SA businesses slow to embrace automation

While the majority of organisations worldwide are planning to automate business practices‚ with some jobs being discontinued as a result‚ less than a third of South African businesses are considering this course of action‚ a new Grant Thornton International Business Report shows.

The report‚ which researched the scale of technology’s influence on business‚ highlighted that 56% of firms globally‚ and 31% of South African companies‚ were already automating or may do so in the coming 12 months.

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Despite this‚ the research revealed that 66% of South African businesses were not considering automating any business functions in the next 12 months‚ while only 3% might consider this.

“But automation will have to be introduced if we are to be globally competitive‚” said Michiel Jonker‚ director: IT advisory at Grant Thornton in Johannesburg. “And there are several factors that will start driving automation here at home.

“We face extraordinarily high labour costs‚ very low productivity and - compared to other countries‚ including the BRIC countries - entry salaries of young people are extremely high.

“In addition‚ if we want to compete globally‚ we will have to play according to global rules. Productivity is extremely important for competition‚ which means that we have no choice but to automate.”

Jonker said the local situation was different for many reasons - including the high number of unskilled people‚ making it difficult for employees to operate more advanced machines or computers.

He said that a failing government education system was not preparing young people for jobs in the 21st century‚ which was also referred to as the “second machine age”‚ and this was a major cause of the unacceptably high percentage of unskilled labour in this country.

The report provides insight into the views and expectations of more than 10‚000 businesses per year across 36 economies worldwide. Research for this automation report is drawn from data surveying 2‚571 executives in 36 economies in February this year.

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The findings also suggest that opportunities will arise for workers to assume new roles and responsibilities created by an increased use of technology. Globally more than half of automating firms (54%) expect to redeploy workers in other areas‚ with 28% saying that workers will be trained to operate new machinery.

In South Africa‚ the research revealed that 44% of firms that had automated‚ or intended to‚ said their people would be trained to use the new machines‚ while 32% expected automation to lead to a reduction in their organisation's head count.

“SA needs to accept that automation is going to happen‚ and that innovation will be key for economic growth.

“We need to start encouraging our young people to consider jobs that cannot be replaced by automation. They must design those robots‚ rather than going into occupations that will be replaced by robots.”

Commenting on the report‚ Steven Perkins‚ global leader for technology at Grant Thornton International‚ said: “In this digital age‚ businesses are looking to technology at an ever-increasing pace. Post-financial crisis‚ firms continue to strive for greater efficiency and better productivity.

“But fifty years on from PCs going into mass production‚ costs of capital are low while labour costs increase. As businesses consider whether to invest in staff or machines‚ for many‚ the latter is becoming the more cost-effective option.”