Kgomotso Lebele | Country Managing Director | Accenture | mail me |
The returns from digital transformation will remain elusive until business leaders confront an uncomfortable truth: the problem is not the Artificial Intelligence (AI), but everything underneath it.
Consider this scenario. You lead a large retail business. Six months ago, you approved a significant generative AI investment to personalise customer promotions. The business case was compelling, the pilot results were strong and the board supported the move. The tool is now live. However, it operates at a fraction of its intended capacity, reaches only part of the target customer base, and has already exceeded its original cost projections.
Your CTO assures you that the AI is performing as designed. They are right. What failed was not the technology but the foundations underneath it. The business still relies on a decade-old inventory system that was never built for real-time data exchange. Pricing data remains siloed across business units, and customer histories remain fragmented across legacy databases.
You approved the AI, but nobody flagged the foundations. This is no longer a hypothetical scenario. It is playing out across South African enterprises that are investing heavily in digital transformation. As South Africa’s AI push gathers momentum, many organisations are discovering that technology alone cannot overcome weak digital foundations.
The value gap nobody is talking about
More than 80% of South African enterprises increased their ICT budgets in recent years. IT spending grew by 11% between 2022 and 2025, while AI investment rose by 80% over the same period. Yet business performance has not kept pace. Revenue growth across sectors has remained subdued.
This divergence points to a widening gap between technology investment and business outcomes. By 2025, our analysis shows that technology spending had outpaced revenue growth by roughly 115 percentage points. Investment is accelerating faster than the value it is meant to create.
The explanation is uncomfortable but clear. Many organisations are deploying sophisticated technologies on foundations that were never designed to support them.
Why leaders aren’t acting on it
Our research shows that 89% of South African executives acknowledge that legacy infrastructure limits their agility and contributes to growing technical debt. Yet only 24% are actively addressing the problem.
This is a visibility gap. AI initiatives are visible, measurable, and time-bound. By contrast, foundational work, such as modernising data architectures, integrating core systems, and resolving technical debt, progresses more slowly. It is also less visible and is often treated as operational spending rather than a strategic investment.
The result is predictable. Organisations optimise for what can be seen and measured in the short term while underinvesting in what determines whether those initiatives can scale. Consequently, organisations prioritise short-term visibility over long-term scalability. This challenge sits at the centre of South Africa’s AI push because long-term value depends on investments that often remain hidden from view.
What the evidence shows when the foundation is right
Where the foundations are strong, the results are clear. One of South Africa’s largest retail banks by customer base has built its model on a digital foundation that was designed for simplicity and scale. By late 2024, it had reached 23 million clients, with more than half actively using its app. Digital and card payments grew by 24%, while headline earnings increased by 36% during the first half of 2024. Its cost-to-income ratio of approximately 37% and return on equity of 29% reflect a business that was built for efficiency.
A similar pattern is evident elsewhere. A local digital bank that was built on a cloud-native architecture reached 10 million customers in under six years and achieved profitability ahead of schedule.
These organisations did not outperform because they invested more in AI. They outperformed because they built the conditions that allow AI, and every other technology, to deliver lasting results.
The paradox hiding in plain sight
AI is not only underperforming on weak foundations; it is actively making those foundations weaker. Every temporary integration, workaround, and model trained on inconsistent data introduces complexity that persists.
Accenture’s research shows that AI and enterprise applications are now among the largest contributors to technical debt in complex organisations. Managing that debt already consumes between 20% and 40% of IT budgets. The challenge is that debt accumulates through success. A pilot works and delivers strong results.
The board then approves expansion. However, scaling requires either rebuilding properly or accepting inherited fragility. Most organisations choose the latter. AI debt is harder to identify than traditional technical debt. It hides behind successful pilots and surfaces only when scaling fails. By that stage, organisations are already committing to the next round of investment.
The lessons emerging from South Africa’s AI push are therefore clear. Organisations cannot separate AI success from the strength of the digital infrastructure that supports it.
Three disciplines that cannot be delegated
Our research identifies three disciplines that are required to build a reinvention-ready digital core. These disciplines span cloud, data and AI, platforms, security, and applications. All of them require direct leadership attention.
The first discipline involves building for industry rather than following a generic template. Infrastructure growth alone does not translate into value. A bank that runs legacy systems faces different constraints from a mining company that operates in low-connectivity environments. Competitive advantage comes from identifying which capabilities matter most within a specific context.
The second discipline requires organisations to treat innovation investment as a compounding activity. Organisations that consistently increase innovation spending build momentum. Those who keep spending flat, particularly during periods of pressure, do not stand still. Instead, they fall behind. A 6% annual increase is emerging as a threshold for maintaining competitiveness.
The third discipline involves managing technical debt as a strategic asset. Around 15% of IT spending is emerging as a critical balance point. Below this level, complexity compounds and limits scale. Above this level, organisations absorb investment by fixing the past, which delays new growth.
The question leaders need to ask
AI investment is accelerating across South Africa. The constraint is no longer access to technology; it is the ability to support technology at scale. Foundations are not a technical detail that leaders can address later. Instead, they determine whether investment translates into performance. The organisations pulling ahead are those that are building the structural conditions required for sustained value.
The question is no longer whether to invest in AI. Instead, leaders must ask whether their businesses are built to extract value from it. AI will not fail South African companies. Weak foundations will. They will fail organisations quietly at first and then all at once, turning promise into cost when it becomes far harder and far more expensive to fix.
As South Africa’s AI push continues to accelerate, the winners will be those who invest as heavily in their foundations as they do in the technologies built on top of them.
