The biggest risk many banks once faced in their operations was robbery and collusion. Today, we are seeing 12,000 to 14,000 hits every month on our firewalls with most of these threats emanating from Eastern Europe.
Those words were recently uttered to the media by Equity Group’s Managing Director, Dr James Mwangi, admitting to the serious risk digital transformation of the bank’s activities has brought on.
It lends to the irony seen in recent surveys, such as the recently launched 2019 East Africa CEO Outlook which found that “as organisations take bolder strides in their digital transformation journeys, each step is matched by an increase in their vulnerability to cyber attacks.”
To continue with the example of Equity, the bank has branches across East Africa, including the Democratic Republic of Congo. If we take it the many thousands of the hacking attempts were only in its extensive bank network, how many thousands more must be registering on other banks’ firewalls?
The more important question however is, as Dr Mwangi posed, “do you have the skills and competencies of the global wizards trying to take away from you?”
We apparently don’t have the necessary competencies. And this is including a seeming lack of will as revealed in the CEO Outlook.
According to the survey, only 4 per cent of the regional CEOs plan to up-skill more than half of their entire workforce in digital capabilities. This is despite operational risk having emerged as a primary concern for CEOs in the region.
It, however, is an illustration of the dearth of requisite skills when Dr Mwangi, speaking during the release of the survey report, explained how Equity has had to hire four data scientists from Eastern Europe because the capabilities in the local market are still low.
To emphasise the high level of expertise necessary, he adds that all four scientists have doctorate degrees.
The KPMG survey, evocatively titled, Agile or irrelevant: Redefining resilience, looks at the how CEOs in Kenya, Uganda, Rwanda, Tanzania and Ethiopia are fairing in digitally transforming their business entities.
It reports some positive developments, such as the rise to 62 per cent the number of CEOs who now appreciate the importance of improving their innovation processes. The enthusiasm was 20 per cent in 2018.
Also, the proportion of East African CEOs confirming that they have in place digital transformation structures to adjust their business model has improved from 31 per cent in 2018 to 52 per cent in 2019.
Digital transformation describes how a business interacts with customers enhancing their experience using technology, as well as how the technology is used to improve internal processes, by making them more efficient.
However, the survey finds that of the major technologies enabling digital transformation, only 8 per cent of the East African CEOs have already begun implementing artificial intelligence (AI) in the automation of their processes.
Overall, it is clear there is a technological lag in the business sector in the region. Thus, the East Africa CEO Outlook conclusion that “CEOs in the region will need to exercise agility and adaptability in order to respond to, or better still, get ahead of change.”
And yet, though change is inevitable to survive in business, digital transformation is not easy. This is according the McKinsey & Company, the global management consulting firm.
Its October 2018 survey shows that only 16 per cent of organizations’ digital transformations have successfully improved performance and also equipped them to sustain changes in the long term. An additional 7 per cent say that performance improved but that those improvements were not sustained.
It also notes that even digitally savvy industries, such as high tech, media, and telecom, are struggling. Among these industries, the success rate does not exceed 26 per cent.
But in more traditional industries, such as oil and gas, automotive, infrastructure, and pharmaceuticals, digital transformations are even more challenging: success rates fall between 4 and 11 per cent.
Success rates also vary by company size. At organizations with fewer than 100 employees, respondents are 2.7 times more likely to report a successful digital transformation than are those from organizations with more than 50,000 employees.
Results from respondents who report success point to best practices that make a digital transformation more likely to succeed. These fall into five categories, namely, leadership, capability building, empowering workers, upgrading tools, and communication.
Reading from these best practices, it is clear where the East Africa CEOs need to improve as revealed in the KPMG survey.
To recall the Seventh Edition of the Africa CEO Forum in March 2019 in Kigali, digital transformation was touched upon as one of the aspects to unlock the continent’s economic potential as the promise of the Africa Continental Free Trade Area (AfCFTA) unfolds.
The views expressed in this article are of the author.