The perceived reasons for this increase correspond in general to the wider global picture. The most common cause cited is market rules and regulation changes, identified by 29 percent, followed by the economic environment and recession, at 26 percent, closely matching the global averages of 26 percent and 23 percent respectively.
Complexity in South Africa is widely expected to rise further over the next two years. Whereas only 8 percent of firms quizzed anticipate a simpler business environment, 68 percent foresee more complexity, with the majority of those – 56 percent – predicting a significant increase.
Regulation shoulders much of the blame for the rise in complexity, identified as one of the two dominant causes by 60 percent of firms – the highest in the survey. Government oversight comes a distant second with 32 percent, but this is considerably higher than the global average of 21 percent, and joint third in the survey behind Italy and Singapore. However, tax policy is hardly considered a factor at all, considered an issue by just 4 percent of South African businesspeople, compared to the global average for this category of 26 percent.
Like elsewhere around the world, increased costs (86 percent) and having more risks to manage (81 percent) were considered the two main challenges associated with complexity in business today. However, diverging from the global pattern, delays in sealing deals and transactions was raised as an issue by 80 percent of respondents, considerably more than the average of 58 percent, and joint highest in the survey alongside China.
South African respondents were bullish that complexity can create new opportunities, with some 82 percent seeing the potential for exploiting complexity to their advantage. Of those, 88 percent – second only to Sweden – believe they have the opportunity to gain a competitive advantage. A large proportion, 80 percent (global average 58 percent), argue that it can help focus existing business strategies.
Looking ahead, South African firms strongly believe that regulation will be one of the major causes of increased complexity over the next two years. With 79 percent subscribing to this view, this trails behind Canada and Ireland but far exceeds the global average of 63 percent. Tax policy, on the other hand, is considered far less relevant in South Africa, raised by just 36 percent of respondents against the global average of 52 percent. Mergers and acquisitions and operating in more countries are likely to be far more prominent drivers of complexity, each cited by 64 percent of South African firms quizzed, the second highest proportions worldwide in their respective categories.
The last two years appear to have been a time of great change for many South African companies, with 82 percent – more than any other country in the survey – reporting reorganizations of all or part of their businesses to help manage complexity. In line with the rest of the world, even more (88 percent) concentrated on improving information management. Only a fraction changed their approach to human resources, some 36 percent, less than half the proportion opting for this method in China, India and Brazil (85 percent, 80 percent and 76 percent respectively).
More than anywhere else, South African companies expect different or additional measures over the next two years to overcome complexity. Improving information management will be undertaken by 87 percent of firms, while 68 percent will reorganize all or part of their businesses. A globally disproportionate figure – 61 percent as opposed to an average of 42 percent – will try investing in new countries or geographies, suggesting a gradual widening of business focus for South African businesses.
South African firms are unanimous that managing complexity is important to their company's success. Almost as strong are the beliefs that businesses will need to attract new skills to face issues arising from complexity (94 percent), and that governments should work together to simplify the regulatory process (96 percent).
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