on financial market effects and weaker investment,” it said.

Rival consultancy Capital Economics said the situation in China was still developing and it remained unclear how long before the quarantine rules across much of China’s central belt would lead to mass job layoffs and wage cuts becoming more widespread.

It said 85% of larger stock market-listed firms had enough funds to meet their liabilities and wage bills formore than six months without any further revenue.

But thousands of small and medium-sized businesses, which are responsible for half of urban jobs, “may not heed government orders not to shed jobs”.

A survey of 1,000 SMEs conducted by two Chinese universities found that unless conditions improved, one-third of the firms would run out of cash within a month, the consultancy said.

Another survey of 700 companies found that 40% of private firms would run out of cash within three months.

The firm’s Asia analyst, Julian Evans Pritchard, said: “Our best guess is that there is still a window of another week or so during which, if economic activity rebounds, the bulk of employees including at vulnerable SMEs would probably keep their jobs.

“And with large-scale layoffs avoided, consumer spending would bounce back quickly due to pent-up demand, which in turn would help the self-employed and family-run businesses to recoup much of their recent loss of income.

“But with each day that the disruption drags on, the risk of a protracted slump in output rises. If activity is not clearly rebounding by the end of next week, we will revisit our annual growth forecasts.

Oxford Economics said it still expected the impact of the virus to be limited to China and have a significant, but short-term impact, bringing world GDP growth just 0.2% lower than January at 2.3%.

But a pandemic would cause a deeper and more profound shock over the next six months, possibly equal to a $1.1tn loss, followed by a recovery that would make up some of the ground lost earlier in the year.

Is this the end of SAA?

By Jeanine Walker for SA Promo Magazine

“The end of the line is coming soon,” economist Mike Schussler told the Sunday Times over the weekend.

“We are in a deep crisis, we cannot save every state owned entity (SOE) and I think at this point in time Eskom is much more important than SAA”

His comments come at a time when SAA requested another R4 billion from the government in an attempt to keep the struggling airline afloat. BusinessTech reports the airline continues to operate at a loss and has a R3.5-billion short-term loan, which will be depleted at the end of this month (June 2019), along with a long-term R9.2-billion loan.

SAA board member Martin Kingston is quoted as saying that the board was worried about the state of the economy and how it may impact the government’s decision to bail out the airline.

Schussler says the airline is “indebted to the nth degree”, and that it probably wouldn’t survive.

Meanwhile labour union Solidarity says SAA needs urgent, radical intervention from outside. Responding to the resignation of SAA CEO, Vuyani Jarana, last week, Connie Mulder, head of Solidarity’s Research Institute says since President Cyril Ramaphosa’s election a spirit of excitement prevailed about a new beginning. “However, it now seems as if the faces on the pictures may have changed but the facts on the ground have not. Mr Jarana’s resignation leaves Solidarity with no choice but to update its court papers for business rescue, making a final end to the cadre merry-go-round at the SAA.”

SAA ‘is unsalvageable’

He says he finds its extremely disconcerting that in his letter of resignation Mr Jarana cites all the challenges Solidarity had highlighted in 2018 as the reasons for the airline’s failure. “This is proof that while the airline is state-owned it is unsalvageable, regardless of who is at its helm. In 2018 Solidarity reached an agreement with Mr Jarana in terms of which he would give us regular feedback on progress being made with the turnaround strategy. It is now clear to us that this strategy is not going to be implemented for as long as the SAA is owned by the state,” Mulder added.

The SAA’s status as a going concern is still in jeopardy, and it would appear as if little progress has been made as far the implementation of the turnaround strategy is concerned.

“To give a new CEO another chance, yet again, will be irresponsible given the history of the SAA,” Mulder added.

Solidarity considers the SAA business rescue application to be a precedent-creating case of vital importance, not only for the SAA, but also for taking back other, bigger state-owned enterprises from the hands of the state.

“To sit back now and let the SAA continue with another bailout and a new face will be akin to treating a patient who needs heart bypass surgery with a Panado. The SAA and other state-owned enterprises need radical, external intervention, and Solidarity will provide it,” Mulder concluded.

When Jarana resigned he said he would vacate the post on 31 August. However, the Sunday Times reported that he would now vacate his position immediately and would be succeeded by Zukisa “Zuks” Ramasia as acting CEO of SAA.

Businesses to sue Eskom

Source: 702

Eskom – as a state-owned entity – has a legal obligation to provide electricity to the people of South Africa, says Elaine Bergenthuin, MD at De Beer Attorneys.

De Beer Attorneys is preparing to take legal action against Eskom for losses suffered by businesses and commercial entities as a result of load shedding.

If the business in question had a specific contract with Eskom regarding the provision of electricity, then Eskom’s failure to supply power will form the basis of its claim.

If a business bases its claim on delict, then De Beer Attorneys will again need to prove that Eskom’s conduct was wrongful or negligent.

De Beer Attorneys expects Eskom to argue that load shedding, per se, is neither wrongful for negligent – in so far as it is a rational, responsible response to the electricity crisis, ensuring that SA’s electricity grid will not collapse, which would be an unmitigated disaster.

The law firm, however, argues that the electricity crisis itself is something which is of Eskom’s own making – due to its negligence in maintaining the electricity infrastructure.

As such, they should still be held accountable for the losses suffered.

De Beer Attorneys will evaluate each case on its own merits.

De Beer Attorneys is calling on all affected businesses that have suffered clear, quantifiable losses as a result of Eskom’s scheduled power outages, as well as public interest groups who wish to hold Eskom to account to please contact it at eskom@debeerattorneys.com.

How loadshedding has impacted local businesses

By Prinesha Naidoo for Bloomberg/Fin24

Businesses in South Africa have spent the past week struggling to operate amid rolling blackouts that affect their operations for as many as five hours at a time.

The power cuts by cash-strapped utility Eskom, which provides about 90% of the country’s electricity, are a “hugely damaging reality check,” President Cyril Ramaphosa said Thursday amid a fifth straight day of blackouts.

The reductions may cost the country as much as R5-billion rand a day, according to the Organisation Undoing Tax Abuse, a civil-society group.

Bloomberg visited some businesses during blackouts to see how they were coping with the situation.

Suzanne van Weely said she is throwing out as many as 15 loaves of unbaked bread daily – about a 10th of what she produces at her Supercalifragilistic bakery and coffee shop in Linden, Johannesburg.

“People don’t get the things they want and they walk out,” Van Weely said. With fridges shut down, cheesecakes, mousses and trays of tiramisu “are going off. It’s all stuff that costs money to make,” she said.

Across the road, trading at her father Ronald’s store, Magnificent Paints and Hardware, is at a standstill. When the power goes out, his regular customers – local contractors – stop working and so do his orders and sales.

Three of his six delivery trucks are parked in the yard while he sits in a back office lit only by a rechargeable lamp and the light from his smartphone screen.

“The power outages are way too long,” he said. “Four and half hours is way too long – most people work for eight hours so more than 50% of the workday is lost. They should make it two hours then we can at least get some business done.”

Around the corner, the screens on electronic fuel pumps at the Linden Garage gas station are blank. While owner Marco Dalle Ave jokes that his old mechanical pumps were seemingly more advanced and better suited to rolling blackouts, he is worried about turnover and having to pay staff.

“If you can’t operate, you can’t make money,” he says. According to him, a generator would cost more than R100 000 rand – which he can’t afford.

Francois Labuschagne, who also can’t afford a generator, said electricity shortages are killing business at Print2Go, his printing shop.

“It is like the economy has just been cut in half – half of the economy is operating half of the day and it is not like there is a plan,” he said. “As a business owner, this is a ridiculous situation, we’ve got staff to pay – if the business goes under then staff lose their jobs.”

While the Rembrandt butchery has a back-up generator, power cuts still have a devastating effect, said Marco Huisamen, its manager.

With petrol prices close to record levels, running the generator is expensive and doesn’t provide nearly enough energy to keep all the lights on, fridges cold and meat band saws working all at once.

Source: EWN

The trade union federation has warned doing so would not solve the struggling utility’s governance and debt problems.

The Congress of South African Trade Unions (Cosatu) says it does not support a proposal to split up Eskom into three different entities.

The trade union federation has warned that doing so would not solve the struggling utility’s governance and debt problems.

The proposal to split Eskom into three separate firms was reportedly made by a task team appointed by President Cyril Ramaphosa.

Cosatu’s first deputy president Michael Shingange says any unbundling would result in retrenchments.

“When you unbundle and turn debt into equity, as they say, we [Cosatu] view that as part of retrenchment. Even if you don’t pronounce that you’re going to restructure or privatise, we view it as privatisation because you are going to invite private ownership.”

By Michael Holder for BusinessGreen

Upcyclers turn old desks, chairs, and carpets into new office furniture, saving money and delivering environmental benefits.

Making sure products and materials can be used again – rather than going to waste – is good for for both businesses and the environment. That is the premise that underpins the concept of the “circular economy”, an emerging sector the government estimates could deliver £23-billionn a year of benefits to UK businesses if resources were used more efficiently.

For example, one third of our office furniture – 300 tonnes per day – ends up in landfill.

Firms such as Rype Office create sustainable furniture from items that would otherwise get thrown away and is employing ‘upcyclers’ across its growing business to help turn the circular economy vision into a reality.

Source: IOL/Bloomberg

The business cycle in South Africa, where the economy entered its first recession in almost a decade in the second quarter, is in its longest downward phase since records started in 1945.

It entered a 58th straight month of declines in September, central bank data showed Tuesday.

The regulator monitors about 200 indicators representing economic processes such as production, sales, employment and prices to determine the direction of the trend.

Source: August Free Press

There are many goods and services that are vital to businesses and one of the key ones is stationery. It is important for businesses of all sizes to be able to access the stationery products and printing services they need, as without access to the necessary stationery it can be difficult to maintain a professional image and difficult to operate on a day to day basis.

Fortunately, there are various options available when it comes to stationery providers, which makes it easier for businesses to find the right provider for their needs. There are many important factors that need to be considered when it comes to selecting the most suitable stationery for your business, and the one you choose can have a big impact both in terms of business finances and business operations.

How to make your selection
So, what do you need to consider when it comes to selecting the right stationer for your business? Well, there are a number of different factors that you need to take into account before you make your choice. Selecting the right provider can make a difference to the professional image of your company, to the outgoing costs you are faced with, and to the service you receive when it comes to your stationery deliveries and processes.

There are all sorts of products and services you can get from the right stationery and printing services provider. This includes everything from a simple rubber stamp through to high quality, low cost posters printing. Finding a stationer that offers a wide variety of services and products will make life far easier for you because it means you can get all the stationery and related services you need from the same place rather than having to shop around each time. This will save you time, hassle, and inconvenience, which means you can get on with running your business rather than getting tied up with stationery ordering.

Another thing that is very important for most businesses is finding a provider that offers affordability. All businesses have to be careful about their budgets and spending these days and without finding a competitive provider you could end up paying way over the odds for your stationery and services. You therefore need to make sure you check the cost of the services and that you find a provider that offers good deals and affordable pricing.

The service levels you receive are also important, as you need to ensure you get reliability and timely deliveries of your stationery. For businesses, things can grind to a halt when stationery runs out so you need to be able to get the items you need when you need them. Finding a provider that has a reputation for solid service and reliability will help you to benefit from peace of mind as well as reduce the risk of operations being affected. In addition, it means you can look forward to an excellent level of customer service from your provider.

It’s comply or die for SA’s SMEs

By Tracy Bolton, director: General Business at SAP Africa

On 25 May this year, a new piece of legislation came into effect in Europe that could have severe consequences for non-compliant South African businesses. The General Data Protection Regulation – or GDPR for short – is a regulation under European Union law that aims to give control over personal data back to EU citizens.

The regulation applies to any organisation that collects or processes data from EU citizens, even when that citizen or organisation is based outside the EU. The European Commission defines personal data as “any information relating to an individual, whether it relates to his or her private, professional or public life”. This includes names, home addresses, photos, email addresses, bank details, social media posts, medical information, or even a computer’s IP address.

The fines for non-compliance are severe and could spell the end of a business practically overnight: the maximum fine is as much as €20-million, or nearly R300-million. What’s more, the regulation is far-reaching: any company with an EU citizen among its workforce, or a customer based in the EU, or even if only one of the subscribers to a company newsletter is based in the EU, that company can be held liable under GDPR. Few if any mid-sized South African firms could afford such a steep sanction, and legacy issues compound problems around compliance, increasing their risk and potential liability.

In response, technology firms are taking unprecedented steps to ensure they and their customers remain within the confines of the new regulation, especially considering the volume of trade and collaboration between African countries and their European counterparts.

Legacy processes add complexity to compliance
Most mid-sized firms have deliberately or inadvertently built up internal siloes related to how customer, business and other operational data is stored. For example, in a typical retailer’s marketing department, the data storage systems that processes newsletter subscriptions via email may be entirely removed from and non-integrated to the WhatsApp number where much of the customer communication takes place. This means a customer that unsubscribes to a newsletter via WhatsApp may still receive the newsletter until such a time as the retailer can integrate the two sets of data.

As GDPR comes into effect, companies will not only stand liable for fines should the above scenario play out, but they need to be able to provide customers with complete clarity on how their data is stored and managed at any point in time. Any costs incurred in the process of showing how customer data is stored is also for the company’s own account, which adds not only complexity to standard business processes but also potentially additional costs.
Considering the prevailing trust deficit between consumers and brands, the potential of being exposed for treating confidential customer data poorly is immense. Once trust is breached, affected customers are unlikely to engage with the brand again, and will leave a searchable and public trail of comments on social media for all to see. The recent case of Facebook – which now faces a fine of as much as $2-trillion – has brought this to the forefront of consumer consciousness, but other examples of poor customer data management abound.

On the basis of consent
For South African businesses, however, new technology tools could play an invaluable role in mitigating risks associated with GDPR and its South African counterpart, POPI. A recent investment by SAP into Consent is simplifying the business processes associates with creating trusted digital experiences within the limitations of GDPR and POPI compliance.

Part of the SAP Hybris suite of applications, Consent enables SMEs to centrally manage customer preferences and consent settings throughout their full lifecycle, while putting them in control of their own data. Consent enables companies to be transparent, gain loyal customers and protect their business from costly fines as well as potentially disruptive business processes related to proving to customers how their data is being stored and managed.
In line with modern business demands, Consent is also provided in the cloud, making it quick to implement and easy to prove ROI. Every time a policy changes, customers can receive an automated notification that they actively accept, with a record of such forms of consent stored centrally to allow SMEs to quickly and accurately prove responsible customer data management.

Whether you run an online retailer with customers around the world, or a news website where a European citizen may occasionally offer a comment on an article, GDPR holds inherent risks to your business. But with the correct technology tool, a potential R300m liability can be transformed into a competitive business advantage that furthers the cause of trusted and trustworthy digital customer experiences.
Seems an easy choice, no?

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