According to a new Gemalto report The Journey to a Software Company Mindset, 84% of organisations within the global manufacturing industry are embracing software over hardware as their primary business model.
The report, which surveyed 300 business decision-makers in device manufacturing firms across five major markets (Japan, Germany, France, UK, US), reveals that the device manufacturing industry is embracing software over hardware as its primary business model.
“In fact, 37% have already made a full shift to a software-centric business model, one that places software at the core of how a company runs and generates revenue,” the report states.
According to Gemalto, tech firms experience an 11% increase in earnings following a shift to software-based revenue models.
Dobek Pater, Managing Director at Africa Analysis, says that with some exceptions (e.g. SA) the adoption of software-based models by companies in Africa is still very slow.
“We need to give it another few years. One of the drivers will be companies’ continued move more in the direction of an opex-based, rather than a capex-based, model for IT (although this also depends on company size and strategy).
Steven Ambrose, industry analyst and CEO of StrategyWorx says, “Essentially all software is going this way and as cloud adoption increases and high-speed internet access increases it will accelerate.”
Koffi Kouakou, Africa analyst and Managing Director at Stratum Futures says there is an enormous opportunity for Africa to adopt software-based models.
“Software-based models are components of the digital economy, they help to speed up repetitive tasks and they triple down effects on getting things done. There are much higher benefits as you can do everything digitally and we’ve seen that now, in fact, there’s a great need of new innovative progress.”
“I think the opportunities are enormous in sort of a very frontier as there is an empty place regarding inroads from African countries and so forth. The Germans are here, the Japanese are also coming in but it still hasn’t moved fast enough, that is the reason why there’s such an opportunity, and we’ve seen initiatives like coding for girls, coding for young people.”
According to Ambrose, key challenges include internet access, especially in the more rural areas. “An additional constraint is the level of overall education and sophistication of the business environment.”
Pater says access to quality broadband connectivity remains a challenge. “Availability of software-based solutions (in the cloud) – those offered by global cloud providers are more readily available but their use may be lacking in quality (due to poor connectivity, high latency as the “cloud” is normally based somewhere else in the world).
“While domestic public clouds (created and offered by local operators), and even private clouds, are still very few.” He says others include the expansion of good quality data centre infrastructure, upgrade of existing networks by operators/service providers and customer/user education (also a big one).
Kouakou says Africa nations are operating at different speeds, “and those speeds depend largely on the leadership that is running those areas. Some countries are technology adoption prone to penetration, they are continuously reviving things and this leadership has been mainly political.”
“If you took Rwanda for example, they’re moving faster with broadband and making sure that people have access to these technologies. In Morocco, they’re also moving fast and are already around the 5G zone. They’re very serious about investing in encouraging both public sector but also private sector small and medium-sized enterprises to get these kinds of things going.”