|Number of patents filed||8||6||14|
|Research and development spend (Rm)||220,5||163,4||227,0|
Our focus at Altron lies in delivering relevant technologies, cost-effectively, to assist the needs of our customers on their specific outcomes – whether that is profit, efficiency or delivery of value. With our access to a wide range of technology and cutting-edge ICT solutions, from among our OEM partners as well as our own product suites, Altron is well positioned to deliver seamless, innovative end-to-end solutions to our customers and to capture opportunities for cross-selling.
This year saw our move away from the manufacturing side of our business draw closer to completion. Within the core businesses, to ensure that our offerings remain at the forefront of technology, it is critical that we are adaptive to quickly evolving technological trends and that we are ready to maximise the potential of new opportunities. Our two most material issues in this area are therefore innovation and research and development (R&D), and our product and service offerings.
Altron is proud of its intellectual property (IP) and encourages innovation within the business. We design and invest in products and applications throughout the group, which we constantly refresh and evolve. We protect all IP through registration of patents, designs, domain names and trademarks at a group level.
Importantly, we see partnerships as a way to leverage external IP, which enables us to offer tailor-made solutions to our customers by drawing on the research and innovation of our strategic partners in addition to our own. Altron plays to its strength in implementing and facilitating technology. This approach exposes us to a variety of creative thinking from across the globe and enables us to stay abreast of cutting-edge international developments.
Within the group we strategically invest in growing our product and service offerings both organically and inorganically, ensuring that we maintain a promising pipeline of growing businesses. This year we adopted a “back-to-basics approach”, focusing on satisfying our customers, eradicating inefficiencies and using technology to improve productivity.
Altron prides itself on its strong relationships with its customers and suppliers. We maintain multi-tiered relationships with each of our key partners, which ensures flexibility and sustainability. Ongoing engagement is a core part of Altron’s strategy in this regard, which requires that we evolve alongside our strategic partners and that we are responsive to opportunities provided by their developments.
We have determinedly focused this year on building new partnerships and new relationships in our products and services space. A particular achievement in this regard was that Altron, through Altech Radio Holdings and Bytes Systems Integration, joined the Nokia Global Partner Programme.
Salesforce has also been added to this list of key partnerships. We will not only become a consulting partner to Salesforce but will also implement it internally. See here for information on this relationship, as well as how we engage with our customers and other key external stakeholders within our value chain.
|RISKS||KEY MITIGATION STEPS|
Altron’s TMT businesses operate in fast-paced, continually changing markets, which regularly face disruptive technological advances. We recognise the importance of ensuring that our businesses remain in a phase of growth, so we aim to keep our product and service offerings fresh. Decades of experience in remaining abreast of new trends ensures that we remain adaptive and are well positioned to respond accordingly.
Altron acts primarily as an implementer and integrator of world-class ICT solutions on behalf of our strategic technology partners, and as such we leverage the R&D and accumulated IP of these international partners. As a result our own R&D requirements tend to be limited to local technologies and integration solutions being pursued by the group.
We continue to invest in and evolve our internal IP, particularly in the fintech and healthtech spaces. New R&D is budgeted for on an annual basis and proposals are considered and approved within each operation on a project-by-project basis.
This year we were particularly proud to be honoured at the Da Vinci TT100 Business Innovation Awards Programme for 2016 (TT100). Competing in the large enterprises class, the group was announced the winner for three of the four main categories, namely the MTN Award for Excellence in the Management of Innovation, the Eskom Award for Excellence in the Management of Systems, and the Greg Tosen Award for Excellence in the Management of Technology. We were also recognised as a finalist in the Management of People category. In addition, the group also won the Blank Canvas International Award for Sustainability in the large enterprises class and the Minister of Science and Technology’s Award for Overall Excellence.
South Africa has always been a volatile environment in which to do business – but that brings with it opportunity. It is important that Altron remains ready to respond to those opportunities and to our customers’ evolving digital needs and demands. We do this through smart acquisitions, recognising where needs arise for a service or competency, and through delivering efficiencies.
Our strategic partnerships enable us to offer a wide variety of innovative, custom-packaged solutions to our customers in our product and service offerings, while limiting the costs and risks associated with developing our own technology.
As part of Altron’s broader strategy we have instilled a paradigm shift in our product and service offerings based on a more developed understanding of our customers’ business needs and their unique market positions. Our focus has moved beyond ICT skills and product offerings to offering integrated, end-to-end solutions that holistically address our customers’ overall digitisation demands and requirements. We have therefore worked to create and to offer more products and services within a single bouquet to our customers.
We have also resourced our broader business understanding and consulting capabilities through our key account executives (KAEs) in key verticals such as banking, retail and telecommunications, so that we are able to gain insight into our customers’ business, the solutions they require and – most critically – the direction in which their businesses are moving, so that we can pre-empt their digitisation and technology needs.
Our market offerings are often a combination of product and service offerings, rather than simply a “box dropping” of products. In this way we are developing long-term, sustainable relationships with our customers and are better positioned to provide unique, high-quality, cost-effective solutions.
As Altron moves out of a period of recovery and looks towards new growth, we remain alert for opportunities to make small “bolt-on” acquisitions, thereby capturing adjacencies in an incremental manner. In this way we can evolve slowly each year by transitioning into new technology spaces with minimal risk, and capitalising on the vertical integration of these acquisitions into the group.
Altron has also recognised that it can add value by delivering a bundled skills offering to our customers, together with our traditional portfolio of products and services, which contributes to their business success. AAD, for example, has captured project management and full supply chain management adjacencies that enrich its business offering to its customers. We expect that many of our operations will continue to look toward broadening their service offerings in this way.
We are currently reviewing the operating models of each business so as to prioritise our investments as a group with these adjacencies in mind. When making acquisitions we look beyond just the numbers to consider the potential fit within the group and the market in which the relevant business operates. In this way we can assess potential for both integration and synergy extraction, ensuring that we maximise the return on those adjacencies.
In 2017 we conducted a white space analysis of how our current portfolio of products and services aligns to what we consider to be the technologies of the immediate future. Those results will drive where we make our acquisitions and build internal capacity to be strongly positioned when those trends become mainstream. We also continue to track our areas of competitive advantage on which we will be able to build.
As the market transitions away from own-and-operate towards pay-per-usage or services-based business technology solutions, we are responding by championing various cloud solutions. We are seeing a steady progression towards uptake of cloud-based services although, with the technology being relatively new, many customers are first moving towards hybrid cloud solutions.
Altron has made steady progress this year in moving its own operations and people toward cloud-based services and operations. This year we prepared to roll out Salesforce, a cloud-based client relationship management system, throughout the group. Our enterprise resource planning (ERP) systems and processes are entirely based within our private cloud and our productivity suites have been moved into the public cloud domain. We expect all our operations to be using hybrid cloud solutions or to be functionally cloud-based by June 2017.
This migration to cloud solutions has already demonstrated advantages to the group by increasing our agility and responsiveness, particularly in terms of being able to scale our systems rapidly to respond to real-time needs. Cloud technology also aids business continuity and results in cost reductions with regard to licensing fees and IT systems maintenance and operations.
There are both risks and opportunities inherent in cloud-based products – for our customers and for the group. All current cloud-based market offerings are international, which means that they are subject to currency volatility. In time we anticipate opportunities for local strategic partnerships to emerge.
Going into 2018 we will continue to be a low-cost producer, maintaining our focus on costs and efficiencies. We will continue to offer our existing customer base a wide variety of creative, innovative technology and digitisation solutions whilst exploring new partners and adjacencies in order to retain efficiency in supply and provide increased offerings to our customers. Our ability to implement and facilitate technology is our strength and we will continue to play to this advantage.
As the world looks towards new emerging technologies, such as advanced analytics, blockchain and the internet of things (IoT), and as our customers’ business needs evolve accordingly, we are conscious that we must remain adaptive and able to change quickly. This requires both organic growth and an acquisitional ability to buy into disruptive changes as and when they are commercialised.
Digitisation will constitute a significant disruption to the wider business community in coming years and we expect this to offer exciting opportunities for Altron in its products and services space. We are already supporting many of our government customers in creating infrastructure and systems for digital inclusion throughout South Africa and we expect this to become an important source of growth for Altron.